After it was announced that London Stock Exchange Group had bought MayStreet, Max Bowie, Joanna Wright, Wei-Shen Wong and yours truly reached out to a bunch of people to get a feel for what the industry thought of the deal. Here’s the resulting article.

The TL;DR of it all is that this was a smart move made by LSEG. Now, the story I linked is what we’d label as “news analysis,” the aim of which is to provide a balanced perspective on news that has already broken through conversations with in-the-know subject matter experts. On the other hand, this here—what you’re reading right now—is called a column, otherwise known as an opinion piece. So I’m going to address some of the more gossipy aspects of this acquisition and recklessly speculate on what it means for LSEG (and, by extension, Refinitiv) going forward. So keep that in mind and feel free to tell me I’m a moron: anthony.malakian@infopro-digital.com.

Here we go.

After talking to a swath of people directly connected to LSEG/Refinitiv and MayStreet, or who are industry participants and competitors, two schools of thought emerged. The first is that it’s simply a smart move. Again, read this to see why. The second is that LSEG was essentially painted into a corner. Yes, a smart move, but one that could not be avoided and, as such, cost LSEG a pretty penny.

The theory here is that LSEG had to buy MayStreet because Refinitiv relied entirely on the supplier of low-latency direct datafeeds, a small but crucial piece of technology. LSEG had a choice: either buy MayStreet or make a huge investment into the vendor to protect its stake in this piece of critical tech. Taking no action at all wasn’t an option. If a competitor were to buy or make a huge investment in MayStreet, Refinitiv would be screwed by having to build its own low-latency direct datafeeds or buy (and install) a lesser provider’s tech after ripping out MayStreet’s.

In this instance, it proved smarter to buy rather than build. No need to reinvent the wheel. But could this have been avoided?

Some sources close to the companies involved in the deal bristled at the idea that “LSEG was painted into a corner”. One said this was just a smart move. Another framed it as a bigger company taking control of a significant third-party provider…nothing personal—just business—and it happens all the time.

Some wondered, though, when LSEG bought Refinitiv, how much did it consider third-party and fourth-party risk? Did the exchange know that it was going to have to buy or make a major investment into a company like MayStreet? Or was that a surprise? Maybe they did, but these are the questions that the industry’s observers, gossipers, and speculators are asking today.

The point is that perhaps this is a warning for other companies that see tech as secondary to their “core” role as data aggregators or algo builders or whatever else: You can be big, but if you rely on someone else for something mission-critical, you are beholden to them. How will that influence buy-versus-build decisions in future? How should companies assess what’s critical enough to build in-house versus what’s commoditized enough to outsource?

Here’s another thing: We weren’t able to nail down an exact price—some say $60 to $100 million while others said that it was three to four times its revenue valuation of $76 million from a couple years ago—but it’s a significant price tag. (“Credit Suisse [Next Investors] is walking away as a very happy investor,” one source said). It’s a big investment to support a business that Refinitiv admits it wasn’t really in before, and where direct feeds have limited demand in today’s trading environment. So why bother at all?

Do they really think there’s a ton of hidden money to be made here, and that’s why they’re willing to spend so much to future-proof themselves? Or (cynically speaking) is there a concern that Refinitiv’s tech is about to fall apart and they need MayStreet’s expertise? Or, were they worried that MayStreet could quickly become a viable competitor in the platform space and that they could take some business from Refinitiv? That would make Refinitiv less sticky and less tightly integrated in the long term and would make them more of a content company. MayStreet, however, does potentially keep its stickiness on the Street.

Perhaps it begs the bigger question of whether vendors should only do what they do best—either provide tech or be a data vendor and hand content off to specialist aggregators and distributors, such as the cloud providers.

In this scenario, Refinitiv would post its data to the cloud, leaving Amazon, Google, Microsoft, or IBM to pick it up and handle the distribution through its own dedicated data clouds, or its cloud marketplaces. (And I’m back on the Big Tech kick!) Aside from farmers’ markets, isn’t that the way most industries work? With mainstream marketplaces like Etsy or Amazon.com, there’s a manufacturer, but someone else takes care of warehousing, shipping, transactions, and billing. Maybe that’s how things should work? But then again, what about Bloomberg, which somehow manages to do it all very well?

I suppose what I’m saying is, if you’re not good at tech, don’t do it. Don’t be a mediocre provider of something. And don’t get forced into transactions you hope will make you a great tech provider…because you can’t count on that working out. It’s an old story, but the frustrating thing about M&A is that all too often a big company acquires a smaller specialist company. But when they try to integrate, things get messy, the talent that created the specialist product leave, or they get pooled into a development organization where they no longer specialize in the things they’re good at (and then leave to found a new startup). So the acquiring firm just becomes a bigger, more mediocre tech provider.

I’m not saying this is what’s happening today at LSEG/Refinitiv—I’m saying it’s the concern. It’s the worst-case scenario. LSEG bought MayStreet, but now it will be responsible for building out the product in the future. Refinitiv, Tora, Quantile Group and now MayStreet. Buying is easy…integrating and sustaining is hard.

The image accompanying this column is “The Four Markets: The Vegetable Market” by Richard Earlom courtesy of the Cleveland Museum of Art’s open-access program.