Financial institutions of all sizes often require external compliance advice and support. The compliance advisory market is significant and ranges from the Big Four consulting practices through to freelance contractors. The boutique end of the compliance advisory market typically serves smaller to mid-sized clients. It is specialised, fragmented, growing, and continues to attract PE attention.  

Keeping up with compliance  

New entrant and mid-sized financial institutions can struggle to manage regulatory compliance with available in-house resources. They often look externally to supplement their inhouse compliance teams due to a lack of capacity, a lack of expertise, cost, and general concerns about the risk of regulatory enforcement down the line.  
 
The relationship with a compliance consultancy frequently starts with support on the FCA authorisation process and evolves into long-term advisory support either through retainer agreements or bespoke ad-hoc projects. This is an attractive business model for investors with a sizable portion of recurring revenue and a transparent revenue base. 

Trusted advisors 

Compliance advisory firms provide expertise, efficiency, and usually possess strong relationships with regulators. Their clients trust them to help meet rigorous regulator expectations. Once established, these client relationships are sticky and offer opportunities to sell on further services. 

A core part of the organic growth strategy is growing the client book through referral networks. Referrals come from adjacent professional services providers who also serve small to mid-sized financial institutions (e.g. lawyers, accountants).  

Typical service lines of compliance advisory firms include: 

• FCA authorisation support 
• Compliance advisory (via retainers or bespoke project work) 
• Outsourced compliance support (e.g. audits, file reviews, reporting) 
• Regulatory M&A due diligence 
• Compliance training 
• Compliance staffing solutions 
• Compliance software products 

What investors are asking 

UK financial services compliance advisory services is a highly fragmented market. The Association of Professional Compliance Consultants (APCC) have over 150 members ranging from generalists to niche specialists operating in a specific regulatory area or sector. We have seen potential platform assets coming to the market in the last two years and expect to see more in 2024.  

A challenge for investors is how to segment the market meaningfully. There are many ways to divide up the market and it is difficult to benchmark a consultancy’s capabilities against its nearest competitors. In response we have created a framework to help investors and management teams segment this complex market and pinpoint where they can create value. 

Here are some common questions we have helped PE and management teams to answer: 

• What is the size of the addressable market opportunity given narrow specialisms across FS verticals, regulatory areas, and service lines? 
• What are forthcoming regulations likely to be, and how can a provider best position themselves to take advantage? 
• What truly differentiates providers from each other? How can a provider protect against losing its own clients to its close competitors? 
• What is the end-to-end client lifecycle? At what stage is the provider at risk of being replaced with the client’s in-house compliance function? What are the implications of this on the business plan?   
• How does the referral network actually work? How successful is it in generating new business? How can it be further developed to win a greater share of referrals? 
• What cross-sell/up-sell opportunities exist with the current client base?
• Is buy-and-build a viable strategy in the market, and if so, what is the optimal strategy? How do M&A targets fit into an accelerated (inorganic) business plan? 
• How is technology being used internally to improve margins? 

Please get in touch with a member of the team if you would like to discuss opportunities in the FS compliance advisory market. 

Solomon Ishack

[email protected]
+44 7943 036 633

Email Solomon

We’re proud to announce Armstrong has been awarded the Commercial Due Diligence Provider of the Year at the Real Deals Private Equity Awards 2024.

In the last year, Armstrong navigated a complex market helping management teams and investors to evaluate performance and identify opportunities through our rigorous commercial due diligence and strategic advice. 

Our work is based on our understanding of each company and its market, its value proposition and differentiators, and the commercial opportunity available to it. We help our clients to assess the likely achievability of business plans given the macro backdrop (including inflation and energy costs), the difficulty in hiring and retaining talent, and the competitive dynamics of the markets they operate in. Meanwhile our sector experts continue to support teams with their investment theses and deal triage.  

This award recognises the hard work of our talented team which has given our clients the confidence to invest, innovate and grow in challenging markets. If you would like to find out more about who we are and what we do, please get in touch.   

