Deal Profile: Cority

For a host of reasons, Environment, Health, Safety, and Quality (EHSQ) software tools are becoming increasingly popular among corporate users. By extension, providers of these tools are enjoying a significant uptick in interest from prospective strategic buyers and investors.

Toronto-based Cority is one such provider, which Harris Williams advised in its sale to Thoma Bravo LLC. Cority’s software solutions are designed to help organizations around the world more effectively manage their EHSQ programs to protect the well-being of their workers and the environment, ensure compliance in the face of rapidly evolving requirements, and accelerate sustainability and operational excellence corporate initiatives.

Managing Director Mike Wilkins and Director Erik Szyndlar, who led the transaction and are part of the Harris Williams Technology, Media & Telecom (TMT) Group, discuss what made Cority attractive to buyers.

Cority’s Solutions Address a Growing Need among Businesses

As companies have grown increasingly large, complex, and global, and new regulatory requirements continue to be enacted at a record clip, companies find it more difficult than ever to remain compliant, protect their workers, reduce their environmental impact, and ensure high-quality operations. And their existing antiquated EHSQ processes and disparate EHSQ tools aren’t helping matters.

“This is a crucial area of the business that companies can’t afford to mishandle,” says Wilkins. “You’re talking about the health and safety of people working on oil pipelines, in food processing facilities, in large manufacturing plants, as well as a company’s impact on the environment and its overall quality posture. Companies are hungry for anything that can make managing all that easier and more effective.”

That, in essence, is Cority’s value proposition. It provides a suite of software, delivered as a service, that acts as a “one-stop shop” for all of a company’s EHSQ needs. By automating key EHSQ activities, as well as providing on a single platform everything a company needs to manage EHSQ, Cority helps companies make better business decisions, make facilities more productive, make workers safer, and make products more efficiently and with higher quality.

Importantly, Cority continues to expand its solution set—both organically, by spending considerable time developing the technology, and by making key strategic acquisitions that augment the company’s overall solution set. And unlike some other vendors in this space, Cority has not ignored the “Q” in EHSQ.

“Typically in this sector, many players have chosen to focus only on the environment, health, and safety part of the equation,” explains Szyndlar. “But Cority saw the logic in adding quality to its arsenal, which increases its product set and its total addressable market while giving it an offering that enables the company to win customers that may be just looking for a quality solution. So Cority can really position itself as a provider of a holistic compliance solution.”

Cority’s Total Addressable Market Is Substantial and Expanding

Not only is EHSQ a critical focus area for companies, but it’s also increasingly vital across many end markets. These include heavy industrial segments—manufacturing, chemicals, food processing, and oil and gas, for instance—as well as light industrial organizations and even services companies.

“Cority’s solutions are certainly critical to industrial settings—especially from an environment, health, and safety standpoint, where employees are working in potentially dangerous conditions—and there are a lot of these types of companies,” notes Szyndlar. “But these solutions also can be useful to help any type of company, even those less industrial in nature, better manage their workforce and operations.”

Cority’s Software-as-a-Service (SaaS) Model Has Many Inherent Advantages

Unlike traditional on-premise, licensed software, software delivered as a service has a number of characteristics investors and strategic buyers find attractive. For starters, it’s quick to get up and running in a company with minimal effort. Cority’s solution delivers a superior user experience that seamlessly connects users to all the vital operational risk information from around the company that they need to do their jobs. As a result, it can begin generating value for customers almost immediately.

Because it’s subscription-based, it provides a predictable, recurring revenue stream and facilitates highly “sticky” customer relationships. It also streamlines the sales cycle, making it easy for Cority to sell customers additional tools at any time. “If a customer is already spending a certain amount of money on the platform, it’s easy to turn on another module for an incremental charge,” notes Wilkins.

In fact, one of the biggest advantages of the SaaS model is the ease with which new revenue-generating functionality can be added to it. That could be new tools that Cority itself develops or those from another vendor that can tie into the Cority platform via application program interfaces (APIs)—a vendor that Cority ultimately could end up acquiring.

“The SaaS model really gives Cority great flexibility to grow and expand its range of services, either through internal R&D or buying other businesses with relevant, complementary tools that can augment the existing solution set,” Szyndlar says.

Conclusion

The market for EHSQ tools is robust and likely to remain so in the years to come, as new rules and regulations, as well as ongoing changes in the general business landscape, make it critical for companies to ensure they are managing their EHSQ programs as efficiently and effectively as possible. That means investors and strategic buyers have significant opportunities in the EHSQ space—but they need to move quickly, as the market is consolidating rapidly and attractive assets such as Cority won’t remain independent for long.

“Cority represents everything that’s attractive to interested buyers in this space,” Wilkins notes. “They have products and technology that are well known to be best in class, a business model that’s easy to scale, a solid management team with an ongoing focus on innovation, and a footprint that spans more than a dozen verticals with a huge total addressable market. Cority’s experts provide technology that keeps workers safe and well trained—and that’s something important to all companies.”

Published July 2019