Wolters Kluwer Buys CGE: The Battle For Real-Time Operational Risk Management Heats Up
The Legal & Regulatory division of Wolters Kluwer announced on January 16 that it had signed a definitive agreement to acquire Hague-headquartered CGE Risk Management Solutions. At the time of the acquisition CGE had approximately 30 employees and posted revenues of €5 million in 2018. Terms of the deal were not disclosed but applying standard valuation metrics and given the competitive interest in the unique CGE business, Verdantix estimates the acquisition price was between €15 million and €20 million.
The rationale for the deal is clear and logical. CGE’s primary software product is BowTieXP, a desktop application designed for industrial risk management experts to construct bowtie risk models. Since it was founded in 2004, CGE has managed to build its BowTieXP user numbers to more than 15,000. Verdantix believes this is the largest user group for a bowtie risk modelling desktop application. CGE has also developed a cloud-based version of the BowTieXP software.
What’s in it for Wolters Kluwer’s Enablon business unit? Firstly, buying CGE supports the expansion of the value proposition from core EHS to a broader operational excellence play. Secondly, Enablon will be able to leverage CGE’s relationships with industrial risk managers to enhance its dynamic barrier management offering. Barrier management is a digital version of bowtie risk models which uses real-time data from asset sensors, mechanical integrity data flows and operator rounds. Thirdly, CGE’s business model was based on an international network of over 200 technical consulting firms. Enablon can exploit these relationships to upsell its eVision control of work and barrier management software. Fourthly, CGE was a unique business in terms of its library of bowtie risk models and user base. By acquiring CGE, Wolters Kluwer has stymied competitors’ efforts to get into this market especially in the crucial North Sea oil fields which serve as a testing ground for many advanced risk management technologies.
In the last 18 months several large players – Fortive, Hexagon, Sphera, Prometheus Group and Yokogawa – have made acquisitions in the operational risk management software market. Safety leaders at the largest firms are now looking for technology solutions which help them to adapt to constantly changing business operations. Traditional EHS software which supports ISO-type management systems doesn’t fit with their needs. Instead they want real-time risk management capabilities tied to connected worker platforms and asset reliability data streams. These new propositions will be developed in 2020 and launched by the end of the year.