Inflexion scouts ‘under-penetrated’ North America for Axiom GRC add-ons

There are no ‘one-stop-shop’ providers of business risk and compliance software and tech-enabled services in North America, says Axiom GRC CEO Alex Dacre.

Inflexion portfolio company Axiom GRC, a provider of software and tech-enabled services for risk management and compliance, has put North America at the top of its acquisition list, Isabelle Pagnotta, partner and head of business services at Inflexion, and Alex Dacre, CEO of Axiom GRC, told PE Hub.

Axiom GRC counts global enterprises and SMEs among its 40,000 customers. But Inflexion, which carved Axiom GRC out from London-based compliance software and services provider Marlowe for £430 million ($576 million; €511 million) last year, believes Axiom GRC can grow its international revenue share of 15 percent.

“We want to make the business more international,” said Pagnotta. “We’ve been actively looking at making acquisitions outside the UK, in North America, but also Australasia. We believe that the product can be sold in other geographies as well.”

Isabelle Pagnotta, Inflexion
Isabelle Pagnotta, Inflexion

Recent US deals in management and compliance tech involving private equity include Lateral Investment Management portfolio company Morae acquiring Gimmal, a Houston-based governance software platform, in May and GI Partners and TA Associates making a majority investment in Egnyte, a Silicon Valley-based provider of secure content collaboration and governance software, in February.

In Australia, PSG invested $280 million in Protecht Group, a risk management software provider based in Sydney, in March.

Axiom GRC’s UK base positions it well for expansion into new geographies, said Dacre, particularly in North America, which makes up most of its international revenue.

“The UK is a very well-regulated market and tends to lead the way in terms of health and safety regulations and areas like that,” he said. “North America is attractively under-penetrated and is our top priority market. There isn’t anyone out there that provides the one-stop-shop solution that we do in the UK. We’d like to find a platform or a couple of businesses to acquire and build into an integrated GRC platform.”

The North American push is also timely for London-headquartered Inflexion, which earlier this year hired Ben Meyer from Hg as partner and head of North America to lead a new office in New York.

Other M&A will focus on deepening the company’s presence in existing markets and growing in new sectors, such as a recent move into cybersecurity.

“We’re building a fully integrated GRC platform, a one-stop shop for compliance,” said Dacre. “One of the primary motivations behind doing that is the potential to cross-sell products to the same buyer. We think we’ve got about £100 million of white space just across our existing customer base.”

Compounding

Axiom GRC’s carve-out from Marlowe comprised several business lines: WorkNest, Vinciworks, William Martin, Elogbooks, Barbour, IMSM and Corestream. That speaks to the business’ pre-Inflexion growth as “primarily through acquisitions to compound its organic growth,” said Dacre.

Alex Dacre, Axiom GRC
Alex Dacre, Axiom GRC

Since Inflexion’s acquisition, Axiom GRC has completed three acquisitions: two in cybersecurity and one in HR compliance. They have together added about £7m of EBITDA. The most recent was Wirehouse Employer Services, a provider of retained HR, employment law, and health and safety consulting and advice services to SMEs based in Warrington in the UK.

The growth is also evident in revenue figures. In Marlow’s financial year to March 31, 2023, the GRC unit contributed revenue of £85.8 million and adjusted EBITDA of £31.4 million, giving the deal a multiple of 16.2x proforma adjusted cash EBITDA.

But Axiom GRC’s revenues are now around £150 million, with a 30 percent EBITDA margin. Forty percent of revenues are from SaaS, with the rest tech-enabled services, and 80 percent are recurring. The company has 1,100 employees based primarily in the UK, and also the US and Israel.

Dacre sees plenty of headroom for more growth, putting the TAM of the sector at around $20 billion and growing quickly.

Regulations are getting more complex and the enforcement burden is rising,” he said. “Areas like health and safety, employment law and cybersecurity are the areas that all businesses internationally have to comply with. They’re really non-cyclical, non-discretionary and becoming more relevant and more important as risks in these areas become heightened.”

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