Peter Cookson, Managing Partner

[email protected]
+44 7871 425 467

Email Peter

The built environment is often equated with construction. It is so much more. Smart buildings and technology are transforming our environment, and their adoption is driven by regulation and climate change. There are so many components that go into smart buildings, and these continue to attract mid-market investor attention.

One example is installing a lift in a smart building: you’ll need engineers for the installation work; consultants to advise on how many lifts, footfall, their load and capacity; software to run and monitor the lifts; specialists on energy consumption; and facilities management to monitor and maintain them. A question for those providers is how deep do they specialise and what services can be joined up to offer a comprehensive solution to their customers?

A large underlying market…

In recent years, assets operating in the built environment have been out of favour because of the preconception that performance is linked to construction cycles. This does not take into consideration that UK infrastructure is ageing and there’s a huge amount of refurbishment going on. What better time to convert these buildings into smarter, greener buildings? And there’s a large installed base. Even if landlords are not planning to do anything smart with a building; buildings need to be maintained, monitored, and meet regulations.

… connected to our infrastructure

It is also important to consider how buildings are integrated into their surrounding environment and technology can support more efficient and high-quality service connectivity. This could be from the water pipes to the need to install EV charging stations. We see opportunities for companies that can help landlords monitor and manage the health of their assets from the outside in.

Here are three areas where mid-market in PE is successfully creating value in smart buildings:

Geospatial: There has been a significant increase in uptake of geospatial technology in the last six years. It is now considered a critical element in projects across sectors and is used at scale in areas ranging from marketing of real estate to EHS (Environmental, Health & Safety). Adoption and opportunity vary by sector with significant potential for growth in the slower adoption sectors like construction and engineering.  Read our recent article about what is driving growth here.

TICC: Preventative maintenance and condition monitoring continues to attract investors to TICC. There are lots of small TICC specialists, read our article here on how to find the value in them.

Facilities Management: There has been recent activity in the FM sector and investors will need to understand how their assets fit into the broader build environment trends. Successful companies will need to take the lead in making buildings greener and more efficient. Read our article on the opportunities (and tough decisions) facing facilities management providers here.

Please get in touch with a member of the team if you would like to discuss opportunities in industrials and the built environment. 

Brandon Matthews

[email protected]
+44 7771 401 723

Email Solomon

Armstrong is delighted to have provided commercial due diligence (CDD) in support of Zanders’ acquisition of RiskQuest.

Zanders is a global independent treasury and risk consulting firm with 30 years of experience in providing innovative solutions to multinational corporations, financial institutions, public sector entities, and NGOs (Non-Governmental Organisations). The company has grown strongly to become a leading global consulting firm with 450 employees across Europe, the Middle East, the US, and Asia.

Based in Amsterdam and founded in 2008, RiskQuest specialises in building state-of-the art models for managing financial risk, developing sustainable strategies, and preventing financial economic crime. The business has an impressive customer base and services all major Dutch financial institutions, including the Dutch Central Bank. 

This strategic acquisition is set to further strengthen Zanders’ presence in the European market and reflect a shared commitment to deliver excellence, paving the way for strengthened services and increased market influence.

Armstrong interviewed a range of RiskQuest’s clients to help develop key recommendations to maximise the business’s potential, and enhance the proposition of the combined group.

Sjoerd van Zoelen, Chief of Staff at Zanders said: “The Commercial DD work that Armstong has provided was very helpful. With their report it was easy to understand the relationship that RiskQuest has with their clients. Furthermore, the report clearly shows any business opportunities in different areas of expertise.”

Jack Hibbs, Engagement Manager at Armstrong said: “We really enjoyed working with the Zanders and RiskQuest teams and are thrilled to have helped with the transaction. We are looking forward to seeing the success of the group going forwards.”

If you are interested in talking to Armstrong about opportunities in Financial Services, please contact:

Jack Hibbs

[email protected]
+44 7883 296 346

Email Jack

Solomon Ishack

[email protected]
+44 7943 036 633

Email Solomon

Simon Hemsley

shemsley@armstrong-ts.com
+44 7957 340 534

Email Simon

Armstrong is pleased to have provided sell-side Commercial Due Diligence support to fire protection specialist Checkmate Fire (Checkmate) on its sale to IK Partners.

