CVC Acquisition Of VelocityEHS Is The Biggest Deal In The EHS Software Market In 2017
On September 23, 2017, CVC’s Growth Fund entered into an agreement with Actua Corporation to purchase VelocityEHS (Actua owned 99%) and Bolt Solutions (Actua owned 70%) for a total of $328 million. CVC Growth Fund is part of the larger CVC Capital Partners, which currently has $65 billion in funds under management. Based on the relative size, profitability and shareholdings of the two businesses sold to CVC, Verdantix estimates that VelocityEHS was valued at approximately $290 million making it the largest transaction in the market in 2017 and comparable with the purchase of Enablon by Wolters Kluwer.
VelocityEHS has evolved substantially from its origins as a material safety data sheet provider called MSDSonline. In April 2012, ICG Group (which later rebranded as Actua) acquired a 96% stake in MSDSonline for $48 million with management owning the remaining 4%. At the time MSDSonline forecasted $16 million of revenue for 2012 with a profitable margin; 2011 revenues were $13 million running at break even. In August 2014, MSDSonline bought Canada-based EHS software vendor Knowledge Management Innovations (KMI) for an undisclosed fee. Verdantix estimates that KMI had annual revenues near $7 million at the time. The two businesses rebranded as VelocityEHS in September to demonstrate the unification of the health and safety software with the product compliance solution. In September 2016, VelocityEHS acquired e3 Solutions to enhance its environmental functionality, thus becoming a software application which covered the full spectrum of EHS and chemical compliance. Over the last two years, VelocityEHS has grown at approximately two times the market growth rate of 10% for product compliance and EHS software. The KMI and e3 acquisitions, rapid growth, solid profitability and attractiveness of the EHStech sector explains the $200 to $240 million increase in the value of the business since 2012.
How does this deal impact the EHS and product compliance software markets? Whilst VelocityEHS demonstrated significant success within the Actua portfolio, its growth potential was somewhat hindered by its position in the portfolio as the primary profit generating entity. Now, as a standalone firm owned by a growth-focused private equity fund, VelocityEHS will become a more formidable player in the converging EHS and product compliance markets. With a veteran management team, a high impact sales organization, a very broad customer base and proven cloud-based products for EHS management, chemicals and product compliance, VelocityEHS is one of the best positioned vendors to exploit the growing appetite among EHS professionals for digital technologies that improve the efficiency of their management systems and better manage EHS risks.
To learn more about the EHS industry, apply to attend the forthcoming webinar ‘2018 Benchmark For EHS Budgets, Priorities & Technology Preferences’ on October 26, 2017.