S&P Places CEB's (CEB) Ratings on Review for Downgrade

Standard & Poor's Ratings Services said that it placed its ratings, including the 'BB' corporate credit rating, on CEB Inc. on CreditWatch with negative implications.

"The CreditWatch placement is based on CEB's announcement that it will acquire Evanta Ventures Inc. for a total cash consideration of $275 million," said Standard & Poor's credit analyst Elton Cerda. "We expect the acquisition to increase CEB's debt leverage above our 3.5x threshold for the 'BB' corporate credit rating."

CEB's performance in 2015 was weaker than we'd expected. For the quarter ended Dec. 31, 2015, CEB's revenue increased about 1.5% but EBITDA declined almost 5%. New sales and cross-sell activity were lower than we anticipated. The company's slower-than-expected hiring of new sales staff and softness in the natural resources sectors are possible contributing factors. With its sales force in place, we expect CEB revenue to grow in 2016.

We will meet with management to review the transaction and to discuss its business outlook and financial policy. We will resolve the CreditWatch placement shortly after the meeting. At this point, we believe that the potential downgrade will likely be limited to one-notch (to 'BB-').

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