Founded in 1989 with headquarters in Elland, Checkmate is the UK’s largest passive fire protection specialist providing a comprehensive range of fire protection services to businesses across the healthcare, education, government, social housing, and commercial sectors.

Checkmate operates across the UK and has over 200 employees. The Company is responsible for maintaining passive fire systems in around 2,000 buildings to ensure compliance with increasingly stringent regulations, carrying out over 30,000 fire door remediations or replacements per year. 

The acquisition will allow Checkmate to further develop its passive fire offering and continue to invest in its people and technology whilst executing a targeted M&A strategy.

Armstrong provided full scope vendor CDD which included in-depth interviews with market experts, a detailed assessment of Checkmate’s passive fire safety market, how its competitive environment is evolving, and in-depth interviews with customers. We validated Checkmate’s growth plan, which presents exciting opportunities across its core end-sectors.

Please get in touch to discuss opportunities in the Industrial and Built Environment sectors.

Matt McNally

[email protected]
+44 7894 736 523

Email Jack

Brandon Matthews

[email protected]m
+44 7771 401 723

Email Brandon

Armstrong is delighted to have provided sell-side commercial due diligence (CDD) to support 15below, the travel industry’s leading provider of automated passenger communications software, on its investment from private equity firm LDC.

Brighton-based 15below was established in 2000 and has become a market leader in hyper-personalised, automated passenger communications. Its platform supports more than 60 of the world’s best known airlines, rail operators, and travel management companies, offering real-time operational updates including booking confirmations, boarding passes, and disruption alerts to passengers.

Armstrong’s work included in-depth interviews with 15below’s clients and partners, detailed analysis of the market and competitive environment, and an assessment of potential adjacent opportunities. Armstrong’s commercial strategy work also evaluated the key growth drivers in the business plan to validate the investment hypotheses.

With plans of accelerated growth, the partnership forms part of a strategic move to enhance 15below’s proprietary software and expand its client services, with ambitions to deliver an even greater number of innovative solutions that meet the evolving needs of global travel companies and their customers.

Nicholas Key, CEO at 15below said: “The Armstrong team was great to work with. They quickly understood our business and the complex industry dynamics, and were responsive and helpful throughout the process. The report produced for us has been invaluable for the business up to this point, and the insights gained will continue to have an impact on our decisions going forwards.”

Jack Hibbs, Engagement Manager at Armstrong said: “15below is a high-quality business with an impressive management team and excellent opportunity for growth; taking on investment will help the business continue its trajectory. We really enjoyed working with the 15below and Clearwater teams, and very much look forward to seeing the success of the business going forward.”

If you are interested in talking to Armstrong about opportunities in the Tech or Travel sectors, please contact:

Mike Callow

mcallow@armstrong-ts.com
+44 7894 594 500

Email Jack

Jack Hibbs

jhibbs@armstrong-ts.com
+44 7883 296 346

Email Jack

Federico Romanelli

fromanelli@armstrong-ts.com
+44 7908 906 907

Email Federico

Geospatial technology, technology that collects and / or processes data associated with location, is continuing to attract mid-market investor attention with assets coming onto the market in 2024.  

There has been a significant increase in uptake of geospatial technology in the last six years. It is now considered a critical element in projects across sectors and is used at scale in areas ranging from marketing of real estate to EHS (Environmental, Health & Safety). Adoption and opportunity vary by sector with significant potential for growth in the slower adoption sectors like construction and engineering.  

What is driving the growth? 

Infrastructure: The UK government plans for significant infrastructure investment in the long-term will drive demand for geospatial information. Government often do not have in-house resource or expertise to implement complex infrastructure projects and will rely on specialists and consultants to advise and implement projects.  

Technology: Increased Digital Experience (DX) activity has driven adoption of geospatial technology across many sectors. Demand will continue to increase as ROI and efficiencies are more widely understood across the project lifecycle. 

