Senior Advisor, S&P Global Inc
S&P Global’s Doug Peterson: ‘Now is the time to strike’
S&P Global provides the data that powers global markets. And Doug Peterson has been the CEO there for more than ten years. Is this episode of CEO Moments of Truth he reflects on the bold decision to acquire IHS Markit for $44 billion. The decision to proceed was based on far more than ensuring the finances were in place. It also meant assessing the ability of leaders to manage the change that followed.
This series of videos shines a light on the key moments and decisions that have shaped the leadership of CEOs.
For more in this series, visit the CEO Moments of Truth webpage here: on.bcg.com/...
About Douglas Peterson
Douglas Peterson, Senior Advisor at S&P Global, has discussed the company's strategic decisions and market observations in recent appearances. In a 2024 interview, Peterson reflected on the 2022 acquisition of IHS Markit for $44 billion, stating that the decision was based on both financial and managerial capacity. He said, "Now's the time to strike," and emphasized the importance of culture in the merger, noting that "when you have two large organizations that are this big coming together, if you don't put that front and center, it's not going to happen." He also described the challenge of executing the deal during COVID, including renting a wedding venue for management meetings with social distancing. In a 2018 interview, Peterson discussed S&P Global's business model, saying the company has "been in the data business for over 150 years and we know how to monetize data." He identified alternative data and ESG as growing themes, and noted the shift from bank markets to capital markets globally. Regarding China, he said the country "needs a yield curve, they need a credit risk curve" and that S&P Global has been "building relationships there." He also described post-2008 enhancements to credit analysis, including cross-team collaboration to identify credit indicators and bubbles.
Transcript (23 segments)
I
Interviewer0:10
Hey, Christoph, it's so nice to see you. Welcome to S&P Global.
D
Douglas Peterson0:13
Thanks for having me at your headquarters. It's great to be here.
I
Interviewer0:15
Come on in. So S&P Global is almost a household name for business leaders. Tell us a bit more about S&P Global.
D
Douglas Peterson0:25
Well, we start with data and analytics that we provide to our clients to make informed decisions. So that's everything we think about: how can we be independent, how can we provide information. And that cuts across all the divisions; the ratings division, indices, market intelligence, commodity insights and mobility. And that's one of the beauties of our business. It's these embedded data flows that people need to use to run contracts and make decisions.
I
Interviewer0:48
And tell us a bit more about your mix on a global scale.
D
Douglas Peterson0:51
We service clients in over 150 countries. They're humming and there's a lot of growth in the emerging markets.
I
Interviewer1:11
Tell us a bit more about one of these defining moments that truly shaped the company and also you as a leader.
D
Douglas Peterson1:19
After about three years of being CEO, the name of the company was McGraw-Hill Financial. And I realized that we needed to bring the organization together under one brand, which was S&P Global. And at the time we had the rating agency, we had the index business, and they all fit together, but we had some businesses that didn't. And this gave me the ability to have a single brand, a single vision for the company. And it's also helped mark going forward from then on what our strategy is and how we think about building the portfolio. Strategy has to be driven by what are your clients need and what are they doing. Those biggest themes were what was happening with sustainability, with digital transformation. The private markets were starting to emerge. And that's what we decided to do with the merger with IHS Markit. That was I think, the biggest M&A move in the world actually in that year.
I
Interviewer2:17
In 2020. Yes, it was. Across all industries and certainly the biggest one that you had ever done at S&P Global. What got you so excited about IHS Markit?
D
Douglas Peterson2:26
Well, we used to talk about it, the industrial logic of the two companies, and they had data and analytics that we didn't have. And we had the benchmarks and the technology platforms that they didn't have.
I
Interviewer2:37
That was in the middle of COVID that you made that decision. Were you just sitting at home and not being able to come to the office wondering what bold move you could make or how did the idea come up and how did the whole process start?
D
Douglas Peterson2:49
Well, it wasn't quite like that. We had a scan of the markets for many, many years, and IHS Markit was always part of that scan. But we said, well, should we do something that's bold? The first was our financial capacity to undertake a large transaction like this. This was quite large. It ended up being over $40 billion. But probably the more important question was do we have the leadership capacity. To do something like this requires you to have a strong team of people who have proven in the field, who are change managers, who have experience doing mergers and acquisitions, including divestitures. And my answer to the board is, yes, we have the financial capacity, which is obvious, but we also have the managerial capacity. So this is the time to do something like this. Now's the time to strike.
I
Interviewer3:44
So it all started with a phone call that you made to the CEO of IHS Markit. How did that happen?
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Douglas Peterson3:50
After getting the approval from our board of directors that I could make the phone call, which isn't always easy. I was at a vacation home and I had to sneak out on a balcony. And so that was good. And it meant that we were able to move pretty fast and we had really cordial discussions throughout.
I
Interviewer4:17
So there was an important element of personal chemistry and trust.
D
Douglas Peterson4:21
Absolutely. I'd known Lance for many years. Somebody that I've worked with over the years, been in commissions with him and things like that. So somebody I knew, company I knew well and we were able to have that trust and that very strong relationship throughout.
I
Interviewer4:33
How did you convince your leadership team, your board, that this was the right moment?
D
Douglas Peterson4:39
Well, I'll tell you something that's very practical, not very strategic, very practical. Trying to do something like this during COVID was a big challenge. We had one of our very first management meetings with the management teams from both sides in Connecticut. We rented a place where they normally have weddings. We all took COVID tests and we sat about ten feet apart. To get to know each other, to start doing the due diligence. And it took really long. I tried to take a step back and said, 'Well let's take advantage of that to come up with a plan for the strategy. The organization design, who are going to be the leaders across every part of the organization? Who were going to be all of their direct reports?' So as opposed to many mergers and acquisitions, the day the deal closed, we had an executive team, we had the entire organization below them, and even a lot of the organization below them was already defined. So we were able to move really fast after we closed.
I
Interviewer5:42
You are generally known to be a very people oriented CEO and you were that before the deal with IHS Markit. Now the merger happens, people topics are incredibly important at that moment. What were the big opportunities and also what were the challenges that you had to navigate?
D
Douglas Peterson6:12
But that it's all about the customer and delivering innovation to the customer. We found that IHS Markit had a similar culture. They were people oriented, customer oriented. They had innovation in the middle of what they did. So bringing the two cultures together wasn't too hard. But it's not easy. And I talked about those meetings that we were having to pull together, the management team. We had some really tough conversations, but valuable conversations about what kind of company do we want to be.
I
Interviewer6:38
Obviously, this transaction, the merger, completely repositioned S&P Global strategically, operationally, peoplewise, I'm sure it has also shaped you as a leader. What are your big takeaways from this process?
D
Douglas Peterson6:54
I've been involved in many big change management initiatives, but when you have two large organizations that are this big coming together, if you don't put that front and center, it's not going to happen. And I know sometimes talking about things like vision and purpose and values sounds like it's an academic exercise, but it's not. It actually is meaningful. And when I think about the culture that we've built and putting those values upfront every single day has been so important for our success.
I
Interviewer7:35
I couldn't agree more. In the end, I mean, culture always sounds fluffy, but you can measure it, you can document it, you can articulate it and you can change it. And I do think the boldest and most successful leaders know that and actually do it. Whether it's in the situation of a merger or in the normal course of business. So thank you for talking about the moment of truth. It's always wonderful to hear from you, Doug. Thank you so much.