Why Acquire Testing, Inspection, Certification, Compliance Businesses

In 2026, Testing, Inspection, Certification and Compliance remains one of the more attractive areas of business services M&A because it combines large addressable markets, resilient demand and genuine strategic relevance.

TICC services are often global and necessary, supported by regulation, safety, quality, trade, and operational assurance requirements. Customers cannot easily reduce spending in this area because laws, accreditation standards, contracts, or internal risk policies often mandate TICC spending to achieve a licence to trade. This keeps many investors focused on the sector, as it often helps isolate TICC markets from economic cycles. This resilience was evidenced in TDR Capital’s investment case for Applus, which cited both low cyclicality and sustained growth. Beyond this, TICC players have reported strong organic growth even against 2026's macroeconomic backdrop of tariff uncertainty, higher-for-longer interest rates and geopolitical tension, the sector continues to be regarded as regulation-driven, cross-industry and structurally defensive.

For example, Bureau Veritas reported 6.5% organic growth in FY25, and UL Solutions reported 6.4% in the same year. ALS Limited recorded an even higher 8.4% organic growth as of fiscal year-end in March 2026, which was included in its overall reported revenue growth of 10.7% to A$3.32bn.

Why a TICC asset can be a good investment

A strong standalone TICC business is attractive because it relates to customers’ non-discretionary spending. These companies deliver essential conformity assessment services, including product safety, site inspection, auditing, supply chain verification, and other regulatory or best-practice requirements. What makes these essential services even more attractive is that they often support ongoing service delivery, offering greater opportunities to develop recurring revenue streams. Investors increasingly prize this recurring quality as certification and calibration businesses in particular are seen as resilient and largely insulated from economic downturns, because their fees recur predictably year after year.

Top TICC targets are differentiated through accreditations, technical expertise, specialist equipment & facilities, customer relationships, and regulatory credibility. These high barriers to entry support defensibility, customer retention, and recurring revenues. This is especially true in niche specialisms. When a target has scarce technical expertise, buyers often prefer acquisition over internal development. Organic growth can be slow, costly, and uncertain, particularly when credibility relies on a proven track record, accredited personnel, or establishing trust. As a result, focused specialists attract more interest and higher valuations.

Attractive TICC assets now often include a mix of software, advisory services, or ongoing monitoring. In some cases, offerings also include specialist engineering support, data management, and the reduction of risks that TICC services unveiled to clients. This is important because the strongest M&A cases are based on embedded service models rather than one-off tests. These models enhance revenue visibility, increase customer retention, and create cross-selling opportunities, enabling providers to expand per-customer revenue by offering additional services. For example, a customer may begin with fire safety inspections. Over time, the same provider can win spend with the same customer on fire inspections, water hygiene, health & safety consultancy, electrical inspections, asbestos compliance, as well as remedial advice, compliance management software, monitoring devices, training, etc.

Technology-led delivery and integrated client solutions are increasingly important for valuation. They improve efficiency, broaden service offerings, and make providers more difficult to displace. Highly focused specialists are also valuable when they offer platforms access to technical capabilities, accreditations, or customer relationships that are otherwise hard to obtain.

Why platform-building is even more powerful

While a single good asset can be attractive, a scalable TICC platform can be even more powerful. The sector remains fragmented across services, industries and geographies, with many local specialists operating alongside a smaller group of international players, creating a clear buy-and-build opportunity and ample "multiple arbitrage" opportunities. This is because a large, diversified TICC platform typically commands a higher multiple than the small, single-market targets it acquires, so bolting a business bought at 7x EBITDA onto a group valued at 12x instantly creates value. Independent estimates put the outsourced TICC market at over €145bn of a total €200-300bn, with the top 20 players accounting for only around 35% of it. This leaves a long tail of independents that sustains this buy-and-build opportunity.

There are already several clear examples:
•    Inflexion launched Celnor in 2023 with the stated aim of consolidating TICC across four pillars, and the platform completed 16 acquisitions in its first 12 months.
•    Oakley-backed Phenna had already developed into a multinational TICC group spanning infrastructure, built environment, niche industrial, pharmaceutical and certification and compliance services. Under Inflexion’s previous minority ownership, Phenna completed 23 acquisitions before Inflexion sold its stake to Oakley Capital at a valuation of over £1 billion, generating a 5.5x return on investment over an 18-month partnership. Oakley’s 2025 interim report then noted that Phenna completed 11 acquisitions in the first half of 2025 at an average EV/EBITDA multiple of roughly 7x.
•    Astorg-backed Normec provides another global example, having completed 85+ acquisitions and, in August 2025, entering the U.S. through three specialist deals that more than doubled its addressable market.
•    Socotec shows the same model among strategic trade buyers. In the UK, roughly two-thirds of its growth has come through acquisition, with the purchases of Shore and Quadrant making SOCOTEC UK the number-one building control provider, and the 2024 additions of IETG and 40SEVEN (£13m combined revenue, 160 staff) extending its presence within remote environmental and water monitoring, and its recent entrance into the UK Power Grid market through acquiring LSTC.
•    UL Solutions shows that large public strategics compete for the same assets, using bolt-on deals such as TesTneT (hydrogen storage testing) and BatterieIngenieure (battery testing) to add niche capabilities, before agreeing in 2026 to acquire Eurofins' electrical and electronics testing business for around €575m at roughly 14.5x EBITDA to expand across EMEA and Asia-Pacific.

