Publisher Buys J.D. Power - aftermarketNews

Publisher Buys J.D. Power

James Dave Power III, who has spent more than half his life building an idea into a trusted company that provides information to consumers and companies -- especially about automobiles -- agreed Monday to sell his research firm to the behemoth McGraw-Hill Cos. Inc.

From Detroit Free Press

DETROIT — James Dave Power III, who has spent more than half his life building an idea into a trusted company that provides information to consumers and companies — especially about automobiles — agreed Monday to sell his research firm to the behemoth McGraw-Hill Cos. Inc.

The publicly traded publisher based in New York will purchase all assets of J.D. Power and Associates, based in Westlake Village, Calif., for an undisclosed amount. That includes Power Information Network, a unit that collects detailed information about new- and used- vehicle sales.

No changes are planned for J.D. Power operations. So popular automotive reports, such as consumer surveys about the initial- and long-term quality of vehicles, will continue to be published. The company has 190 workers in Troy, Mich.

Power, 73, said he will remain active in the company he founded in 1968. “They might have to carry me out,” said Power. “I like what I’m doing.” He will report to Scott Marden, president of McGraw-Hill’s information and media-services division.

The purchase, subject to regulatory approval, is expected to close in April.

Shares of McGraw-Hill on the New York Stock Exchange closed down 51 cents at $95.40 Monday.

In a meeting with his top executives last fall, Power determined his growing company would need outside investors to meet its ambitious worldwide objectives. McGraw-Hill, with annual revenue of $5.3 billion, is more than 30 times larger than J.D. Power, with revenue of $167 million. But the companies whose business is providing reliable information decided they were a natural fit.

Founded in 1888, McGraw-Hill collects and distributes information in several sectors, such as financial services, education, health care, aviation and other industries. Standard & Poor’s, BusinessWee and McGraw-Hill Education are some of its leading brands. The company has 17,000 employees in more than 280 offices worldwide.

Power has about 800 employees in 13 offices worldwide. About 70 percent of the company’s information business is automotive-related, but the company has been trying to expand into other areas, such as health care and mortgage banking, in recent years.

So McGraw-Hill’s expertise and resources will help Power achieve goals, and the merger will bring the valued J.D. Power brand into its portfolio. “That’s why we’ve teamed up,” Power said.

While terms weren’t released, the sale probably fetched a comfortable sum for Power. He noted that about 120 employees who have equity in the company will benefit from the sale, too.

“I think they will all be pleasantly surprised,” Power said.

Power graduated from the College of the Holy Cross in Worcester, Mass., in 1953 and later earned a master’s degree in business administration from the University of Pennsylvania’s Wharton School of Finance.

He worked for Ford Motor Co. as a financial analyst and then as a market research consultant for General Motors Corp.

Power’s idea for his company came out of his frustration working with American automakers.

In a prior interview, Power explained that the Detroit automakers seemed to collect and present information to high-ranking executives in a way that was twisted to tell the executives what they wanted to hear. Power believed that led the companies to make mistakes with their products and marketing. He decided they needed objective, independent information in order to be successful.

There was just one problem.

“The American staff wouldn’t see me,” Power said.

So Power took his proposal to Japanese automakers. And Power’s now-deceased wife, Julie, typed up his first contract with Toyota Motor Corp.

For several years, Power and his wife were the company. She helped him type up notes and reports while caring for the couple’s four children.

In the early 1970s, J.D. Power tackled its first quality controversy by pointing out problems with a Mazda engine. “The engines didn’t last,” Power said.

Mazda denied it. Ultimately, Power was proven right, and the controversy launched his company’s reputation as a trusted source on automotive quality.

Copyright 2005 Detroit Free Press. Distributed by Knight Ridder/Tribune Business News. All Rights Reserved.


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