UK based research firm Memoori, has released a new Report that estimates the world market for electronic based physical security equipment at factory gate prices in 2010 was USD $18.67 billion; a growth of 4 / 5% on 2009 but still marginally below its peak in 2008.
Online PR News – 11-February-2011 –UK based research firm Memoori, has released a new Report that estimates the world market for electronic based physical security equipment at factory gate prices in 2010 was USD $18.67 billion; a growth of 4 / 5% on 2009 but still marginally below its peak in 2008. Of this, Video Surveillance took the largest share at 47.5% increasing its share by 4.5%, at the expense of Intruder Alarms 29.5%; with Access Control at 23%.
So despite overall growth in the business, intruder alarms sales have declined and access controls has lifted marginally, whilst video surveillance has performed well particularly considering the poor economic trading conditions that have prevailed over the last 3 years.
This is a robust market which has outperformed many of the electronic equipment businesses supplying the industrial & commercial markets. For this reason, acquisition and investment has surged ahead in 2010 and is forecast to continue over the next 2 years.
The geographic distribution of equipment sales in 2010 has changed significantly in the last 3 years. China has more than doubled its market share in the last 5 years to 11%, whilst other emerging markets in Asia, Central and Eastern Europe and South America have similarly increased their share of the market. This trend will continue with China probably becoming the biggest single market by the end of this decade.
The value of deals completed in the industry in 2010, was USD $7.98 billion; a growth of almost 75% on 2009. This is the highest value ever recorded and is 28% higher than the previous record set in 2005 and 2007. This is a startling number not least because it is in stark contrast to what has happened in similar businesses. So what has caused such a surge in consolidation, at a time when the global market for physical security equipment has experienced little growth?
In 2009 we identified 77 acquisitions compared with 80 in 2010. So the almost doubling in value of deals is clearly not the result of more transactions. The reason is that last year, consolidation was much more focused at the top end of the business, between established large companies. The buying price for just three deals amounted to $4.3 billion, some 54% of the total business transacted, and a further 7 companies paid over $250 million to complete deals.
The drivers to achieve growth in this industry are clearly to deliver products and services that increase productivity and provide a return on investment. IT Convergence and integrated solutions are seen as the way forward here. In order for companies to deliver such systems, many have decided that it is necessary to acquire expertise through merger and acquisition.
One example of this is the need to join physical security with identity management and biometrics. Some of the largest acquisitions in 2010 where in this area. HID Global, the 3M Company and Hewlett Packard have all bought big in the last 4 months of this year.
We also identified 17 significant deals for Alarm Installation and Monitoring Companies, netting a total value of some USD $4.18 billion. So in 2010 this segment of the market has attracted some 52% of the total spend on acquisitions.
There have been some major landmarks during the last 12 months. In January 2010 Tyco purchased Broadview Security for USD $2 billion. This was followed in April with GTCR’s purchase of Protection One for USD $828 million. In September Safran bought L1-Identity Solutions for USD $1.1 billion and in December, Monitronics was acquired by Ascent Media Corp for USD $1.2billion.
With the exclusion of alarm companies the surge in acquisition activity in 2010 has been driven by companies from outside the mainstream physical security market. Safran, L-3 Communications, Flir and 3M have pulled off some major deals in 2010, but mainstream suppliers like Schneider Electric, UTC, Honeywell and Bosch have been conspicuous by their absence.
To continue at this rate of consolidation would require the merging or acquisition of very large leading suppliers, which is unlikely because their numbers are getting depleted. However a steady rate of consolidation will continue in the short term, not least because the major suppliers were absent from the dealing table in 2010 and have made claims to be active in the near future. UTC have made it publicly known that they intend to grow through acquisition and it is now over a year since their mega purchase of GE’s Fire & Security Division. Last month, Tyco announced that they have set aside $500 million to acquire companies in India, Brazil, Middle East and China to push inorganic growth in these markets.
So given these facts, the continued interest for IT and Communications related companies to see benefit in buying into the security business and its current fragmented state; we are forecasting a 20% growth in the value of deals over the next 5 years. Cash deals have accounted for as much as 95% of transactions in 2008 / 9 but this will fall as the security business is once again attracting private equity finance. Without this, the forecast growth in consolidation will be hard to achieve.
