December 2010: Will You Be There in the Morning?

That's a question all buy- and sell-side firms contemplate when they enter into a new contract with a third-party technology provider. And for good reason: There is no sense—business or other—in starting a relationship with a vendor unless you are comfortable with its long-term viability. After all, finding out that your service provider has short-term funding issues after you’ve inked the deal would be a game-changer.

This brings me to Misys’s recently announced acquisition of Sophis, a Paris-based specialist risk management and trading technology provider to both sell- and buy-side firms, and a multiple Buy-Side Technology Awards winner since 2007.

While acquisitions happen all the time in our industry, and many have turned out well—Thomson Financial’s purchase of Reuters and Linedata’s Beauchamp Financial buy are two such examples—they are nonetheless the types of developments that incumbent user firms could do without. Of the acquisitions that have been successful, all have one thing in common: The merged entities have retained the branding, and to a large degree, the organizational infrastructure around the products that already enjoy significant market traction, although whether this is coincidental or by design is anyone’s guess. But the message clear: If it ain’t broke, don’t fix it.

Neither Misys nor Sophis—as far as I know—have any sustainability problems, although this column seeks not to cast doubt in such a direction. Rather, it’s about relationships and the changes to existing arrangements that make user firms twitchy when they hear the dreaded “a” word. It’s perfectly feasible that the levels of service enjoyed by Sophis clients to date will be enhanced as a result of this development, but of that there is no guarantee, which is why this is not a particularly happy time for those firms.

On a separate note, many of you will by now know that Stewart Eisenhart left Incisive Media over the Thanksgiving weekend. Stewart joined the Risk Waters Group in 2002, prior to its acquisition by Incisive Media. During his time at the company, he developed into a skilled news and features writer, with particular interest in buy-side regulations and a range of mostly front-office-based business processes. But more important than his writing skills were his reliability and amenability, two attributes that made him popular with whomever he spoke to and met.

Stewart joins Emergo Group in his home town of Austin, Texas. Our loss is their gain.