Testing, Inspection & Certification (TIC)

# Executive Summary * The Testing, Inspection, and Certification (TIC) industry's growth is fundamentally propelled by rising global regulatory complexity and stricter compliance standards, creating non-discretionary demand. * Digital transformation, particularly the integration of Artificial Intelligence (AI) and Internet of Things (IoT), is reshaping service delivery, creating a key battleground for efficiency, differentiation, and higher-margin, software-based revenue. * The fragmented market is actively consolidating, with mergers and acquisitions (M&A) being a critical strategy for gaining scale, acquiring technology, and navigating complex regulations. * A clear performance bifurcation is emerging between tech-enabled, diversified leaders and smaller, specialized firms more vulnerable to macroeconomic pressures. * Sustainability and ESG (Environmental, Social, and Governance) certification represent a major new growth frontier, creating demand for new assurance and advisory services. ## Key Trends & Outlook The primary catalyst for the Testing, Inspection, and Certification (TIC) market is an accelerating wave of global regulatory complexity and stricter compliance mandates. This trend is creating non-discretionary demand, evidenced by a 12% surge in TIC spending in 2025 following new EU Medical Device Regulation (MDR) and U.S. Food and Drug Administration (FDA) guidance. This directly boosts revenue for TIC firms as companies are forced to seek third-party validation to access markets, with over 120 countries now having mandatory product inspection rules. New frontiers like the EU AI Act, introduced in 2024, are creating entirely new service lines, benefiting firms with deep regulatory expertise. This dynamic solidifies the market position of established players like UL Solutions (ULS), whose mission-critical services are indispensable across regulatory landscapes, and TIC Solutions (TIC), whose core business provides essential, often compliance-mandated, services in high-risk industries. This trend is expected to be a primary growth driver for the next 3-5 years. Alongside regulatory drivers, digital transformation is fundamentally altering service delivery and value creation. The adoption of AI-driven inspection tools, which rose 22% in 2024, is improving accuracy and efficiency, while digital compliance platforms grew 18%. This allows leading firms to shift from purely service-based revenue to more predictable, high-margin SaaS (Software as a Service) models, creating significant competitive moats. UL Solutions is a prime example with its ULTRUS software platform and new AI safety certifications, guided by UL-3115 and a new Outline of Investigation (OOI) for AI safety of AI-based products. Similarly, the transformational merger of TIC Solutions (Acuren) with NV5 Global aims to combine proprietary NDT (Nondestructive Testing) with advanced digital capabilities like LiDAR and a SaaS-migrated geospatial software platform. The most significant near-term opportunity lies in M&A, allowing firms to rapidly gain scale and technology to address the aforementioned trends, as demonstrated by APi Group's (APG) aggressive bolt-on strategy. APi Group completed 11 bolt-on acquisitions year-to-date in Q3 2025, expanding its service portfolio and geographic footprint. The key risk is competitive divergence, where sub-scale firms lacking the capital for technological investment or the breadth to navigate global regulations will lose market share to larger, more diversified consolidators. Furthermore, the growing demand for sustainability and ESG certifications represents a major new growth frontier, creating demand for new assurance and advisory services, with UL Solutions introducing ECOLOGO certification for energy and industrial automation equipment. ## Competitive Landscape The Testing, Inspection, and Certification (TIC) industry is characterized by a fragmented competitive landscape, with the top three global players—SGS, Bureau Veritas, and Intertek—holding less than 8% of the market. This fragmentation is the primary driver for the intense M&A activity and the different strategies companies employ to gain market share. Some firms build their franchise on a foundation of brand trust and regulatory expertise. UL Solutions exemplifies this "Brand-Driven Safety Science Leader" model, leveraging its 130-year legacy and the globally recognized "UL-in-a-circle" certification mark. This strategy allows UL Solutions to command premium pricing and secure long-term, recurring revenue streams for mission-critical compliance, particularly as it pioneers certifications in new high-growth areas like AI safety and sustainability. In contrast, other companies pursue growth by consolidating smaller players into a diversified services portfolio. APi Group operates as a "Diversified Services Consolidator," employing a disciplined "buy-and-build" M&A strategy. Its "inspection and service first" philosophy and 11 bolt-on acquisitions in 2025 exemplify this model of consolidating fragmented markets to build a resilient, high-growth platform with predictable revenue streams. Finally, some smaller firms, such as Mistras Group (MG), compete primarily through specialized, proprietary technology. Mistras Group's proprietary Acoustic Emission (AE) technology provides 15-20% better detection accuracy, allowing it to support premium pricing (10-15% higher) in niche applications like asset protection for critical industrial infrastructure. The key competitive battleground is shifting towards the integration of technology and software with traditional services, a move exemplified by the transformational TIC Solutions (Acuren) merger with NV5 Global. This $1.7 billion merger, completed on August 4, 2025, created a market-leading North American provider of TICC and engineering services with over $2 billion in annual revenue, significantly enhancing its market position and accelerating technological innovation through combined resources like proprietary NDT and advanced digital capabilities. ## Financial Performance Revenue growth in the TIC sector is not uniform, exhibiting a clear bifurcation in growth trajectories. This divergence is caused by different business models—consolidation versus cyclical exposure. APi Group's +14.2% YoY revenue growth in Q3 2025, with approximately 10% organic growth, exemplifies the success of the M&A-fueled, diversified services model, which benefits from resilient, statutorily-driven demand. In contrast, Mistras Group's 12.4% revenue decline in Q1 2025, attributed to macroeconomic uncertainty and project delays, highlights the vulnerability of being exposed to cyclical project-based work in industrial sectors, though it recovered to +7% YoY in Q3 2025. {{chart_0}} Profitability also shows significant divergence in margin profiles, ranging from high-end adjusted EBITDA margins of 27.7% down to operating losses. Margin leadership is directly linked to proprietary offerings, whether through a trusted brand, software, or unique technology. UL Solutions' 27.7% adjusted EBITDA margin in Q3 2025 is an industry benchmark, proving the value of its trusted brand and high-margin software and advisory business, which includes its ULTRUS platform. Contrast this with TIC Solutions, which posted a loss from operations of -$9.4 million in Q1 2025, primarily due to increased costs related to the Acuren Acquisition, adverse weather, and project timing, illustrating the financial impact of a major strategic transition. {{chart_1}} Companies are allocating capital to address the industry's key trends, primarily through aggressive M&A for growth and internal investment in technology. APi Group exemplifies the M&A focus, deploying $214 million on 11 bolt-on acquisitions year-to-date in Q3 2025, adding $118 million of goodwill. TIC Solutions' $1.7 billion merger with NV5 Global represents a transformational, single-transaction approach to the same strategic goal of expanding scale and service offerings. Both companies are also investing in technology, with APi Group deploying AI-enabled operational tools and TIC Solutions integrating AI and Large Language Models (LLMs) post-merger. The industry's overall balance sheet health is mixed and directly tied to strategic choices. APi Group maintains a strong position with $1.299 billion in total liquidity as of September 30, 2025, comprising $555 million in cash and cash equivalents and $744 million available under its credit facilities, providing the firepower for its M&A strategy. In contrast, Mistras Group reported negative free cash flow of $20.9 million for the first nine months of 2025, reflecting longer collection cycles and working capital challenges, highlighting the financial strain that can occur when facing operational headwinds. {{chart_2}}