Moreover, the focus is not solely on consolidation and density, as investors also acquire niche technical capabilities, enter adjacent verticals such as environmental services, digital inspection, remote monitoring, or ESG assurance, and expand geographic coverage to reduce dependence on a single market. As such, the platform model suits TICC well, as market fragmentation more easily supports acquisitive growth from a defensible position.

Why it has a future worth investing in

The near-term outlook is positive, with TICC demand supported by traditional regulation and new assurance requirements. 2026 trading updates show that major players continue to find growth opportunities. SGS, for example, has emphasised bolt-on acquisitions, AI-enabled services, and digital trust leadership. This indicates not only that the current TICC position is defended and resilient, but also that there are tangible options for further growth. Sector deal activity underlines this momentum as TICC M&A reached a record 344 deals in 2025, up 29% year on year, with a further 102 transactions in just the first four months of 2026.

Digital trust is one of the most visible examples. SGS is already offering end-to-end EU AI Act compliance, testing and certification services, including conformity assessment pathways for high-risk systems. Intertek has launched its AI² assurance proposition to evaluate AI-enabled products, operations and customer-facing systems. More generally, not only is the boom in data centres, AI, and semiconductors creating a TICC submarket that requires new services to build trust in this underexplored field, but existing players are also capitalising on emerging technology to improve service delivery. For example, Bureau Veritas now uses AI and drone inspections to automate anomaly detection and corrosion mapping but still requires an expert to review and certify. 

This demonstrates how the sector evolves as technology expands the need for TICC by broadening the scope of how and what must be tested, verified, and assured. When you combine this with geopolitical climates of increasing, not reducing, regulations and initiatives, the opportunities for TICC are only growing faster. This can include, among many others, the EU AI Act mentioned above, or NIS2 driving cybersecurity-focused TICC, or PFAS regulations & record-level AMP8 budget benefitting water-related TICC services, or the Building Safety Act in the UK creating and increasing TICC services relating to building and fire safety, or CBAM carbon reporting driving carbon audits and emissions verification, or Sustainability Reporting regulations (SRS in the UK and CSRD in the EU) creating demand for non-financial data assurance, ESG assurance, supply chain data checks and climate-risk disclosure support.

Why acquisitions in TICC are premium yet financeable

Much of the sector generates unusually strong free cash flow, which makes funding acquisitions far more achievable. Three characteristics drive this. First, the model is asset-light, as core assets tend to be people, so physical CapEx typically runs in the low single digits as a percentage of revenue, versus 15–25%+ for manufacturing or utilities, and EBITDA is not eroded by heavy capital spending and converts cleanly into cash. Second, working capital demands are minimal, as these are service businesses with no inventory, and certification and audit fees are often invoiced upfront or on a schedule, so growth does not trap cash. Third, relates to the earlier points around demand being largely recurring and non-discretionary, which produces predictable, reliable collections rather than irregular cash flows.

This combination creates strong, predictable free cash flow, meaning the acquired business can service and repay acquisition debt from its own cash generation, reducing reliance on external funding and lowering financing risk. Predictable recurring revenue gives lenders confidence, supporting greater leverage on favourable terms. Because little cash is consumed by CapEx or working capital, more of each year's earnings is available to offset initial acquisition costs or fund the next deal. This means that for buyers leveraging debt to fund acquisitions, such debt can be raised more readily, cheaply, and in larger amounts.

These same qualities directly affect the EBITDA multiple a buyer is willing to pay, as a TICC business converts a high proportion of EBITDA into cash, meaning each unit of EBITDA is worth more than the equivalent in a high CapEx or inventory-heavy business. The recurring, non-discretionary nature of the revenue lowers the perceived risk of future earnings, and lower risk translates into a lower discount rate and, therefore, a higher multiple. Predictable cash flows also support cheaper acquisition debt, allowing financial buyers to meet their return targets even when paying at higher multiples than other sectors. Beyond this, the previously mentioned opportunity to create “multiple arbitrage” also gives buy-and-build acquirers a strong incentive to keep buying and to do so at a higher-than-market multiple for smaller assets. For example, an asset may be valued at 7x its EBITDA, yet a platform acquirer aiming to integrate it into a large group could pay 9x, knowing that, once part of the group, its contribution is valued at 12x. This is a tactic typically seen in acquirers backed by financial sponsors with short ownership cycles, as they know they will realise 12x value within a defined period.

Conclusion
No matter the economic standings, investing in TICC will remain attractive because it sits at the intersection of regulation, trust, and necessary spending. These defensible acquisition targets offer recurring revenue, expertise in areas with otherwise high barriers to entry, and customer cross-selling. The fragmented market they sit in offers players the opportunity to compound these attractive qualities by building platforms across services, sectors, and geographies.

This combination is powerful for M&A. It supports revenue visibility, downside protection, consolidation potential, and multiple value-creation levers. As a result, strong TICC assets can command premium valuations, especially when positioned as scalable platforms or defensible specialist bolt-ons.

For investors, the sector offers a rare combination of defensive earnings with strategic growth, and TICC companies with strong technical capabilities, accreditations, customer relationships, and growth markers are among the most attractive M&A opportunities in business services.