More investments and acquisitions in GRC capabilities expected

The financial services industry in Europe is a dynamic eco-system, exposed to continuously changing regulatory frameworks. This has led to increased interest by private equity firms in staffing and consulting companies specialised in the mediation of white-collar financial professionals at banks, insurance companies and pension funds.

High demand for GRC professionals

The demand for GRC (Governance, Risk and Compliance) professionals is fuelling this trend. As the financial services industry becomes increasingly regulated, many financial institutions and companies are looking for these professionals to help them meet the latest regulations. GRC professionals help ensure that an organisation’s activities and processes comply with applicable laws and regulations. They are also responsible for developing, implementing and monitoring internal controls to mitigate financial and regulatory risks.

Wave of private equity investments in 2021 and 2022

This increased demand for GRC professionals has led to a wave of private equity investments in companies specialised in the provision of white-collar financial experts. In 2022, for example, private equity firm Parcom acquired the Dutch staffing company Quoratio from Foreman Capital. With around 1,000 professionals, Quoratio is a provider of secondment- and consultancy services for critical administrative processes in five domains: HR Process & Payroll, Healthcare, Finance & Control, Pensions and Social Domain & Benefits.

In 2021, One Two Capital acquired Welten, an integrated, full-service provider to the financial services sector in the Netherlands, supporting its clients and train professionals in fighting fraud and money laundering in Compliance & Risk, as well as in the dynamic field of Business IT. Also in 2021, France-based Optimind acquired Altiad, a financial consulting company specialised in consulting, project management and integration in four main areas: risk & controls, compliance, information systems and data & cybersecurity. This sixth acquisition was preceded by ESOFAC in 2020, R&B Partners, 2J Associés Agora Partners, and EOSA in October 2021, and a strong showing by Optimind in executing its buy and build strategy after having raised EUR 25 million with Ardian in 2019.

Continuing trend

Looking ahead, it is likely that this trend will continue. Private equity firms will continue to seek opportunities to invest in staffing and consulting companies specialised in the mediation of white-collar financial professionals as the demand for scarce GRC professionals is expected to remain high due to ever more changing regulatory environments. Furthermore, these companies will likely seek to expand their services to include more specialised and niche roles, such as those related to digital transformation, cybersecurity, data science, and robotic process automation. And with the sustained appetite from private equity, buy and build efforts are expected to continue.

More investments and acquisitions in the years to come

In conclusion, private equity firms’ interest in European staffing and consulting companies specialised in the mediation of white-collar financial professionals is likely to remain strong in the years to come. The demand for GRC professionals is driving this trend, with private equity firms investing in a range of companies to gain access to this scarce resource. As a result, we can expect to see more investments and acquisitions in this space in the years to come. Based on our recently closed transactions, including the featured transactions of Quoratio, Welten and Optimind, and our ongoing conversations with consolidators and the development of our pipeline, we see increased M&A activity in the sector and expect to bring multiple deals in to a close the coming period. For more information you can reach out to Roel ter Steeg.