Mack: Industry trends, private equity investment & market growth

Mack, the executive vice president, co-head of investment banking and head of mergers and acquisitions at Imperial Capital, began his overview of recent M&A activity with an emphatic comment about the current state of the industry.

“I’ve never been more excited about the potential of the industry in the last 20 years than I am today,” he said. “We just have amazing opportunities in front of us. There’s a reason lots of private equity is coming into this industry. There’s a reason we’re experiencing double digit organic growth rates in a lot of the subsectors of the industry.”

Mack explained M&A are closely linked to the cost of debt capital, as most transactions involve debt. Higher debt costs can hinder M&A activity. However, as people adjust to the current cost of debt, M&A activity is expected to increase. Additionally, there is a significant amount of private equity capital, around $2.5 trillion, waiting to be invested, which will be a major driver of future M&A activity.

“I used to work really hard to get private equity guys to come to the [Security Investor Conference] we hold in December,” he said. “I used to be thrilled if I could get 10 guys to come to that. We had over 80 different firms at the conference this past year.”

The number of private equity-backed security integration and fire/life-safety businesses in the industry today is well over 70 platform companies, all of which want to do M&A, he said.

“These guys are running around trying to find [other integration and fire/life-safety firms] that they can potentially acquire, either as a platform or a tuck in.”

Erickson: AI regulations, police use of facial recognition & federal investment in AI research

Erickson, CEO of SIA, said the association is working diligently to oppose complete bans on facial recognition while supporting compromise legislation with transparency and accountability measures.

“If you are offering AI-related solutions in any way, I would be very concerned about the proliferation of state bills in particular that will regulate the use of facial recognition (FR), and ultimately AI as a whole. This definitely has a direct impact on sales opportunities,” he cautioned.

Erickson said SIA is very sensitive to the importance of police departments and law enforcement having access to security technology tools, such as facial recognition. Through two years of negotiation, for example, in the state of Maryland, the association recently reached a compromise where law enforcement can use FR for truly heinous violent crimes, but cannot use it for theft.

“On broader AI policy, honestly, it’s really a lawyer’s delight,” he said. “I mean, some of the terminology being used would make your head spin in terms of legislation calling for definitions of what is a consequential decision; how does that relate to law enforcement, [and] whether or not criminal justice should be an allowable use of AI. So, again, we are very sensitive to making sure that there are exemptions permitting the use of FR and related technologies by law enforcement.”

Erickson went on to explain that Sen. Chuck Schumer has released a 30-page federal plan that includes about $32 billion of proposed investment activity in AI, principally around R&D.

The manufacturing community and the industry as a whole will be watching the progress of the plan, Erickson said.

“In this political climate, $32 billion sounds like a lot and may seem unattainable but this is bipartisan. I think what you’re going to see on the federal level is incremental approaches. So some funding allocated for R&D by the [presidential] election this year, and the next year with the new Congress, you’ll see further investment,” he continued. “So we expect recurring sources of revenue in R&D monies from the federal government for AI applications.”

Go online to read the full report, including Sokka emphasizing the need for industry-wide education to facilitate AI adoption, highlighting the challenges and opportunities for integrators, while Nemerofsky and Erickson address the workforce crisis, stressing the importance of rebranding and college outreach to attract new talent to the security industry. And much more. //

Global Access Solutions’ approximately 1,200 employees are now part of Honeywell. The transaction is expected to be adjusted earnings per share accretive in the first full year of ownership.

Assimilating the Global Access Solutions division will bolster Honeywell’s building automation strategy by adding essential, high-value products crucial for building management, according to the announcement. The acquisition is also expected to enhance Honeywell’s growth and profit margins, enrich its software offerings and increase recurring revenue. When merged with Honeywell’s current security portfolio, the combined annual sales are projected to exceed $1 billion.

Kumar Sokka, global president and general manager of LenelS2, commented on the acquisition at the recent PSA TEC in Dallas, where he was a featured panelist for the State of the Industry session. He said the focus of integrating the business into Honeywell was to ensure a seamless transition for its integrator partners.

