News today from the GRC vendor world: LRN, a leading player in ethics training and consulting, has taken a “significant investment” from private equity firm Leeds Equity Partners.
How much of an investment? LRN and Leeds won’t say. The language of the press release gives the impression that it could be a controlling interest in LRN, but does not specifically say that. Judge for yourself:
LRN Corp. announced today a strategic partnership with and a significant investment from Leeds Equity Partners. This partnership brings together the leading ethics and compliance company and the foremost private equity firm investing exclusively in the knowledge industries in pursuit of a shared objective to help companies elevate behavior to reduce risks and create sustainable competitive advantage.
I did ask LRN (via Twitter) whether or not Leeds purchased a majority stake, and have received no answer so far. The firm does say Dov Seidman, founder and chairman of LRN, will remain in those roles. Then again, why would you feel the need to announce something like that if you still owned a majority of the business?
Ultimately, of course, corporate compliance officers don’t need to care too much about who owns the vendors selling you services, so long as those services actually work. Leeds and LRN say this deal will fund an expansion of what LRN wants to offer its customers — a “transformational move,” Seidman called it in a press release. Again, judge for yourself:
“Backed by Leeds Equity’s expertise and resources, we will grow through even greater investments in technology and further innovations in our products and services, such as mobile delivery, adaptive learning and data analytics — enabling us to better support our client-partners in educating and engaging their employees, assessing workplace conduct, guiding the right kind of principled and profitable behavior, and demonstrating the ROI of effective ethics and compliance initiatives.”
Cut through all the jargon there, and actually this is a validation of corporate compliance overall. Leeds manages $1.7 billion in assets and has been in “the knowledge industries” since its founding in 1993. The firm wouldn’t place a bet like this on LRN or anyone else unless it believed there’s growth to be had.
Indeed, there are parallels between this deal with LRN, and the sale of NAVEX Global back in July to private equity firm BC Partners. In the NAVEX deal, BC Partners took a majority stake in NAVEX and styled the transaction as a “recapitalization” where NAVEX would use the funds for more growth. That’s pretty much what LRN is saying here, too. (Disclosure: I write occasional paid columns for NAVEX on its Ethics & Compliance Matters blog. I don’t do any paid work for LRN, but do try to attend its events when I’m in New York and there’s free food.)
It’s also worth noting that Leeds already owns Simplify Compliance, a training business based out of Tennessee; Exterro, maker of e-discovery software for legal departments; and a bunch of other training or education businesses that vaguely feel like they could have some crossover potential with LRN’s focus on ethics and corporate governance.
One question: does this mean LRN will go on an acquisition spree itself? That’s another point to ponder, especially for all the smaller vendors out there looking to cash out before recession or trade wars or whatever comes along to block the exits.
We shall see. Meanwhile, more investment cash in LRN’s coffers should mean more LRN sales executives calling or emailing you to talk about the wonders of their products and services. Let me know if that comes to pass. [email protected].