Wolters Kluwer Buys Enablon: Another Corporate Giant Enters into the EH&S Market
On May 31, 2016 the Netherlands headquartered information solutions and services firm, Wolters Kluwer, announced a binding offer to purchase Enablon for €250 million ($278 million). Based on Enablon’s 2015 publicly disclosed revenues of €45 million Wolters Kluwer has paid 5.6 times revenues for one of the leading EH&S software providers. Verdantix estimates that Enablon has been operating at a 15% to 20% margin in the last 12 months and on this basis, the offer price reflects a valuation of between 28x and 37x EBITDA. Whilst this is a whopping multiple, Wolters Kluwer is a global player in the information solutions market with revenues of €4.2 billion in its last financial year and has the cash for acquisitions.
Enablon will be a business unit in the approximately €1 billion revenue Legal and Regulatory division of Wolters Kluwer. Reflecting the logic for the acquisition, Wolters Kluwer’s executives see Enablon as a growth engine for the division which is reflective of the fact that Enablon’s new parent company grew just 2% in constant currencies in the last quarter whilst in its disclosures as part of the deal, Enablon anticipates its total revenues will grow by 22% in 2016 compared to 2015, reaching €55 million. At the time of the acquisition Enablon had approximately 340 employees compared to 19,000 at Wolters Kluwer.
The acquisition of Enablon by another large trade buyer, following on from the purchase of cr360 by UL’s EHS Sustainability division, indicates the maturing market conditions as firms like Wolters Kluwer need to buy substantial assets to generate synergies and inflect their financial performance. With multiple investments and acquisitions taking place, operating as a standalone software vendor is an increasingly untenable strategy. As a business unit within Wolters Kluwer, Enablon will have privileged access to thousands of legal, compliance and financial executives in a wide range of industries. This new ownership structure will accelerate sales cycles through facilitated cross-selling and significantly enhance Enablon’s brand position with new buying communities. Beyond the high valuation for Enablon, other market participants should see the acquisition as a vote of confidence in the total addressable market for EH&S information management.