According to a Capital One survey, the majority of security system professionals (66 percent) expect to complete at least one acquisition in the next year, and 16 percent expect at least three acquisitions. The interest in mergers and acquisitions (M&A) activity reflects respondents’ optimism in the financial health of the security industry — 85 percent expect improved financial performance a year from now.
Capital One conducted the survey at the Honeywell CONNECT 2015 conference in Scottsdale, Ariz., on October 22, 2015. Respondents included security system dealers and integrators, and other professionals who serve the security industry.
“The increased availability of capital and the entry of sophisticated investors make this an attractive buyers’ market for security companies,” said John Robuck, managing director, Capital One Commercial Banking. “However, leveraging M&A requires working with the right financing partner who understands the industry, and can ensure any transaction is priced and structured correctly to enable future growth.”
In line with the security industry’s appetite for M&A, more than 80 percent of those surveyed expect that financing to support growth, whether new lines of credit for organic growth (53 percent) or an acquisition facility (29 percent), will be most important in the next year.
Also noted, 36 percent of those surveyed cited increased competition as the trend that will have the largest impact on their business in the next 12 months, followed closely by technology innovation (34 percent), M&A activity and consolidation (18 percent) or increased cybersecurity threats (12 percent).
Interconnected devices were cited by 42 percent of respondents as the technology innovation or trend expected to be most impactful in the next 12 months, followed by do-it-yourself and self-monitored systems (24 percent) and managed video monitoring (23 percent). Fewer respondents cited enhanced data analytics (7 percent).