The proof is in the numbers

Editor, Security Systems News Despite what some people may say, merger and acquisition activity this year is the highest in recent years, if not already surpassing it. The proof is in the numbers, shown in this month's Stat section where USBX Advisory Services shares with us their mid-year report that takes a look at M & A activity over the past two years. The report charts acquisitions of public companies like Ultrak's CCTV division sale to Ademco, Diversified's purchase of PhotoScan and Ingersoll Rand's buy of systems integrator Electronic Technologies Corp. Since the start of this year, more than 28 acquisitions have taken place, and that's not including the likes of Stanley Work's planned acquisition of Best Access, a deal announced only days before we went to press. And we know there are many more deals out there that many of us are not aware of where smaller, niche companies, perhaps on the manufacturing end, are joining forces with larger entities. And, let's not forget the many small alarm companies that sell their businesses on a daily basis. Already, numbers for this year outpace those of 2001, according to USBX. In 2001, USBX charted 21 acquisitions, compared with 28 by the end of the third quarter of this year. And in 2000, while the report only shows numbers for the second, third and fourth quarter of that year, USBX reported 16 acquisitions. When I talked to John Mack, who founded and heads up USBX Advisory Services, for the Stat section, he told me consolidation in certain key sectors will continue. That includes the guard market, manufacturing and systems integration. And while it's not as fast and furious as in the heyday of the alarm industry approximately 10 years ago, the sale and acquisition of companies in our industry is happening at a steady pace. Acquisition among manufacturers and integrators, Mack predicts, will accelerate. "Small independents are going to be hard pressed," to provide better service and on a national scale. Many installation companies are now looking to build either a national or regional presence. We have the return of Tom Rankin and his new company Electronic Security Partners. Rankin plans to focus on the West Coast market. Sweetwater Ventures has recently gotten into the act, buying Dallas-based North American Security Alarm. Here, the plans are lofty, with sites set on a national footprint. Why is there so much interest and growth in the security market today? Many analysts say Wall Street is looking to invest in other industries. Since the terrorists attacks of Sept. 11, 2001, more and more security companies, ranging from software providers and biometric firms to installers and manufacturers, are reaping the rewards with new investors, securing additional capital or finding someone to partner with either through acquisition or strategic alliance. Our industry is continuing to evolve – it's more sophisticated than ever before – not just with the technology at our fingertips, but the people running companies. You may be wondering what this has to do with you. Why should you take note of the acquisitions going on in the security industry, the new players coming on board, and larger conglomerates buying up manufacturers? John Mack put it quite well – with this type of information in hand, business owners can better define what markets to serve. It's important to define your niche market; you don't need to be everything to everyone. And, the market, he said, rewards those that are focused. Take note of what's happening around you and plan for your company's future. Isn't it time that you seek your reward?