“When you buy a company of this size for $5 billion, you’re buying it for what it represents. And from an LenelS2 perspective, yes, we have technology, but beyond that what we represent is this ecosystem that we are together solving problems. That’s the powerhouse and that’s the value and differentiator that we really hold,” Sokka said.

The Global Access Solutions business has thousands of integrator partners around the world, including about 100 PSA members. How the business works and interacts with its integration partners is a core value that will not change under Honeywell, he said.

“When you think about the work that we just went through these last six months, a lot of work, it’s all about how do we make sure on day one that we're collectively not seeing any change,” Sokka said. “And then over time, as we talk about opportunities and how products will evolve, we’re really trying to figure out how could 1 + 1 = 3. That’s what’s going to come in time. But right now it’s ensuring that the biggest assets of us coming together is really the integrator community, and ensuring that continues. How can we improve that perspective of it is where we’re focusing a lot of our efforts.” //

“In looking at the different options we had in selling our business, there was no doubt Pye-Barker was the best fit for our company, our team and my family,” said Jeremy Bates, who serves as president and co-owner. “I have paid close attention these last two years to dealers that have sold to Pye-Barker. Everyone I talked to said they were extremely happy in selling to them, and Pye-Barker honored all their promises to them and to their employees.”

The Bates Security team and culture, with Pye-Barker’s support, will continue to serve customers in the Southeast, according to an announcement.

“Pye Barker’s mission and their team are simply energizing,” said Bryan Bates, co-owner. “We have been focused on growth while maintaining quality for over 50 years, and now we have the backing of a much larger organization to help us reach new heights of opportunity for our employees and value for the clients they serve. Our passion statement of ‘Building a great company by enabling personal success’ is perfectly in line with Pye-Barker’s mission. We cannot wait to see what the future holds.”

Pye-Barker CEO Bart Proctor, stated, “The Bates family has created an impressive and highly successful business with a foundation of values that align with Pye-Barker. Together, we will continue to uphold the local feel that has made Bates Security integral to its communities and a great place to work for all team members.”

Bates Security was represented by Mark Sandler, managing director at SPP Advisors, in the undisclosed transaction.

Pye-Barker Fire & Safety bills itself as the largest fully integrated and full-service fire protection, life safety and security services provider in the United States. The company, with more than 200 locations and 6,000 team members nationwide, ranked and No. 8 on the 2024 SDM 100. //

Along with the acquired accounts, Doyle Security will be retaining DFT Security’s Fredonia office and seven employees. Fredonia will become the 10th Doyle branch in New York, joining Buffalo, Olean, Syracuse, Watertown, Albany, Fishkill and Catskill, N.Y., plus Erie, Pa., and the corporate headquarters in Rochester.

“DFT has earned an incredible reputation in the security and life safety industry, and we couldn’t be prouder to be merging with their security division,” stated Doyle Security President and CEO Jack Doyle. “Our mutual passion for customer service and our alignment on values really makes this an excellent fit for us.”

DFT Communications shares many common traits with Doyle Security including being a family-owned company for more than 100 years, according to an announcement. DFT will retain their internet and phone services, staff and accounts.

Doyle Security Systems, ranked No. 23 on the 2024 SDM 100, states that it is the largest security company in New York. Family owned and operated since 1919, the company services more than 45,000 residential and commercial customers across New York and Pennsylvania. //

In a blog, George Sewell, government relations coordinator, Security Industry Association (SIA), explains businesses must notify their employees bound by noncompete agreements that these agreements are no longer enforceable. Senior executives with existing noncompete agreements can remain under those terms, but employers will be prohibited from establishing or attempting to enforce any new noncompete agreements, regardless of the employee’s position within the company.

On April 24, the day after the FTC announced its ruling, the U.S. Chamber of Commerce filed a lawsuit against the agency’s near-total ban on noncompete agreements, Sewell explains. The Chamber of Commerce contends that the FTC lacks the authority to implement such a comprehensive ban. They argue that while the FTC can enforce antitrust laws enacted by Congress, it does not have the right to establish rules defining other company practices as anticompetitive without explicit congressional authorization.

