MCG – GRC Technology

Business Description

Governance, Risk and Compliance Management Technology Company

Our client, a private fast growth technology firm, code named MCG Co., who is a leader in corporate Governance, Risk and Compliance management (“GRC”) technology, is now seeking a strategic buyer.

The Company:

A unique opportunity has arisen for a strategic investor to purchase MCG Co, a leading provider of governance, risk and compliance (“GRC”) software solutions. In an independent Forrester Research Report on the GRC marketplace, MCG was recognized as being one of only 2 leading vendors to score full points on Q&EHS, the other being SAP. Since formation in 2003, MCG has achieved significant sales growth with sales of US$3.7m in YE Sep 30 2010 (60% increase on YE 2009). MCG enjoys strong gross margins, significant sales growth and recurring revenue from both SaaS and Enterprise models. This strong financial performance is attributable to a number of factors:

• Cutting-edge product recognized as a market leader by industry experts
• Applicability of product to a range of industry segments and regions
• Recurring revenue model
• Diversified client base
• High client retention
• Highly skilled developer base

This platform for growth that MCG has been built over the past five years and going forward, will benefit greatly from the presence of a large, well-respected partner, to enable MCG to gain access to the larger client base and further accelerate growth.

The Technology and Service Solutions:

Cutting-edge products recognized by industry experts:

  • The flagship product is a cutting edge enterprise GRC solution that focuses on automating data collection, management and reporting,
  • Product includes both Cloud and SaaS offering,
  • In November 2010 MCG was recognized as a GRC Market Leader in an independent Forrester Research Report. Only MCG & SAP scored full points on Q&EHS.

Applicability of product to a range of industry segments and regions:

  • Key client sectors include: Financial Services, Mining, Oil & Gas, Facilities Management, Retail and Food & Beverage,
  • Geographies: USA, Canada, UK, Australia, UEA, Belgium, Bahrain, Germany.

Recurring revenue model:

  • MCG receives upfront fees in the initial year with subsequent fees representing circa 30% of the initial fee for the next 4 years.

Diversified client base:

  • MCG has deployed their software and services to over 100 clients,
  • MCG is not dependent on any key client and has consistently recorded client growth since formation.

Highly skilled low cost developer employee base:

  • MCG has established low cost development centers that provide an employee base of the highest quality.

Entry point into the large and rapidly growing GRC marketplace:

  • Gartner and AMR Research both estimate the potential size of the GRC market to be in excess of US$30B per annum,
  • The vendor market is currently highly fragmented and under penetrated providing an incredible opportunity for a leading software solution provider to forge a strategic partnership to rapidly accelerate growth

The Value Proposition:

MCG is a pioneer and a recognized leader for governance, risk and compliance management business process solutions.

  • The flagship product is a cutting edge enterprise management solution that focuses on automating GRC data collection, management and reporting.
  • Self-service portals are available allowing regulators and large organizations to engage with stakeholders, to allow independent self assessments, action tracking or form completion online.
  • It is a web based product that can be offered as a Cloud, SaaS or Enterprise solution.
  • Includes iPad, iPhone, PDA and Tablet interfaces allowing field staff to perform audits and assessments in the field, as well as perform remediation processes and view documentation.
  • The product suite was developed for global use and is multi lingual.
  • The product is a proven flexible and scalable solution to support GRC applications across many key industries globally, thus is perfectly positioned to exploit the rapidly growing demand for GRC solutions.
The Market Outlook:

Despite a stalling of growth following the global financial crisis in 2008, growth in the GRC market is expected to grow strongly over the next 5 years. There are a number of factors that are to contribute to this growth:

  • Continuing evolution of regulatory frameworks: As a result of the global financial crisis, governments have introduced a number of regulatory measures aimed at controlling the activities of the financial services industry as well as others such as the Food Industry,
  • Penetration within the market place is low: Forrester estimates that the penetration into the enterprises and government organizations is only 30% but Forrester believes this will grow to 50% by 2015. This represents a massive opportunity for vendors to increase awareness of their products and increase penetration,
  • Penetration within the current client base is low: Research by Forrester has demonstrated that organizations using a GRC platform have not rolled out the suite of products across all relevant risks and compliance domains.