Carving out opportunity: GRC’s carve-out from Marlowe plc

Relationships and experience are key to successful partnerships, with Inflexion’s track record in compliance businesses and carve-outs helping GRC to thrive as an independent entity.

The Governance, Risk and Compliance division of Marlowe plc (“GRC”) has been providing mission-critical services and software to ensure customers remain compliant with legal and regulatory standards since it was formed as a division of the group in 2019. But in spite of generating impressive growth with group revenues of £500m and EBITDA of £90m, CEO and founder Alex Dacre felt public ownership was holding back GRC’s growth ambitions.

Inflexion knows the compliance space well, having partnered with Alcumus, BES, Phenna, and Celnor to great success in the past. The team were looking for a further investment in this attractive market segment and identified the potential within Marlowe’s GRC division as increasing regulations drive businesses to seek compliance solutions. Inflexion had already established a relationship with Marlowe’s CEO Alex Dacre several years prior, after he had created the GRC division from scratch and appreciated its strong prospects.

When Marlowe began assessing strategic priorities, Inflexion’s relationship with Alex made it well placed to engage directly. This laid the groundwork, and Inflexion’s experience helped build it up by devising angles in line with Alex’s own vision.

"From our first discussions in late 2023, Inflexion demonstrated a deep understanding of our business and moved quickly to support the transaction," the CEO recalls.

Experience brings success

“This was an entirely Inflexion-driven thesis and backed up by our rapport with the CEO, helping us to fully understand the business and its potential,” says Isabelle Pagnotta, Partner and Head of Business Services at Inflexion. The potential is high indeed, with the addressable market worth £5bn in the UK and £40bn globally.

Inflexion presented an offer to Marlowe’s board, and a limited process followed. “Our extensive preparation, strong conviction, and well-established relationship with the company were key,” Isabelle says. And Inflexion’s speed of execution and expertise – being the firm’s third carve-out in 12 months – meant Inflexion secured the opportunity in a £430m transaction earlier this year.

Inflexion’s experience in managing carve-outs and IT and finance functions efficiently to minimise disruption made for a seamless transition with clear timelines. The division's existing structure as a standalone unit and the alignment of priorities between both sides simplified the process.

The collaboration is helping the company to thrive. “We've got a very clear strategy: we want to build this business into the leader in compliance services and software for SMEs alongside delivering brilliant enterprise solutions for larger corporate customers. We have the right market backdrop and the right investor behind us,” Alex enthuses.

Positive progress

Progress is palpable: since the acquisition, an independent GRC has already completed three acquisitions, with two launching a new cyber division. “Management had identified cyber as a promising new area to go into because of industry tailwinds. So shortly after signing, we supported two acquisitions (in the UK and US) in the sector to create a new business line,” Isabelle explains. The third acquisition is a business in the UK to enhance GRC’s position in its employment vertical. This growth means that today, GRC’s business lines address enterprise risk, health and safety, HR compliance, compliance eLearning, ISO certification and now cyber compliance.

GRC is now working through a strong pipeline of further potential acquisitions, both in the UK and internationally, and believes this growth channel will be pivotal in global expansion. GRC’s management team has been strengthened with a build out of the C-suite and a new Chair, identified through Inflexion’s extensive network. The Chair brings proven experience in the tech-enabled compliance space and a track record of buy-and-build strategies, making the leadership team well supported to drive its ambitious plans. The business is also working with Inflexion’s Value Acceleration team to strengthen its data platform to improve client retention, capability and offering.

While acquisitions remain a key strategy, the immediate focus is to build up the platform by integrating the first three acquisitions and improve operational efficiencies through cross-selling and reducing complexity. “We are creating a firmer foundation to move forward from,” Isabelle stresses. The value creation plan also includes plans for launching new software and investment in sales and marketing.

Looking ahead, GRC aims to become a global leader in compliance software and services, and expanding into geographies with compatible regulatory frameworks is a priority. “It's been a highly supportive relationship, with the value acceleration team providing expert help in key areas. Together with the broader stakeholders we are focusing on one objective, and that's how can we grow this business faster and more sustainably,” Alex says.