“Companies should consider making preparations for potential implementation of the new rule but also monitor its status should legal action result in delay or cancellation,” Sewell advises. “Many observers believe it will be struck down in federal court, and if this occurs after the rule becomes effective, then applicable policy would revert to state law. The Security Industry Association (SIA) will continue to track developments and provide related analysis for SIA members.”

The Chamber of Commerce said the decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers and the U.S. economy.

“The Federal Trade Commission’s decision to ban employer noncompete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive,” said U.S. Chamber of Commerce President and CEO Suzanne P. Clark.

A major concern is that companies, including small businesses, may incur substantial legal costs as they are forced to find alternative ways to protect their investments, Sewell points out. Small businesses, in particular, could suffer under this rule, as they will be unable to prevent larger companies from hiring their top employees, potentially risking the exposure of confidential information. //

The move to acre Intrusion reflects acre’s holistic approach to security, underscoring the strength and centralization of the company’s entire portfolio, according to the company. The naming strategy is said to highlight that acre solutions are both robust and adaptable, tailored to meet the specific needs of customers while offering peace of mind through acre’s demonstrated expertise and experience.

“Since its inception, acre has been dedicated to transforming security from a complex challenge into a seamless aspect of our clients’ daily lives,” said Mark Roberts, CMO, acre security. “The transition to acre Intrusion highlights our commitment to a more modern branding structure that mirrors this mission. This strategic effort also supports the broader acre security solutions portfolio and ensures that we continue to meet the high expectations of performance and reliability that our customers rely on. Also, it is important to reinforce that this initiative is strictly about the branding and positioning of our intrusion portfolio. No products are being end -of-lifed. We continue to offer the same comprehensive intrusion portfolio, now unified under the acre banner.”

Based in Plano, Texas, acre security employs more than 500 employees in more than 25 countries. Through a portfolio of cloud, on-premises, and hybrid solutions, the company offers a broad array of solutions including access control, visitor management, intrusion, as well as workplace, transmission and connectivity solutions. //

The new facility is intended to better serve customers as the Axis Communications product portfolio expands and its partner ecosystem grows. The space also offers additional meeting space, with plans to expand staffing in the future.

With another Texas AEC located in Houston, the new location will serve various industries across North Texas such as defense, financial services, healthcare and information technology offering localized on-the-ground support and opportunities to demo innovative Axis technologies across video, audio, access control and analytics, as well as solutions offered by Axis technology integration partners.

As an integral part of the Dallas-Fort Worth (DFW) Metroplex — and as the third most populous city in Texas — Dallas is a center for technological innovation and hosts the corporate headquarters of approximately 6,000 companies, resulting in the DFW metropolitan economy being the fourth-largest in the U.S. Along with some of today’s most innovative companies, the new Axis AEC will integrate itself into the community not only as an economic driver, but as a technological visionary as well.

The new 15,000-square-foot AEC is double the size of the former Irving facility, and is unlike any Axis has unveiled thus far, with a completely different style and unique features including:

• A Solutions Theater where visitors can see different Axis technologies working together under one software solution (AXIS Camera Station), as well as an Interactive Solutions area where visitors can engage in hands-on learning around how Axis products actually work together.
• An Image Usability Lab, which includes custom displays to demonstrate how Axis solutions perform under challenging scenarios.
• A dedicated Demo Room with a large-screen video wall to review footage captured by Axis devices.
• Analytics Alley, showcasing many of the different analytics Axis offers to enhance security systems.
• The Partner Pavilion, highlighting third-party vendor technologies that work well with Axis products and provide solutions for difficult applications.

“Axis is excited to expand into one of the most prominent business hubs in Texas, bringing our world-class security technologies and expert support to local organizations across industries,” said Steve Stanberry, business area director, South Central at Axis Communications. “We look forward to meeting and working with local enterprises to enable enhanced safety and security efforts in addition to increased business value. With this grand opening, we’re proud to further our core mission of fostering a smarter, safer world with state-of-the-art technology solutions.”

