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Genstar Capital Acquires the Operational Excellence and Risk Management Software, Content and Services Assets From IHS

On June 1, 2016 Genstar Capital, a middle market private equity firm with a focus on healthcare, software, financial services and industrial technology, announced that it had acquired the entirety of the Operational Excellence and Risk Management (OERM) assets from IHS in a carve out deal. Neither party has disclosed the terms of the transaction. Verdantix estimates that the transaction valued the OERM assets at between $185 million and $300 million reflecting the revenues of the standalone business, profit margins, growth trajectory and recent comparable buy outs in the sector.

Whilst the terms of the deal have not been disclosed, Genstar Capital announced that Paul Marushka, previously President at Marsh ClearSight, will take the helm as President and CEO of the new entity. He will manage a NewCo with approximately 500 employees and over 2,500 customers which will be headquartered in Chicago. The rest of 2016 will likely be devoted to rounding out the new organization given it will require new HR, financial and other support functions – an area which Genstar Capital has significant expertise in enabling. The NewCo also plans to launch a new brand name in 2017 reflecting its divestment from IHS.

Given the scale of the OERM business in terms of customer base, product breadth and revenues, the new firm’s strategy will have an outsize impact on the EH&S information management market as a whole. An aggressive growth strategy which delivers a new integrated EH&S platform, ramped up marketing and positive outreach to services partners like CH2M, ERM, EY and Tetra Tech will dent the growth opportunities of midsize EH&S software vendors and product stewardship competitors. A strategy focused on fat profit margins over the next 3 years will leave the door open to well-funded competitors to target the huge IHS customer base who are very keen to see rapid product innovation. As a firm in the Genstar Capital portfolio the strategy for the OERM business is fundamentally a call for the new private equity owners. The backdrop for the decision is more than $500 million invested in other EH&S software vendors in the last 18 months.