Frost & Sullivan was founded by Dan L. Sullivan and Lore A. Frost in New York City in 1961. The company initially focused on research related to new technologies, distribution channels and business trends. In 1972, it started a corporate training division. Also in the 1970s, the company started sponsoring conferences and industry meets, and also expanded outside the US in the 1970s by opening an office in London. In 1982, Frost & Sullivan was publicly traded, and had annual revenues of $9.1 million. By 1987, the revenues had grown to around $17.5 million, with $290,000 in net earnings. Theodore Cross acquired 53% of the company's stock in the mid-1980s. In January 1988, the company was merged with a subsidiary of FAS Acquisition Co., a company formed by Theodore Cross and Warburg Pincus Capital, making it a private firm once again. In 1993, the company was acquired by David Frigstad. The company expanded into Asia in the 1990s and opened offices in China, Japan, India and Singapore. In 1997, it entered into a joint venture with M.A.I.D. for electronic distribution of its material. In 2001, it acquired Technical Insights. The same year, Frost & Sullivan lost its New York sales office in the September 11 attacks. The following recession forced the company to lay off 10% of its 700-strong staff, before it made a recovery. In 2002, it further expanded its alliance with Dialog.
Conflicts of interest
Frost & Sullivan participates in an equity research service scheme. The scheme provides equity research for a company who funds the research. The researched company is permitted to correct the report before the report is published. Frost & Sullivan published a paper about the benefits of the scheme in the European Scientific Journal, a predatory journal. Researchers and asset managers see an inherent conflict of interest in research sponsored by the company being researched. Frost & Sullivan issues industry awards based on research using a proprietary methodology, which is sometimes based on a single article produced by the receiver of the award. Organizations which receive a Frost & Sullivan award must pay a fee to communicate the outcome to the public. This conflict of interest is similar to that of a vanity award.
