Corporate Compliance Industry M&A Deal Summary Update

August 2024 update on investments, M&A deals, and profit strategies to capitalize 

Placement funding and financing Investments Deals 

• More than $1 Trillion to be deployed by USA private credit and equity investors; tech innovation and platform consolidation to continue at a faster pace in Q3 and Q4 than previous 6 quarters (PitchBook) 
• More than 500 acquisitions since 2020 for compliance solutions 
• Category leaders command offer 2x the amount of products/solutions
• Deal trending categories include: AI, Intelligent Automation, Embedded Experience.  M&A deals to consolidate and integrate the backoffice across accounting, compliance, finance HR, payroll, and corporate governance and records.
  
  
  

Profit Considerations

• Valuations higher in 2021 as private equity investment sponsors entered the industry. The first half of the 2024 year revealed declining valuations for service providers, with widening valuations for software splitting firms into either below historical average or above average premium valuation
• Increase in competition from non-traditional industry Vertical SaaS solutions as well as global leaders.
• 30 to 40% revenue growth for niche industry vertical specialists (versus single digit growth for generalists)

 

Industry Landscape Summary.  While there are hundreds of local corporate record filing specialists, the market is dominated by a few large global leaders, with emerging modern leaders backed by private equity.  The market for USA private (excluding globals, enterprises, and investor backed) corporate compliance services is estimated at $1B in annual recurring revenues based on market share analysis of the top 125 providers as well as average spend per business. 

Investment Trends. Billions in capital deployed to Compliance investments.  Majority of the recent investments focused on either global platforms, vertical niche industry specific SaaS, or enterprise GRC EHS or RegTech solutions. Deal Themes include industry consolidation into platforms (“Platformization”) and Verticalization (Vertical SaaS Industry Solutions).

Strategy to Capitalize. More expansion deal types and options than ever before… And more financing and capital options with an abundance of capital available from Private Credit and Private Equity.

 

Deal Analysis. Significant product expansion across compliance and backoffice governance.