In case you haven’t noticed, software businesses operating in GRC, or governance, risk & compliance, have continued to see heightened interest from the PE community and a steady pace of consolidation. Add healthcare to the mix, you’ve got a winning formula.
Back on the market: Clearlake Capital Group is exploring strategic alternatives for Symplr, a healthcare-specific GRC software company that has scaled immensely under the Santa Monica firm’s backing, according to people familiar with the process.
Symplr is projecting $190 million in 2021 EBITDA, sources said, with expectations a transaction will command an EBITDA multiple well into the 20x range, or north of $4 billion. It was less than three years ago that Clearlake, in an approximately $550 million deal, took a majority stake in the business, bringing in SkyKnight Capital as a minority investor.
Whether Clearlake ultimately opts for a partial or complete exit is TBD. Nonetheless, if the numbers are any indication, Symplr looks like a homerun investment for the firm. M&A has been a big part of the playbook, with Symplr’s recent deal for HealthSource HR from Francisco Partners — through which it bulked up in talent management software — representing the seventh add-on since its current backers invested. Read more about Symplr on PE Hub.
Notably, Symplr isn’t Clearlake’s only wager in GRC.
Diligent – backed by Clearlake, Insight Partners and Blackstone Group – became the country’s largest SaaS GRC provider in February, when it bought Galvanize to reach a combined $7 billion valuation, my colleague Milana Vinn wrote. Diligent bought Galvanize for $1 billion, Milana wrote, providing an exit for minority investor Norwest Venture Partners and majority owner Harald Will, executive chairman.
In other activity, Clearlake in March invested in RSA Security, a provider of cybersecurity software and GRC management software solutions to enterprises. Clearlake became an equal partner with Symphony Technology Group, while Ontario Teachers’ Pension Plan Board stayed on as a “significant” minority shareholder.
If we’re talking healthcare GRC … other leading companies to watch include RLDatix, which is owned by Five Arrows and TA Associates. RLDatix has also been an active consolidator, most recently adding Ecteon, a provider of contract management solutions for healthcare, insurance, life sciences and other industries.
There has also been speculation around Global Healthcare Exchange, or GHX, and whether it will eventually make any strategic moves beyond healthcare strategic sourcing, which could include entering GRC. Remember, Warburg Pincus just struck a minority investment into Temasek’s GHX that sources told PE Hub was valued at around $500 million.
Regardless, everyone seems to be taking a bit of a different approach to what a cohesive GRC portfolio looks like or doesn’t look. What’s your two cents, and are there other brewing deals in the sector we should know about?
Write to me at email@example.com with any thoughts or tips on GRC or anything else going on in private equity. Have a great weekend!