ISS acquires business intelligence firm focused on Economic Value Added

Governance firm builds out ahead of potential IPO

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Institutional Shareholder Services (ISS), the corporate governance and ESG research house, has bought a business intelligence firm called EVA Dimensions for an undisclosed sum as it readies itself for potential stock market listing.

It is the latest in a string of acquisitions made by the Maryland-based firm over the past few years, as it seeks to transform itself in to an “end-to-end” provider of ESG products and services.

ISS describes EVA Dimensions – ‘Economic Value Added’ – as a business intelligence firm that uses a bespoke framework to measure a “firm’s underlying economic profit rather than its bookkeeping profit”.

“This acquisition will allow ISS to provide our clients a cutting-edge holistic means of assessing and defining performance of their portfolio companies,” said ISS President and CEO, Gary Retelny. “Combined with our expanding suite of data and analytical portfolio tools, EVA will help investment professionals to determine the intrinsic value or risk of portfolio companies.”An industry observer said the acquisition makes “a lot of sense if ISS wants to move away from TSR” [total shareholder return] as the main measure of performance”.

The person said TSR doesn’t have a lot of supporters among ISS’s clients and that EVA — the return on capital less the cost of capital — is a “far better measure” of long-term real financial performance.

Retelny told RI recently that ISS was looking globally for acquisition ahead of a potential stock market listing.

Last week, ISS also launched a new environmental and social disclosure scoring framework for institutional investors. The Environmental & Social QualityScore, which is a new component of its existing corporate profiling and scoring solution, offers a “data driven approach to measuring the quality of corporate disclosures on environmental and social issues”.

An additional 3,500 companies spanning 18 industries will be added later in 2018, bringing the total coverage universe to more than 5,000 companies, globally.