What are the biggest value drivers in regulatory and compliance?

Regulation and compliance are important and growing themes across virtually all sectors, meaning that businesses that offer support in this space are hugely resilient and generate a lot of investor interest. However, with so many businesses offering solutions, what is it that indicates the real winners in this space? 

Market-making businesses 

Generally speaking, the UK has very mature regulatory frameworks across verticals relative to other jurisdictions, particularly when it comes to health and safety. In part, this is because the UK’s H&S regulation tends to be more employee-friendly (vs. employer-friendly) compared to other countries. In the USA, for example, whilst there is federal legislation that stipulates a ‘duty of care’ for employers in respect of their employees, this is not regularly enforced by federal bodies, and when it is, the fines and punishments are nowhere near their UK equivalents.

While a lack of regulation or enforcement can make some markets harder to penetrate, it also provides an opportunity for UK businesses. UK regulatory standards are well regarded globally, so businesses can create markets by highlighting the relevant need. For example, CPOMS, which provides SaaS safeguarding solutions to over half the schools in England, made headway in the North American market during our investment, despite the limited legislative obligations around pupil safeguarding.   

The future of international regulatory and compliance will likely look more similar to the UK than less, creating significant potential growth opportunities for UK businesses. For example, when the US House of Representatives recently introduced legislation for workplace-violence prevention plans in healthcare and social services, it may have seemed surprising that such a policy wasn’t already in place, but that just highlights the trend towards a more employee friendly regulatory environment, much like the UK’s. Who better to support and drive that trend  than ambitious and experienced UK companies.  


Regulatory and compliance services can be quite fragmented. That can be regional fragmentation – often due to the fact adherence requires some form of physical audit or test – or it may be because smaller niche specialist firms have emerged in response to specific changes in legislation and have gained market share quickly in that way. 

This provides a fantastic consolidation opportunity. Domestic M&A provides a good way to increase geographic reach or add new capabilities quickly, while international M&A can give businesses strong knowledge of a different market and its regulations, as well as a good launch pad into a new customer base. 

Acquiring new capabilities provides a good opportunity for cross selling. For example, when Citation, an advisor on employment law and health and safety regulations, acquired QMS during our investment, it not only increased its scale, but also allowed Citation to provide additional services, through QMS’ ISO accreditation products, to its existing customers. 

Market areas that are trending upwards  

One of the reasons that regulatory and compliance businesses are so resilient is that generally bodies of regulation seem to grow and rarely shrink. Furthermore once regulation is in place it is very unlikely to be rolled back or significantly diluted. Plus, compliance with a lot of regulation is usually a legal requirement, so customers are sticky.

However, it is beneficial for growth if companies are one step ahead of emerging trends. At the moment that might include:

  • Data privacy, with growing concerns around protection for the end user.
  • Supply chain assurance, particularly around ensuring ethical working practice and tracking environmental impact. 
  • Mental health in the workplace is a growing focus, and something that really came to the fore during Covid-19.
  • Climate change is clearly a key focus, as companies increasingly examine their ESG responsibilities, and many need support in developing these policies and making sure they are maintained.  We are increasingly seeing companies striving for B-corp status, for example, and we expect this trend to continue.
  • The work from home market will also be an interesting one to track – will companies be responsible for their employee’s health and safety at home if they are working?

We would expect investor interest to remain strong, particularly if companies can maximise on this wealth of opportunities within regulatory and compliance, and continue to build global market leaders in the years to come. 

If you would like to find out about ECI’s experience in the regulatory and compliance space or find out how we could help your business, please do get in touch with daniel.bailey@ecipartners.com

About the author

Daniel Bailey

"I work in the Investment Team at ECI. So, that means I try to find, meet and invest in exciting growth businesses and then do my best to support the teams at those business to scale into global market leaders."

View Full Profile

About the author

Richard Chapman

"I enjoy leading deals at ECI and have invested in lots of different areas including healthcare, restaurants, business services and tech-enabled services, to name a few. A large part of my role is post-investment, helping companies continue their growth organically and through acquisition, both in the UK and internationally."

View Full Profile

ECI announce close of latest fund

Find out more