Mallon eyes surge in security stocks
WEST PALM BEACH, Fla.--As part of his opening remarks at the 11th annual Barnes, Buchanan & Mallon Conference in early February, Jack Mallon noted the Viisage acquisition of Identix for $770 million. "The multiples on that deal are really mind-boggling, up near 10 times sales," he said, a continuation of what was a record year for mergers and acquisitions in the security industry in 2005. And big players Tyco, GE and Securitas were largely silent.
He praised guard firm and integrator Garda, and video manufacturer Axis Communications and March Networks for having strong years.
For the rest of 2006, Mallon predicted "a surge in security stocks." He said the industry was "event driven, and there probably will be an event." He said private equity will continue to invest in large amounts, including hedge funds, and we'll see multiples soaring in mergers and acquisitions.
Hot sectors, he said, would include RFID, asset tracking, computer security, video surveillance and intelligent software.