Source: http://bit.ly/gcu9U1
Online PR News – 11-February-2011 –UK based research firm Memoori, has released a new Report that estimates the world market for electronic based physical security equipment at factory gate prices in 2010 was USD $18.67 billion; a growth of 4 / 5% on 2009 but still marginally below its peak in 2008. Of this, Video Surveillance took the largest share at 47.5% increasing its share by 4.5%, at the expense of Intruder Alarms 29.5%; with Access Control at 23%.
So despite overall growth in the business, intruder alarms sales have declined and access controls has lifted marginally, whilst video surveillance has performed well particularly considering the poor economic trading conditions that have prevailed over the last 3 years.
This is a robust market which has outperformed many of the electronic equipment businesses supplying the industrial & commercial markets. For this reason, acquisition and investment has surged ahead in 2010 and is forecast to continue over the next 2 years.
The geographic distribution of equipment sales in 2010 has changed significantly in the last 3 years. China has more than doubled its market share in the last 5 years to 11%, whilst other emerging markets in Asia, Central and Eastern Europe and South America have similarly increased their share of the market. This trend will continue with China probably becoming the biggest single market by the end of this decade.
The value of deals completed in the industry in 2010, was USD $7.98 billion; a growth of almost 75% on 2009. This is the highest value ever recorded and is 28% higher than the previous record set in 2005 and 2007. This is a startling number not least because it is in stark contrast to what has happened in similar businesses. So what has caused such a surge in consolidation, at a time when the global market for physical security equipment has experienced little growth?
In 2009 we identified 77 acquisitions compared with 80 in 2010. So the almost doubling in value of deals is clearly not the result of more transactions. The reason is that last year, consolidation was much more focused at the top end of the business, between established large companies. The buying price for just three deals amounted to $4.3 billion, some 54% of the total business transacted, and a further 7 companies paid over $250 million to complete deals.
The drivers to achieve growth in this industry are clearly to deliver products and services that increase productivity and provide a return on investment. IT Convergence and integrated solutions are seen as the way forward here. In order for companies to deliver such systems, many have decided that it is necessary to acquire expertise through merger and acquisition.
One example of this is the need to join physical security with identity management and biometrics. Some of the largest acquisitions in 2010 where in this area. HID Global, the 3M Company and Hewlett Packard have all bought big in the last 4 months of this year.
We also identified 17 significant deals for Alarm Installation and Monitoring Companies, netting a total value of some USD $4.18 billion. So in 2010 this segment of the market has attracted some 52% of the total spend on acquisitions.
There have been some major landmarks during the last 12 months. In January 2010 Tyco purchased Broadview Security for USD $2 billion. This was followed in April with GTCR’s purchase of Protection One for USD $828 million. In September Safran bought L1-Identity Solutions for USD $1.1 billion and in December, Monitronics was acquired by Ascent Media Corp for USD $1.2billion.
With the exclusion of alarm companies the surge in acquisition activity in 2010 has been driven by companies from outside the mainstream physical security market. Safran, L-3 Communications, Flir and 3M have pulled off some major deals in 2010, but mainstream suppliers like Schneider Electric, UTC, Honeywell and Bosch have been conspicuous by their absence.
To continue at this rate of consolidation would require the merging or acquisition of very large leading suppliers, which is unlikely because their numbers are getting depleted. However a steady rate of consolidation will continue in the short term, not least because the major suppliers were absent from the dealing table in 2010 and have made claims to be active in the near future. UTC have made it publicly known that they intend to grow through acquisition and it is now over a year since their mega purchase of GE’s Fire & Security Division. Last month, Tyco announced that they have set aside $500 million to acquire companies in India, Brazil, Middle East and China to push inorganic growth in these markets.
So given these facts, the continued interest for IT and Communications related companies to see benefit in buying into the security business and its current fragmented state; we are forecasting a 20% growth in the value of deals over the next 5 years. Cash deals have accounted for as much as 95% of transactions in 2008 / 9 but this will fall as the security business is once again attracting private equity finance. Without this, the forecast growth in consolidation will be hard to achieve.
Source: http://bit.ly/gcu9U1
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