SSN News Poll: Is 2018 the year of the acquisition?

It has been a busy year for M&A, according to 69 percent
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Wednesday, October 17, 2018

YARMOUTH, Maine—It seems as though 2018 is a hot year for financial transactions in the security industry. At the time of writing, Security Systems News has covered more than 65 mergers and acquisitions this year.

“As the decision to sell is such a personal one for a business owner there is no universal ‘right time to sell.’ For someone who decides to sell today, the market is robust and will reward a well run company owner with a good price,” John Cerasuolo, president and CEO of ADS Security, wrote in a News Poll response.

Sixty-nine percent of respondents noticed that it has been a busier year for mergers and acquisitions in the security space. 2018 is not much different in terms of M&A activity as compared to previous years, according to 22 percent or responses. Nine percent said that the buying and selling market actually seems to be slower this year.

One respondent said that their company recently purchased 2 A/V businesses, the only purchase in their company’s history.

One quarter of respondents said that their company acquires other businesses quite regularly. “Our company does make acquisitions, but only when it makes sense to. Our philosophy is to focus [on] the experience and expertise and values of companies we acquire in conjunction with our client's and market needs. We do not make acquisitions to simply have a large market presence,” said one reader.

Another 41 percent said their business only acquires very occasionally. “It has been a great way to boost your RMR instantly without time and labor that it would normally take to achieve,” another respondent said. Thirty four percent said their business is entirely focused on organic growth.

But, has it been a good year to sell? Half of all respondents have noticed that companies that have sold recently have gotten good multiples for their business. Forty-seven percent said that, as is typically the case, the sale price of a company depends on the individual business. Three percent said this is not the year to sell.

“With all of the new entrants into the monitoring space, with newer, better technology, I believe that the value of existing monitored accounts will begin to fall rapidly,” one respondent wrote. “Add the required CDMA radio sunset to LTE, and this will compound the issue. Existing customers have taken notice of the new technology, and want to incorporate these features into their systems. This will make acquired customers more vulnerable to attrition and more expensive to maintain. Believe the cost of acquisitions will begin to fall when the market recognizes these industry shifts.”