EHS Market Update – September 2025

EHS Market Sees Elevated Demand for Comprehensive Service and Technology Offerings Amid Uncertain Regulatory Environment

The Environmental Health & Safety (EHS) market has remained resilient, demonstrating consistent revenue growth and adaptability in the face of evolving regulatory demands, technological advancements, and shifting organizational priorities. Companies have given precedence to risk management and public well-being, attracting investments and innovation to the sector. This strength has been underscored by the rising adoption of digital tools and data-driven strategies, which have transformed traditional EHS practices into more proactive and integrated systems. The EHS market has signaled a significant shift toward digital transformation, with 72% of EHS managers planning to bolster investments in EHS software within the next two years, according to a 2023 report by Verdantis.¹ This growing trend reflects a broader recognition of the value that advanced EHS technologies bring to organizations, namely improved operational efficiency, enhanced decision-making capabilities, and stronger risk mitigation strategies. Companies have continued to strive to meet complex regulatory requirements and foster safer workplaces, increasing demand for innovative digital tools and driving the evolution of more streamlined, compliant, and proactive EHS practices. As infrastructure modernization and sustainability goals converge, EHS providers are expected to be well-positioned to capitalize on rising demand and merger and acquisition (M&A) opportunities.

Despite headwinds in the broader M&A market, including tariff impacts and the slow pace of interest rate drops from the Federal Reserve, demand for companies that provide EHS products and services continues its strength from prior years. Continued regulatory complexity, longer term tailwinds from U.S. reshoring activity, and trends towards outsourced services still drive private equity and strategic buyer interest in the space. Capstone’s presence at the ASSP conference in July confirmed this, with an increasing of private equity groups in attendance. We expect EHS to be a top sector of focus in a strengthening M&A market.

Chris CardinaleDirector, Capstone Partners

Regulatory Retreat Disrupts Air Quality Strategies Across EHS Market, M&A Activity For Technology-Focused Solutions Prevail

The EHS market has navigated a dynamic air quality landscape shaped by diverging regulatory and technological forces. The Trump administration has terminated 24 awards issued by the Office of Clean Energy Demonstrations (OCED) totaling more than $3.7 billion in taxpayer-funded financial assistance, citing cost concerns and strategic realignment, according to the U.S. Department of Energy (DOE).² This reversal has decreased the total $6 billion commitment made in March 2024 by the Biden administration but has maintained funding for carbon capture and sequestration (CCS) and decarbonization initiatives. Concurrently, U.S. Congress has moved to weaken Clean Air Act provisions that limit toxic emissions from industrial sources. While federal regulatory rollbacks may slow progress at the national level, states and regions have continued to enforce their own EHS standards, often exceeding federal requirements. This decentralized regulatory landscape has ensured that demand for EHS solutions remains strong as organizations must navigate a complex web of local compliance obligations. From California’s stringent air quality rules to New York’s labor safety mandates, regional policies have shaped the operational priorities of businesses and fueled continued investment in EHS technologies and services. These developments have introduced heightened compliance risks and uncertainty, particularly for organizations operating across jurisdictions with varying environmental standards. Despite funding rollbacks at the federal level, state and regional regulatory compliance standards have continued to push the EHS sector forward and drive M&A activity.

Sector participants have increasingly invested in regulatory-compliant solutions and capability expansion to keep up with the shifting legislation and take market share, driving M&A activity for companies investing in regulatory-compliant solutions and capability expansion. Notably, TPG (Nasdaq:TPG)-backed AmSpec Group acquired A&B Environmental Services for an undisclosed sum in July 2025. A&B expands AmSpec’s capabilities to include environmental, microbiology, air, and metal testing and is expected to strengthen AmSpec’s position in the Environmental Compliance space and enhance its ability to serve clients across regulated industries. In pursuit of similar goals, VaLogic acquired full-service biomedical company, Air Systems Technologies (AST) for an undisclosed sum (July 2025). The acquisition enables VaLogic to integrate AST’s specialized capabilities in cleanroom certification, biosafety cabinet testing, laminar flow hood certification, and biological decontamination into its portfolio offerings. AST’s core focus on maintaining environmental structures and clean air devices complements VaLogic’s existing service portfolio, enhancing its ability to meet air quality and compliance standards. These transactions underscore the shift toward decentralized air monitoring solutions in the EHS market, a transition expected to force businesses to proactively manage exposure risks and maintain compliance.