Environmental and resources management: Key stakeholders have an increased focus on environmental impacts at every stage of a project lifecycle. Buildings are being designed and reconfigured to be more sustainable, driving the usage of digital twin and geospatial data. 

Construction: The construction market suffered during COVID but is entering an expansion phase in the next two to three years. This will lead to growth in the use of geospatial data which is essential at every stage of a construction project lifecycle. Read our recent article – Opportunities for investors to help Britain build better homes here.

Adoption: As geospatial technology advances, the adoption curve shifts up, creating long-term growth potential including increasing the types of usage for early adopters. 

What investors are asking 

It is worth noting that while the application of geospatial tech continues to expand, it is primarily used in infrastructure and construction projects. While the macro-construction environment remains gloomy, the relatively low penetration of geospatial services means a small increase in demand quickly translates to growth. Additionally, we’re seeing usage expand beyond construction and industrial projects into service led property management and environmental services. It is important to get a robust understanding of the market and opportunities for growth.  

Here are some questions we’ve helped PE and management teams answer recently: 

• Which services offer the most attractive recurring revenue opportunities? 
• Which segment of the value chain is most attractive to operate in? 
• What are the competitive advantages of operating as a specialist geospatial service provider versus a large generalist? 
• How can we overcome the talent shortages in the industry? 
• What does the M&A opportunity landscape look like in the sector?  

Get in touch with a member of the team about opportunities in the Built Environment sector.  

Brandon Matthews

[email protected]
+44 7771 401 723

Email Solomon

Armstrong is pleased to have provided Voice of the Customer Due Diligence to FPE backed business and digital solutions leader Codestone Group (Codestone), in support of its acquisition of Cloud Business Limited (Cloud Business), an award-winning digital transformation and IT-managed services consultancy.

Basingstoke based Cloud Business, operates an end-to-end cloud consultancy team who have delivered hundreds of successful Microsoft transformational projects from Azure, Modern Workplace, and Cybersecurity across 15 sectors in the UK and worldwide. Their services encompass assessment, strategy design, integration, deployment, and post-go-live managed support services.

The acquisition aims to further enhance Codestone’s offering of IT consulting and transformational services to new and existing clients through a dedicated team comprising hundreds of skilled experts.

If you are interested in talking to Armstrong about opportunities in the Tech sector, please contact: 

Ifan Dafydd

[email protected]
+44 7792 158 738

Email Jack

Armstrong is delighted to have provided commercial due diligence (CDD) to NorthEdge Capital (NorthEdge) in support of its investment in Contollo Group (Contollo), a newly formed built environment consultancy.

Contollo specialises in consultancy services across a range of sectors, supporting clients with their regulatory and sustainability targets; NorthEdge’s investment will allow Contollo to undertake a UK-focused buy and build strategy. Upon completion, Contollo secured its first acquisition of Abacus, a Manchester-based cost management consultancy.

Armstrong provided focused CDD which included in-depth interviews with market experts, an assessment of the wider construction market and a detailed review of the cost management and mechanical & electrical (M&E) consulting segments, alongside analysis of the competitive landscape and a review of buy-and-build strategies in the sector.

Liam May, Director at NorthEdge said: “It was great to work with Armstrong; the team’s excellent work validated our investment thesis and the CDD report was high quality. Solomon, Jack and Rupert also provided valuable insight into M&A in the sector to inform and develop our growth strategy.”

Jack Hibbs, Engagement Manager at Armstrong said: “We really enjoyed working with Contollo and NorthEdge, and are pleased to have assisted on this transaction. Contollo and Abacus have impressive management teams, and market conditions mean this is an exciting opportunity for growth. We very much look forward to seeing the success of the business going forward.”

If you are interested in talking to Armstrong about opportunities in the professional services sector, please contact: 

Soloman Ishack

sishack@armstrong-ts.com
+44 7943 036 633

Email Solomon

Jack Hibbs

[email protected]
+44 7883 296 346

Email Jack

Rupert Cookson

rcookson@armstrong-ts.com
+44 7983 110 150

Email Rupert