Things are getting very interesting if you are a consumer reporting agency (CRA), a user of products, an end user of a CRA, or even watching from afar as a human resources professional.  In the past 18 months there have been no fewer than 10 mergers and acquisitions and many new entrants into the industry.  This is both good and bad for the industry overall, but it continues to thrive.  In my 20 plus years in this industry this is the first time I have seen so much industry amalgamation and such a push to completely disrupt a process that has worked well for so many years.

This isn’t the early 2000s when ChoicePoint and First Advantage were buying anyone and everyone they could to dominate the market-share.  Firms now are buying companies for their technology, innovation, and talent.  The desire for market-share has not changed, but simply having a good client base isn’t as desirable to acquirers as it once was.  There is a lot of private equity money floating around now and a ton of interest in creating new names to enter the “top 5.”  Having said all that, now you have disruptors like Checkr, secUR, GoodHire and onfido that are really shaking things up.  For the first time in a long time new products are being created and smart people are using technology where we once simply put people.  Time will tell what happens with these “start-up firms” but Checkr seems to be really making waves.  Recently CheckR raised $100 million in series C funding led by T. Rowe Price.  It is widely speculated that they have over $100 million in revenue a few short years after starting the company.  It is my understanding that they are still very top heavy with flagship clients like Uber and Lyft, but with this cash infusion it will likely change soon. Sterling Talent Solutions continues to invest heavily in technology and research and development, they are a force to be reckoned with when it comes to innovation.  Backed by Goldman Sachs, they are clearly the most financially strong of the CRAs with big plans for growth, backed by a great team and their founder Billy Greenblatt stepping back in as CEO.  Look for big things out of Sterling in the coming years.  Billy is very good at what he does and one of the sharpest business men I have ever met.  Everyone likes to bash the largest in the industry, but I can assure you that they are very good at what they do!

The HireRight and GIS merger is also very interesting to me.  This is a lot less of a “merger” and more of HireRight absorbing GIS at the direction of their private equity firm, General Atlantic.  HireRight has been looking to sell for a long time and I see this as a great play for General Atlantic.  Time will tell how this plays out, but I will be watching this one closely and writing about it more as things come to light.

The mid-market companies continue to thrive.  Look for exciting things out of InfoMart in the coming months.  Other firms such as Accurate Background, PreCheck, EBI, Vertical Screen and others will continue to grow nicely, but if I look into my crystal ball a few of these may consolidate and merge in the coming year.  More on this in a later blog!

So much has happened in the past 20 years in this industry. Much of it is very exciting, but a lot of it is simply history repeating itself, especially from a macro business sense.  This industry is unique in what we do, but in the end, it’s still a business.  All of the trends, M&A, investments, etc. are very standard in any industry but very exciting to watch for background screening geeks like myself.

That’s it for now.  I plan on drilling down on a lot of this in later posts.  I continue to have my ear to the ground as there are a LOT of rumors floating around.  As I see things come to fruition, rest assured I will be posting about them.  I hope you enjoy my posts half as much as I enjoy writing them.  Look for more in this series in the coming weeks.  Looking forward to seeing all of my NAPBS friends at SHRM next week in Chicago.

In the meantime, if you are looking for an industry consultant, check out my services here and hit me up.

Talk to you soon.