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News Poll: M&A activity on the upswing after early slowdown

News Poll: M&A activity on the upswing after early slowdown

News Poll

YARMOUTH, Maine—Results from Security Systems News’ recent News Poll confirm what we here at SSN have been seeing over the last few months within security, which is a noticeable increase in M&A activity.

The arrival of COVID earlier this year may have put a temporary delay on some deals, but over the past few months the M&A landscape has certainly opened up, with deals both big and small making headlines recently.

Looking big picture, three quarters of respondents agree that there has been an uptick in mergers and acquisitions lately, with 50 percent saying, “yes,” and 25 percent seeing “somewhat” of an increase. The remaining 25 percent did not see any change in M&A activity.

“Consolidation makes sense as income from RMR is a proven source of stability during the pandemic,” noted one respondent. “RMR is the reason the traditional alarm industry has shown resiliency in past recessions as well as now during these uncertain times.”

Mark Buckley, technical sales trainer, DSC, noted that many of the recent acquisitions, such as the Johnson Controls-Qolsys deal, had been "years in the works.”

Getting back to the value RMR brings, another reader pointed out, “Buyers want to protect their investment from attrition, and they want for sellers to share in the risk of a rapidly changing market. Both the Google investment in ADT and the Brinks/Protect America acquisition point toward a lower multiple being paid for accounts. Companies that are not showing consistent and strong growth, ability to manage attrition and ability to drive positive cash flow after debt service will continue to be valued at reduced levels.”

Interestingly, 62 percent of those polled said that it is a “buyer’s” market, with just 25 percent saying it’s a “seller’s” market and the remaining 12 percent saying they were “not sure.”
Responses to that question were further validated when readers were asked, “Is your company looking to buy or sell in the near future?” with 44 percent saying they are looking to buy and only 6 percent saying they were looking to sell; the remaining 50 percent said, “neither.”

“We, as buyers, are very concerned about attrition due to COVID-19 and the economy tanking with an anticipated slow recovery in the commercial markets for retail, restaurants, day care, office buildings, and hospitality likely leading to business closures and long term unemployment,” one respondent said. “What will attrition look like in late 2020 and all of 2021? Very uncertain and will require larger and longer holdback amounts leading to sellers sit on the sidelines.”


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