How do mergers and acquisitions work in Testing, Inspection, and Certification (TIC)?

The text of the video.

The script the narration was recorded from, set out under the video's five parts.

When a testing lab, an inspection firm or a certification body changes hands, what is the buyer really paying for? In our judgement, it is mostly what a competitor cannot copy quickly. That means the accredited scope, the people it depends on, customers who stay, and results that stand up to checks. This explainer shows how mergers and acquisitions, or M&A, work in Testing, Inspection, and Certification, or TIC.

It draws on the Deep Dive Reports M&A series: one report for buyers and one for sellers. Deal statuses are as at 11 October 2026, the research cut-off. The evidence comes from six large TIC groups' own reports, the buyers' own deal announcements, and figures published by M&A advisers. Every figure on screen shows its source.

There are five parts: strategy and route, market data, core TIC risks, valuation mechanics, and integration.

Part one: strategy and route

Before any deal, a firm chooses a route for each service. It can grow it from within, partner, buy a business, or sell.

In TIC, that choice turns mainly on one question. Would accreditation take us too long? For many TIC services, a firm cannot sell the work at all until it holds the accreditation it needs. If winning it would take too long for the market, buying a business that already holds it is the faster route.

The reports turn this into a route test of three questions. First, would accreditation take us too long? If yes, ask the second. Is there a suitable business to buy? If yes, ask the third. Does its price beat the cost of building? Three yes answers point to buying. A no at any step points to building step by step, one accredited scope at a time. Many firms also partner with an accredited firm while they build.

Part two: market data

Four figures from the reports show what six large groups, and the wider market, have been doing.

First, six of the six large TIC groups studied sold a business or reviewed which businesses to keep, between 2021 and mid-2026. Five sold at least one business, and the sixth began a review. Five of the six name growth areas driven by new rules, standards or technology. Examples are cybersecurity, sustainability, and PFAS testing for the so-called forever chemicals. For a buyer, the businesses these groups sell are possible targets.

Second, of 75 acquisition announcements by those six groups, from 2024 to mid-2026, only 10 named the target's accreditations, recognitions, designations or approvals. Yet where a service needs them, they decide whether the work can continue after the sale. So a buyer checks the scope and the approvals in due diligence, because announcements rarely show them. Due diligence is the investigation of a business before a binding deal is signed.

Third, four of nine large TIC deals we selected, from 2024 to 2026, involve a private-equity buyer or investor. Private equity means investment funds that buy stakes in businesses, usually taking control, to grow them and sell them later. Two of the four involve buying a listed company and taking it off the stock market. Two were still pending at the research cut-off, and for a third no completion was found. Nine selected deals cannot show private equity's share of the whole market. They do show that, for a large business, private-equity funds are possible buyers as well as TIC groups.

Fourth, price. A multiple is a price divided by a measure of profit. Here the measure is EBITDA: earnings before interest, tax, depreciation and amortisation. One M&A adviser, Aventis Advisors, publishes median multiples, the middle value for each group of deals. Its data covers a wider group than TIC, which adds compliance and assurance firms. It includes only deals whose prices were disclosed, and the adviser sells deal advice. From 2015 to September 2026, deals under 10 million dollars had a median of 6.2 times EBITDA. Deals over 100 million dollars had a median of 13.7 times. A buyer that pays a small-deal multiple may hope the combined business will one day be valued nearer a large-deal multiple. That pays off only if combining the businesses works. Larger targets also differ in scope, customers and growth, so size alone does not explain the price.

Part three: core TIC risks, and what to check first

A buyer is not only buying equipment and buildings. The primary deal risks are in four areas. They are accreditation scope and rules, key signatories and technical staff, customer change-of-control clauses, and impartiality and results integrity. Falsified results can lead to an accreditation being suspended or withdrawn. So the reports advise starting due diligence with accreditation, impartiality, results and people, and then checking the money.

Take change-of-control clauses. A change-of-control clause is a contract term that gives the other party a right when the business gets a new owner. That right may be to consent, to end the contract, or to renegotiate. So a key customer may be able to leave. Accreditations raise a similar question, because they move with a business only on the accreditation body's terms. In the United Kingdom, UKAS, the national accreditation body, asks for written notice before a change of owner. It treats a change of legal entity, the company that holds the accreditation, as a transfer that is not guaranteed. In the United States, OSHA, the workplace safety regulator, has notices for two recognised testing laboratories. They require each to report any change of ownership in writing, as soon as possible.

Part four: valuation mechanics

Buyers and sellers look at the same deal from opposite sides.

A buyer checks value from free cash flow. That is the cash left after tax, equipment spending and changes in working capital, the money tied up in day-to-day trading. Equipment matters in TIC, because a business that must replace costly equipment more often leaves less cash. A seller can run the same check, and then compares offers. Cash at closing is paid when the deal completes. An earn-out is part of the price paid later, and only if the business meets agreed targets after the sale. So a seller weighs cash at closing against money at risk.

When you compare prices, check which value each one measures. Enterprise value is the value of the whole business on a cash-free, debt-free basis. Equity value is the value of the owners' shares: enterprise value less net debt, which is borrowings less cash. Compare like with like, or the multiples can mislead.

Part five: integration, after the deal closes

On Day 1, the deal closes and the legal handover takes place. In the first 100 days, the new owner watches for early warning signs. Examples are a signatory resigning or a key customer giving notice. It combines only the operations it chose to combine, such as finance or IT. At 12 months, a review compares the results with the deal thesis, the written case for buying. It looks at revenue retained, key people retained, accreditation status, and savings against plan.

As a rough guide, how far the two businesses are combined changes what happens to the accreditation, the team and any earn-out. Keep the business separate, and the accredited legal entity and the signatories stay as they are. An earn-out is then easiest to measure. Absorb it fully, and the legal entity may change, signatories may change, and an earn-out is hardest to measure. So before you sign, ask one question. Does the planned integration protect what made the business worth buying? The reports for buyers and sellers are at deepdivereports.com.