In an era marked by the convergence of digital transformation, increasing business complexity, and a proliferation of threats and regulations, GRC Software has emerged as a catalytic force in a fragmented and outdated marketplace.

Governance, Risk, and Compliance (GRC) software is an integrated, holistic approach to manage organization-wide governance, risk management, and compliance with regulations. GRC tools ensure that an organization acts ethically correct and in accordance with its risk appetite, internal policies, and external regulations through the alignment of strategy, processes, technology, and people, with the goal of improving an organization's efficiency and effectiveness.

With the growing complexity of business operations and regulatory requirements, GRC Software has not only become a comprehensive digital solution used by global enterprises but has also permeated across several different sub-sectors through domain and vertical specific GRC applications. Deployed over the cloud, GRC Software offers real-time visibility into risk and compliance data, automates complex processes, and facilitates improved decision-making.

The primary function of GRC Software is to automate much of the work associated with the documentation and reporting of the risk management and compliance activities that are most closely associated with corporate governance and business objectives. GRC has quickly evolved from being managed with pen and paper or excel spreadsheets to AI-powered and integrated platforms which now provide a single pane of glass for managing risk and compliance measures across organizations of all sizes and locations. Key trends driving GRC Software demand include increased frequency of regulations, convergence of GRC and cybersecurity, explosion of data and data risks, growing need of real-time visibility into risk and compliance data, redistribution of risk management, increased business complexity, continued focus on EHS and ESG, and the global adoption of AI and ML for automation, giving rise to predictive analysis.

The global GRC Software market is currently valued at ~$49B (up 15% Y/Y), indicating a growing recognition of its importance in business operations. Despite this, many organizations continue to grapple with manual and siloed GRC activities that result in inefficiencies, inaccuracies, and regulatory noncompliance. Historical incumbents have dominated the market, with GRC being traditionally seen as "back-office" technology. Today, digital transformation and complex regulations have propelled GRC Software into an agile industry, with front-office functions actively participating in risk and compliance decision-making.

This has led to a highly fragmented industry, featuring large/growth players with broad GRC platforms, as well as domain and vertical specific solutions that automate specific GRC applications. The future of GRC lies in cloud-based platforms that deliver rapid and sustained value to all stakeholders by integrating and automating data with AI, while also providing differentiated risk and compliance expertise. GRC will ultimately evolve into a holistic, organization-wide process; siloed approaches or hybrid services will likely not succeed.

GRC M&A deal volume hit an all-time high in '21 with 199 completed deals, a significant ramp from its pre-COVID levels. Activity remained healthy in '22, dipping only slightly despite macroeconomic headwinds slowing other tech deal making. Transactions came roaring back in '23 with an estimated $34B in total value – the most notable of which being Nasdaq's acquisition of Adenza for $10.7B last June. This momentum has continued into '24, with a flurry of notable transactions including EQT's $3B acquisition of Avetta in April, Hg's backing of CUBE in March and subsequent add-on acquisition of Reg-Room in May, and Archer's purchase of Flisk in February. Most recently, though, has been Hg's acquisition of Auditboard, a leader in the GRC space, for $3B last week.

While the paradigm shift in GRC Software is still in its early stages, it has created significant opportunity for growth stage technology companies with disruptive GRC platforms to win market share and will lead to heightened M&A activity as private equity and large strategics invest more heavily in the future of the space. With over 400 companies identified in AGC's GRC Software landscape across Broad / Integrated GRC, Domain Specific, and Sector Specific GRC Vendors, the industry is large, rapidly growing, and multifaceted with vendors touching several different areas of the ecosystem.

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