EQT’s Sizeable Acquisition Of Avetta Highlights The Momentum Behind The Supplier Risk Management Market

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EQT’s Sizeable Acquisition Of Avetta Highlights The Momentum Behind The Supplier Risk Management Market

On April 2nd, private equity firm EQT announced that it had agreed to acquire supplier risk management software provider Avetta from Welsh, Carson, Anderson & Stowe (WCAS). Headquartered in Stockholm, Sweden, EQT has €232 billion in total assets under management within two business segments – Private Capital and Real Assets – and owns portfolio companies and assets in Europe, Asia-Pacific and the Americas. Avetta is a SaaS provider focusing on supplier risk management, specifically contractor procurement, onboarding and safety operations. The deal's financials were not disclosed, although reports value the deal at approximately $3 billion, including debt. This mammoth valuation suggests EQT is paying around 24 times Avetta’s projected 2024 EBITDA of $125 million.

At the highest level, this deal will signal a good omen for private equity firms holding software vendors in the EHS and risk management space. Private equity dealmaking is beginning to bounce back after a prolonged period of stagnation, and with tech stocks booming, this deal is further evidence of an emergence from the tech bear market seen in 2022 and 2023.

Zooming in slightly, supplier risk management is an extremely hot topic in today’s corporate boardrooms. Verdantix sees firms facing increasing scrutiny to select suppliers that minimize risk to business continuity, whether that be through the prism of product reliability and compliance, contractor safety, or ESG credentials. This is highlighted in the results of a recent Verdantix survey: over 50% of the supply chain professionals that responded indicate that a significant jump in external stakeholder pressures is impacting their procurement decision-making.

As a result, demand is soaring for software tools that can assist firms in making more informed procurement decisions. In a recent market size and forecast study, Verdantix calculated that the contractor management software market – Avetta’s primary focus – totalled $2.02 billion in 2022 and will grow at a CAGR of 12.5% to reach over $4.1 billion by 2028. However, accrediting the size of this deal to favourable market tailwinds detracts somewhat from Avetta’s recent triumphs.

For Avetta, and other supplier or contractor risk management software firms, amassing – and, critically, maintaining – as broad and detailed a network of supplier data as possible is critical to market success. Owing to a revamp of its software architecture, Avetta has been incredibly proficient in doing this: it has accrued a network that spans over 130 countries, and contains 130,000 contractor firms and records of over a million individual worker credentials.

While making risk-conscious procurement decisions is a positive step for hiring clients, truly addressing contractor safety risk takes a holistic approach that spans the length of their tenure. In addition to providing prequalification data for procurement, Avetta has taken strides to diversify its solution to support on-site contractor safety. Most topical is its new GenAI-powered safety tool, AskAva, which is currently in Beta testing. Developed in conjunction with Open AI, the tool leverages an extensive data set of historical contractor safety records to provide operators with a risk assessment copilot when planning for high-potential jobs on site. Aiming for general release to customers in Q2 2024, AskAva puts Avetta amongst the frontrunners in AI development and innovation in the EHS space.

To read more about supplier and contractor risk management software, visit the Verdantix research portal.

Tom Brown

Senior Analyst

Tom is a Senior Analyst in the Verdantix EHS practice. His current research agenda focuses on a range of EHS topics, including high-risk safety controls, contractor management, environmental services and EHS digitization strategy. Prior to joining Verdantix, Tom achieved a Master’s in Chemical Engineering from the University of Nottingham.