kVA + UL = A Fascinating Acquisition


Every M&A client has a unique story. Watermark’s most recent M&A client, kVA, had a fascinating one. On June 3rd, Underwriters Laboratories, also known as UL, announced that it had acquired kVA. This announcement ended one stage in the life of kVA as it turned the page and started a new one.

kVA was formed in 2010 by functional safety experts Bill Taylor and Jody Nelson. When Bill and Jody approached Watermark in October 2018, we concluded that kVA embodied core attributes necessary to cross “the M&A bridge” successfully. It is a prime example of a strong company prepared to gain momentum on “the bridge” because of its’ solid business model, Bill and Jody’s consistent leadership and performance, all while operating in a high growth, dynamic market.

kVA owners leveraged Watermark in crossing “the bridge” by allowing us to expand buyer prospects into the sale process, including the addition of the ultimate buyer, UL. They also relied on our expertise in valuation, business strategy, industry research, negotiations, due diligence, and deal structuring.

Watermark is excited about the future for kVA, as the team continues under Bill and Jody’s leadership, now at UL. The company is now housed under UL’s Energy and Power Technologies division.

kVA BACKGROUND: kVA is a technical and management consulting group focused on functional safety, ISO 26262, and autonomous vehicle safety. kVA offers technical consulting, training events, and software tools, all geared to help automotive developers achieve safety. kVA holds the position as the leading expert in ISO 26262 functional safety.

Advanced Driver Assist Systems (ADAS) and autonomous driving represent a massive shift in the automotive landscape, where safety assurance is critical. The evolution towards autonomous vehicles is a major driver in ADAS growth. The company built an enviable client list of OEMs, Tier 1 and 2 automotive supplier customers. kVA has also experienced a growing share of new tech company clients as advanced robotics investment has skyrocketed in recent years.

INDUSTRY BACKGROUND: North America’s automotive functional safety market is projected to post a CAGR of 14.2% from 2018 to 2023, as increasing demands for safety-critical automotive components in the automotive industry begin to transition to the supply chain for autonomous vehicles. In fact, autonomous cars are projected to reach global sales of 600,000 units ($42Bn) by 2025. kVA is knowledgeable and well-connected with autonomous industry leaders, and has already done business with multiple major corporate leaders in this space.

Automakers have been investing in ride-hailing companies, which serve as a great platform for autonomous technology. Growth in autonomy pulls demand for the auto cyber security market. The auto cybersecurity market is estimated to be growing at a very healthy 23.2% CAGR. There has been an increasing use of e-mobility in Asia-Pacific, South America, the Middle East and Africa, driving market opportunities for auto cybersecurity. kVA successfully led automotive cyber security training in the fall of 2018 and is well positioned in this market.