Multiple compliance technology segments are experiencing strong M&A momentum, including governance, risk, and compliance (GRC); environmental health and safety (EHS); and supply chain risk management (SCRM). These software categories are vital for companies to track and ensure compliance with increasingly complicated regulations and keep pace with best business practices.   

Below, our senior professionals discuss why investor interest is expanding across compliance technology and highlight recent Harris Williams clients that exemplify the sector’s value-creation potential.  

The Criticality of Compliance Tech

Several trends are causing demand for compliance technology to increase. “Companies must monitor a continuously shifting global regulatory landscape with frequent geographic and jurisdictional changes,” says Thierry Monjauze, a group head and managing director in the Technology Group. “They need compliance and reporting systems that can help them operate in this dynamic environment.

Growth in demand for compliance technology is further driven by a fundamental shift among companies toward more strategic and comprehensive risk mitigation. This is particularly important as the spectrum of enterprise risk increases and extends beyond the traditionally defined categories of GRC, EHS, and SCRM. “Compliance solution buyers are expanding beyond the Chief Risk Officer or Chief Compliance Officer,” notes Erik Szyndlar, a managing director in the Technology Group. “It's a company-wide effort, up and down the organization, to strategically manage the risk profile of a company’s varied business units, functions, and projects.”   

SCRM and third-party risk management (TPRM) are also escalating priorities for many organizations. These solutions help companies gain confidence that contract employees, material suppliers, and other vendors are adhering to regulatory requirements, which reduces their own compliance and reputational risk. Brian Titterington, a managing director in the Technology Group, notes that risk exposure extends beyond the four walls of an organization and into a company’s supply chain. “As supply chains and vendor management become more complex, it’s imperative that organizations manage third-party risk through software and data tools that ensure compliance and enhance the qualification of their partners. SCRM and TPRM tools provide the needed visibility to enable that,” he says.  

 Related to the risks inherent in third-party vendors, another increasingly important buyer of compliance technology is the Chief Information Security Officer (CISO). An enterprise’s IT environment is typically built with a multitude of software and hardware vendors. Depending on the software, it may need to be used and accessed by multiple entities—including employees, suppliers, and customers—with varying levels of privileges and compliance training. Managing the risks inherent in this complicated IT ecosystem falls to the responsibility of the CISO. “The CISO’s primary purchasing decision has traditionally focused on cybersecurity software and solutions. But due to an increasing velocity of data and IT infrastructure related breaches and resulting regulatory compliance mandates, the CISO is taking on a more influential voice in the purchasing of compliance solutions,” says Priyanka Naithani, a managing director in the Technology Group.  

Finally, as organizations grow into new end markets and geographies, compliance complexities with local regulations expand exponentially. “Local regulations, language requirements, and ethical business practices must meet the needs of local operations to be effective,” explains Julien Oussadon, a managing director in the Technology Group. “Because of this, trusted sources of information, data, and compliance tools that scale with a company’s expanding operations are even more critical.”  

M&A Activity Across GRC, EHS, and SCRM

Several recent Harris Williams clients spanning GRC, EHS, and SCRM exemplify the many sought-after businesses and M&A opportunities within compliance technology.  

A Resilient Future

Rising regulatory complexity, connectivity, and globalization are making monitoring risk and maintaining compliance more difficult and resource intensive. These factors are driving ongoing demand for compliance technology that can help companies protect themselves from risks across their ecosystems.  

“Companies need compliance tools to manage and mitigate their risks,” says Szyndlar. “As risk management continues to grow as a strategic priority, these technologies will only become more important.”  

And while there are many point solutions in the market that address specific risks, there is an increasing desire for tools that offer visibility to risk across different facets of an enterprise. “Industry support for all-in-one solutions lends itself to platform-building opportunities for the software companies in this space,” says Titterington.  

To discuss M&A opportunities across compliance technology segments—including GRC, EHS, and SCRM—please contact our senior professionals.