Axis, along with local partners, customers, and stakeholders, celebrated the Dallas AEC grand opening with a formal ribbon cutting on May 8. In addition, the grand opening event featured tours of the space led by Dallas-area Axis staff, as well as live country music and special appearances by Dallas Mavericks mascot, Champ, and Dallas Cowboys mascot, Rowdy. //

An announcement states, “Security technicians are the unsung heroes on the front lines of safety, whose dedication and expertise help ensure that our homes, workplaces and national infrastructure remain secure. Recognizing these professionals is not just an acknowledgment of their tireless efforts but a testament to their pivotal role in advancing the security industry.”

This year’s recipients are said to be standout examples of commitment and leadership, who have each demonstrated exceptional customer service, technological proficiency and professional integrity.

The 2024 Security Technician of the Year award recipients are:

• Calvin Sprague, technician III, Stealth Monitoring
• James Brevard, master installation technician and trainer, ADT
• Chris Gordon, level 4 security technician, SAGE Integration
• Peter Gagne, technician III, Stealth Monitoring
• Vanna Phan, electrical technician 4, M.C. Dean
• Jeff Lane, fire division project manager, Down East Protection Systems
• Kyle Ackerman, installation technician, Everon
• Anthony Jeffries, electrical technician 3, M.C. Dean
• Harry Hoyte, senior service technician, Grid Squared Systems
• Aaron Welch, head of hardware, Nexkey

“The Security Technician of the Year Awards shines a spotlight on the incredible talent within our industry,” said Ken Kocher, president of Force Security Solutions and treasurer of the FAST Board of Directors. “These awards are a way to recognize the outstanding work of security technicians and to showcase the significant impact they have on all of us.” //

Huggins is the vice president for government programs and national accounts at ASSA ABLOY Door Security Solutions and is a retired U.S. Marine Corps gunnery sergeant. He serves as a member of the USO of North Carolina Advisory Board and a member of the Carolinas Freedom Foundation Board of Directors.

“I am honored to have the opportunity to lead the SIA Veterans in Security Forum,” Huggins said. “The security industry offers outstanding opportunities for veterans to continue to serve in a protective capacity, and people with military experience bring vital skills and commitment to their community to the sector. We have ambitious plans for this new group, and I’m excited to get started.”

SIA CEO Don Erickson lauded Huggins’ commitment to serving veterans and the security industry.

“Jeff inspires our membership community with his sincere commitment to our nation’s service members and support for SIA’s mission,” Erickson said. “As an active SIA member, Jeff recognizes the potential high impact of the association to connect our nation’s heroes with compelling and rewarding career opportunities in our industry. We greatly appreciate Jeff’s willingness to share his passion for the military community and the industry through this important SIA leadership role. We are fortunate to have Jeff’s vision guide the future of this new community within SIA.” //

“By combining Axon’s 30-year legacy of innovation with Dedrone’s cutting-edge airspace security solutions, we aim to revolutionize public safety once again,” stated Axon Founder and CEO Rick Smith. “Together, we will accelerate our efforts in creating a more advanced end-to-end drone solution that enables the good drones to fly and helps ensure the bad ones don’t.”

Founded in 2014, Dedrone has been venture funded with $127 million in total from existing investors, including Axon, which co-led a round of financing with VC firms in July 2022, and has had a seat on the Dedrone board.

Dedrone CEO Aaditya Devarakonda said, “Dedrone’s growing impact across industries such as federal governments, utilities and critical infrastructure, event venues, airports, correctional facilities and other enterprises, coupled with Axon’s powerful ecosystem of connected devices and software, will put us at the forefront of ensuring not only the safety of our communities but also the security of nations around the world.”

The transaction is subject to customary closing conditions and is expected to close in the second half of 2024. Axon was advised by Sullivan & Cromwell LLP and Morgan, Lewis & Bockius LLP, and Dedrone was advised by Tidal Partners and Wilmer Cutler Pickering Hale and Dorr LLP in connection with the transaction. //