Harris Williams recently advised Veriforce, a leader in integrated supply chain risk management software and solutions, on its acquisition of ComplyWorks, a premier provider of web-based solutions that cover the entire compliance life cycle, from contractor management to workforce management, worksite management and payment.
Here, Erik Szyndlar, managing director, and Brian Titterington, director, both from our Technology, Media & Telecom Group, join Luke Semple, a managing director in our Energy, Power & Infrastructure Group, to explore the buyer appeal of the compliance subsector, the specific drivers behind this acquisition and the most important considerations for other buyers active in the space.
What is appealing to buyers about the industrial workforce compliance subsector?
Titterington: In end markets such as manufacturing, industrial, energy and construction, safety is a huge and growing concern. The costs and potential negative impacts of getting something wrong when you’re working on a pipeline can be significant. Workforce compliance software is an essential building block for managing risk and improving safety in these industrial environments.
Szyndlar: There’s also the contractor dynamic: As employers increasingly use contingent workforces, it becomes even more difficult to keep track of training, certifications, authorizations, hours worked and other important variables. Add in constantly changing national and local regulations and there’s significant complexity to manage.
In many cases, companies manually track all of that data in spreadsheets. Increasingly, these businesses are seeing the benefits of more sophisticated, software-supported approaches, both in terms of risk mitigation and efficiency.
Semple: The best compliance tools allow operators to integrate data from across the business and see which workers are doing which tasks, and verify they are fully credentialed and operating in a compliant manner. That’s an important benefit in any labor-intensive business, and particularly for the large, global energy companies that Veriforce and ComplyWorks serve.
What makes the combination of Veriforce and ComplyWorks especially noteworthy?
Szyndlar: The energy industry focus of both these companies is an exciting aspect of this deal. There’s a very large addressable market that highly values the benefits of third-party risk mitigation solutions and software, and Veriforce will now be in an even better position to lead in that market. ComplyWorks brings deep, embedded relationships with some of the largest companies in the global energy industry, as well as a leading position in the Canadian market.
Titterington: The acquisition of ComplyWorks also allows Veriforce to not only gain great new customers but also provide its existing customers with additional safety and training solutions, as well as access to broader operator and supplier networks. And because ComplyWorks is a Canadian business, it brings deep knowledge of that regulatory environment. Those are the keys to success in this market: up-to-date regulatory awareness and deep customer relationships.
What should potential buyers know about this subsector?
Semple: In terms of the energy market, it’s very large and fragmented, providing significant opportunities for services and software providers to grow their relationships with customers—and some of these customers are still running key process on paper.
Szyndlar: Once a workforce compliance software provider becomes embedded in these companies, all sorts of opportunities arise. Companies like Veriforce and ComplyWorks specialize in solving problems for their customers, which creates a natural pipeline of relevant new products and services. If one company in a given sector is facing a problem, it’s near certain others are as well.
There’s also an opportunity to acquire new products and services, as Veriforce has done in this transaction. Many of the players in the workforce compliance space are small and specialized. Being able to build a platform that can bring a portfolio of offerings to major customers is a powerful advantage. It’s much easier to gain mindshare with the big players when you already have a strong commercial relationship with them.
Published August 2020