Deal Snapshot: Health & Safety Institute

hsi-2019.pngHealth & Safety Institute (HSI) is a leading platform for environmental, health and safety (EHS) compliance, training and workflow solutions. Harris Williams recently advised HSI on its sale from The Riverside Company to Waud Capital Partners.

Here, Mike Wilkins, a managing director in the firm’s Technology, Media and Telecom (TMT) Group, and Andy Leed, a director in the TMT Group, share insights on what made HSI an exceptional investment opportunity, as well as their advice for other buyers interested in the space.

What makes this an attractive sector?

Wilkins: “The $35 billion-plus global EHS compliance and training market continues to expand as organizations of all sizes increasingly rely on outsourced providers to make their workplaces safer and more compliant, avoiding costly penalties for non-compliance. In the U.S. alone, the estimated cost of workplace injuries exceeds $150 billion annually.1 The Occupational Safety and Health Administration (OSHA), one of many influential regulatory bodies, issued over 60,000 violations for non-compliance last year.2

“In addition, an aging workforce and the growing occurrence of out-of-hospital emergency medical incidents, such as cardiac arrest, are placing added pressure on companies to invest in cardiopulmonary resuscitation (CPR), first-aid and automated external defibrillator (AED) training for their employees. These macro factors are compelling companies to increase spending on safety training and compliance, which establishes a strong growth outlook for the sector.” 

Leed: “Companies of all sizes are investing in professional education and training to optimize workforce productivity and comply with tightening federal oversight. Technology-enabled providers like HSI are developing a diverse base of B2B customers, which generate recurring subscription revenue streams that investors find very attractive. The sector is also highly fragmented, so quality platforms like HSI have exceptional runway to build market share, extend solution capabilities, and enhance content offerings through M&A.”

What made HSI particularly appealing to buyers?

Leed: “The scarcity factor played a big role here. In a market comprised primarily of point solutions, HSI is one of the few platforms in the U.S. that provides a comprehensive, fully integrated product that helps companies manage training and compliance. In addition, high-quality proprietary content is critical for maintaining strong customer retention, and HSI’s online workplace safety training courses and CPR, first-aid and AED courses are widely regarded as among the best in the sector.”

Wilkins: “HSI can do it all. They have one of the deepest workplace safety training course libraries in the space, which is delivered to customers online through the company’s Pillar technology platform. This same platform also allows customers to manage their chemical inventories, ensuring compliance with OSHA’s HazCom requirements, and track all training progress, course completion, compliance documentation and reporting under a single log-in. HSI can also provide CPR, first-aid and AED training to ensure employees are prepared for an emergency incident. Corporate customers are seeking a vendor that can provide a single outsourced EHS compliance and training solution, and HSI’s integrated capabilities give the company a unique advantage in the market.”

Leed: “HSI’s digital workplace safety training courses are also punchy, interactive and overall more enjoyable for employees. By delivering a product that strengthens learner engagement, companies can be confident that their employees will effectively learn and retain critical safety information. HSI’s high-quality content is what keeps customers coming back year after year.”

What advice do you have for other buyers interested in the space?

Wilkins: “Growth within EHS compliance and training, and more broadly, the professional training sector, has provided an enormous opportunity for investors. When assessing potential investments in the sector, buyers should be careful in situations where customer retention is declining or where there is limited extensibility in the technology platform. In comparison, platforms with highly recurring subscription revenue, a diverse corporate customer base, proprietary content and a proven management team are likely to return the highest values.”

Published September 2019

1. U.S. Bureau of Labor Statistics

2. Occupational Safety and Health Administration