Merger and acquisition activity declined in 2012 by 27% but we forecast that it will return to its historic high of 2011 by 2017. The structural changes that are now taking place across the physical security industry will bring about more strategic acquisitions from within. The VCs have shown that they are much more confident of investing in the physical security industry, whilst major companies from the ITC and Defense industries continue to make forays into the security industry. We believe that in 2013 we can expect a mega-merger between two of the larger security players. These companies have with the rare exception not acquired any significant business in the last three years. That said, a mega merger is more likely to happen next year than it has for some time and the general prospects for growth through acquisition look a lot more promising.

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