VelocityEHS, a Chicago-based environmental, health and safety software provider, continues to seek acquisitions in its seventh year under CVC’s ownership, said new CEO Matt Airhart.

CVC acquired the company in 2017. In 2022, Partners Group took a minority stake in the business.

Asked about an exit timeline, Airhart said while CVC is going on eight years in the platform, Partners Group is only in its second year, and they “typically have a three to five-year hold.”

VelocityEHS has a score of 38 on Mergermarket’s Likely to Exit index. Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a de-SPAC transaction.  A higher score signals a greater likelihood of exiting sooner.

“We have big plans to disrupt the industry. I’m personally in no hurry to exit,” the CEO said. He acknowledged that even with interest rates rising in 2022-2023, EHS and ESG company valuations “have held up pretty well.” There were not many transactions last year in the space, he said, but when the time comes for an exit, VelocityEHS is more likely to seek a sale than an IPO. “It will probably be another strategic buyer or PE to get (us) to the next level. We see substantial growth over the next five to 10 years.”

Airhart was named CEO in September but started in the role in January.  He has a long history with the business, having founded KMI in 2003. KMI was acquired by MSDSonline in 2014. In 2015, the combined entities rebranded as VelocityEHS. He has worked on nearly a dozen software company acquisitions focused on artificial intelligence, ergonomics, industrial hygiene, occupational health, emergency response services, environmental compliance, and contractor management, according to a press release.

“We will continue to be acquisitive whether for market share or targets for best-in-class technology,” Airhart said. The company could look in new as well as existing areas, he said, without being more specific. The company serves almost 20,000 customers in industries heavily weighted toward manufacturing including chemical manufacturing, pharmaceuticals, biotech, food and beverage, and energy. All of these industries pose risks to people or the environments in which they operate, he noted.

Targets can be based in North America and the European Union. He said there is no upper or lower limit as to target size, as long as a company has interesting technology. However, he said typical targets will have scale in their respective product areas.

Most recently, VelocityEHS acquired Toronto-based Contractor Compliance for undisclosed terms. The deal complements the company’s 2021 acquisition of OneLook Solutions, a control of work software provider based in Cork, Ireland. He said VelocityEHS was attracted to the company’s onboarding and qualification tools for contractor management.

Following the deal, VelocityEHS has more than 650 employees, the CEO said. He declined to discuss revenue but said the company is profitable.

The environmental health and safety space has seen heavy PE investment in the past five to 10 years and many large players are private equity backed, he noted.

“We are definitely one of the largest by profitability and among the top three in revenue and employee count,” Airhart said.

The other large EHS and ESG players include Enablon, owned by Wolters Kluwer; Cority, owned by Thoma Bravo, and Fortive [NYSE:FTV] subsidiary Intelex, the CEO said.

VelocityEHS is unique in that it is a unified EHS and ESG platform as well as a provider of contractor management. “We’re pretty advanced compared to others,” he said. He said EHS and ESG are each roughly USD 2bn industries in North America and Europe. In contractor management, a USD 30-40bn market, the company competes with ISN and Avetta, he said.

He estimated the compound annual growth rate for the company’s segments at 15%-20%, with EHS in the 12-14% range while ESG is in the 20% range.

Canaccord Genuity advised Contractor Compliance on the sale to VelocityEHS. Osler was sellside counsel. Fasken was the buyside law firm.