Private Equity Add-On Transactions Support Uptick in EHS Market M&A

EHS M&A has experienced modest growth to date, reflecting a cautious yet steady interest in consolidation and expansion within the sector. Deal activity in the space has increased 3.5% year-over-year (YOY) to 88 transactions announced or completed year to date (YTD). Private equity (PE) add-on acquisitions have primarily driven the uptick, increasing 69.2% YOY to 44 deals and signaling surging interest in scaling existing platforms. Notably, Warren Equity Partners-backed Paradigm HSE acquired Paragon Safety Group in June 2025 and Susquehanna Private Capital-backed U.S. Compliance acquired OSHA/Environmental Compliance Systems (OECS) in April 2025 and Hellman & Associates in November 2024 for undisclosed sums. Additionally, Verdantas, a digitally-enabled technical consulting solutions company for the Environment, Water, and Energy Transition markets, has closed nine acquisitions through YTD 2025 and 14 since its sponsor acquisition by Sterling Investment Partners in May 2024 (undisclosed). SMART Safety Gulf Coast has also begun rolling up EHS sector participants following its acquisition by Carr’s Hill Capital Partners in June 2024 for an undisclosed sum. In April 2025, SMART Safety acquired two companies—Trinity Safety Management and Safety Consulting & Training (SCTI)—to enhance SMART Safety’s geographic reach and service offerings in workplace safety, utilizing its Compliance-as-a-Service (CaaS) model. Terms of the deals were not disclosed. These targets have employed unique CaaS models that combines expert consulting, cloud-based software, and on-demand support to help clients achieve and sustain EHS compliance, reduce risk, and improve overall company performance. While deal volume has not surged dramatically, acquisitions have increasingly focused on expanding service portfolios and gaining access to emerging technologies. This measured pace has suggested that companies have prioritized long-term value and operational synergies over rapid scale, ultimately positioning the EHS market for more targeted and impactful acquisitions as regulatory pressures and technological demands continue to evolve.

The rise in PE add-on acquisitions has offset a decline in strategic buyer activity. Federal regulation and funding rollbacks have created uncertainty and caused strategic buyers to pull back from the EHS M&A market due to their heightened exposure to regulatory volatility. Platform investments by PE firms have also softened, down 10% YTD, reflecting an overall cautious approach to new market entries. The market has remained active, with PE players continuing to grow existing platforms, favoring targets with proven compliance capabilities and expertise, allowing them to scale within known regulatory frameworks. Public strategic buyer activity has declined 56.5% YOY, while private strategic acquisitions saw a slight decrease of 3.8% YTD. Capstone anticipates that consolidation strategies will remain robust, with add-ons playing a significant role in sustaining deal flow.

Services Expansion Drives EHS M&A Momentum as Buyers Pursue End-to-End Capabilities

The EHS market has continued to evolve, with established firms actively broadening their service portfolios to offer more integrated, end-to-end solutions that meet the growing complexity of client needs. EHS market M&A activity composition has reflected this strategic expansion, with the majority (60.3%) of targets operating as service providers. Service-related transactions have risen 3.9% YOY to 53 deals YTD. This uptick underscores a clear market trend of buyers positioning themselves as comprehensive solution providers, capable of delivering holistic EHS support across compliance, risk management, and digital transformation.

EHS market players have increasingly prioritized specialized capabilities in remediation, emergency management, and air quality monitoring to meet evolving regulatory and operational demands. This targeted approach has reflected a broader industry shift toward integrated service models that offer compliance and risk management solutions. As a result, firms have positioned themselves to deliver more comprehensive value to clients navigating complex environmental and safety landscapes. Several key services transactions are outlined below.

