NAVEX TopCo Inc.

The stable outlook reflects our expectation that continued growth in the E&C software market, increased penetration into existing customer base, and a high degree of recurring revenue will enable NAVEX to continue generating positive free cash flow and reduce leverage below 9x over the next 12 months. We could lower the rating if an industry downturn, operational challenges, or intensifying competitive pressures lead to customer defections and margin erosion, such that the company generates negative free cash flow on a sustained basis, liquidity becomes constrained, or we deem the capital structure unsustainable. Although unlikely over the next 12 months, over the longer term we could consider an upgrade if NAVEX is able to consistently achieve revenue and EBITDA growth through

...A shift toward a culture of accountability will help drive NAVEX's growth. Companies continue to manage increasing public scrutiny over compliance issues and ethical transgressions (for example, Facebook's Cambridge Analytica scandal and cases involving high profile CEOs). We believe NAVEX will be able to provide solutions that help companies prevent or appropriately navigate these issues. We project NAVEX will maintain mid- to high-single-digit percent revenue growth during this changing period for all companies. Despite the high leverage stemming from its sale to financial sponsor BC Partners and strong competition in the highly fragmented E&C software market, we expect NAVEX to maintain a sustainable capital structure. While NAVEX has limited operating scale and niche focus on the E&C software market when compared with higher rated technology software companies, NAVEX has shown a good ability to compete among the larger scaled and more product-diverse competitors. NAVEX has generated...

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