• EnGlobe Acquires Cambium (June 2025, Undisclosed) – In June 2025, EnGlobe acquired Cambium, a 235-person employee-owned, multi-service consulting and engineering firm for an undisclosed sum. The acquisition develops EnGlobe’s service capacity in the Environmental sector, with a particular focus on the Ecology segment. In conjunction with EnGlobe’s two recent Western Canada acquisitions—Herold Engineering (May 2025, undisclosed) and Higher Ground Consulting (May 2025, undisclosed)—which expanded the company’s footprint across the Pacific Coast, EnGlobe has continued to add key technical expertise in strategic markets and disciplines across Canada. “The Cambium team perfectly complements and scales our Ontario operations, allowing us to enter new local markets while strengthening our technical and leadership teams in other areas. In welcoming Cambium to EnGlobe, we’re opening new growth opportunities for our team, enhancing our service capabilities for clients, and positioning ourselves to continuing growing our reach in Ontario and beyond,” said Mike Cormier, President of Englobe, in a deal press release.³
• SGS Acquires H2Safety (June 2025, Undisclosed) – SGS (SWX:SGSN), a global testing, inspection and certification company, acquired H2Safety, a Canadian emergency management and operational safety solutions provider in June 2025. Terms of the deal were not disclosed. The acquisition is expected to capitalize on increasing demand for safety services in the U.S., offering SGS a significant opportunity to leverage its global expertise and scale. Through the integration of H2Safety’s experts, SGS expands its capabilities in emergency management, business continuity, risk mitigation, and regulatory compliance, further supporting clients in protecting people, the work environment, and critical infrastructure.
• The EI Group Acquires Aerosol Monitoring & Analysis (May 2025, Undisclosed) – The EI Group, an EHS consulting firm, acquired air quality testing and analysis firm Aerosol Monitoring & Analysis (AMA) for an undisclosed sum in May 2025. The acquisition enhances EI’s service offerings in industrial hygiene and environmental compliance across Private and Public markets. By integrating AMA’s technical capabilities, El has strengthened its position in the EHS Consulting market, enabling more robust support for clients navigating complex regulatory landscapes. The transaction underscores the continued momentum of acquisitions in the sector, as firms seek to expand capabilities and deliver more comprehensive solutions. “Our combined experience in different markets will allow EI the opportunity to expand our expertise to AMA’s Public sector customers and AMA to support EI’s Private sector manufacturing, healthcare and commercial building management clients,” said Greg Lathan, President of The EI Group, in a press release.⁴

The rise in add-on deals and service-focused acquisitions has reflected a clear shift toward consolidation as firms seek to enhance compliance capabilities and broaden their offerings. Environmental standards have continued to evolve, particularly in air quality, as buyers prioritize targets with proven expertise and scalable platforms. M&A activity in the sector will likely remain strong, with a focus on building resilient, end-to-end service models that can adapt to shifting regulations and support long-term sustainability. Capstone believes that companies invested in technical depth and operation flexibility are best positioned for growth and opportunity within the current regulatory landscape.

To discuss the widespread impact of evolving environmental regulations, provide an update on your business, or learn about Capstone’s wide range of advisory services and EHS market knowledge, please contact us.

Neve Adler, Analyst, was the lead Market Intelligence contributor to this article.

Julianna Zelnhefer, Summer Intern, also served as a Market Intelligence contributor to this article.

Endnotes

1. Verdantix, “Green Quadrant: ESG Reporting And Data Management Software,” https://www.verdantix.com/venture/report/green-quadrant-esg-reporting-and-data-management-software, accessed August 8, 2025.

2. Energy.gov, “Secretary Wright Announces Termination of 24 Projects, Generating over $3 Billion in Taxpayer Savings,” https://www.energy.gov/articles/secretary-wright-announces-termination-24-projects-generating-over-3-billion-taxpayer, accessed August 6, 2025.

3. EnGlobe, “Englobe to Acquire Peterborough-Based Cambium,” https://www.englobecorp.com/about-us/news/englobe-acquire-peterborough-based-cambium/, accessed August 8, 2025.

4. The EI Group, “The EI Group, Inc. Expands Footprint with Latest Acquisition of Aerosol Monitoring & Analysis, Inc. (AMA) in Hanover, Maryland,” https://ei1.com/the-ei-group-inc-expands-footprint-with-latest-acquisition-of-aerosol-monitoring-analysis-inc-ama-in-hanover-maryland/, accessed August 6, 2025.