This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.

The European building automation market is seeing further evidence of consolidation and investment, as acquisitions continue to intensify competition in the sector. In the last two years, corporate buyers providing building management solutions, energy services and technical facilities management have acquired solution providers and system integrators as a strategic investment or as bolt-on acquisitions to expand their offering to commercial building owners and operators.

Some of the key transactions are highlighted below, all taken from Memoori’s H1 and H2 reports on M&A and Investments in Smart Buildings.

In Germany, Bosch Building Technologies announced the acquisition of GFR – Gesellschaft für Regelungstechnik und Energieeinsparung mbH headquartered in Verl, in July 2019. GFR offers complete building automation solutions, hardware and software products as well as related services. The company augments the Bosch portfolio of building automation solutions for more security, comfort, and efficiency in commercial buildings.

GFR employs around 260 people at nine locations in Germany. The firm reported 2017 revenues of 23.9 million euros, down by 21.5% compared to the previous year when 30.5 million euro was reported. This decline was attributed to the fact that in 2016, some major projects were completed.

Bosch Building Technologies is a global supplier of security, safety, and communications products and systems, offering solutions and services for building security, energy efficiency and building automation in selected countries. This Bosch division, formerly known as Bosch Security Systems, employs about 9,000 associates and generated revenues of roughly 2.0 billion euros in 2018, the majority of which relates to security and life safety systems.

This acquisition is the third transaction in the building automation sector for Bosch in the last four years, the first in Germany. Bosch has been pursuing an expansion strategy in the U.S. with the acquisitions of Skyline Automation, a specialist building automation systems integrator located in Clifton, NJ in 2016 and Climatec, a U.S. provider of energy-efficiency, building automation, and security solutions in 2015.

We are also seeing private equity firms invest in European building automation firms. In Romania, Abris Capital Partners recently announced that it had acquired a majority stake in Global Technical Group, a building management solution provider in Romania, partnering with the two founders, Fadi Rida and Mihai Stanescu, to grow the operations of the Group and further expand in the Central & East European region. The transaction is conditional upon securing clearance from the anti-monopoly authorities.

Global Technical Group is a leading technology and security integrator in Romania. Its building management solutions are complemented by proprietary software platforms such as CAVI Connected Buildings platform and Share Alert. Over the last two years, the Group has more than doubled its revenue by providing blue-chip clients in sectors such as real estate, banking and retail with solutions that helped them shift from traditional, physical systems to technology-enabled systems. The company recorded 2018 turnover of 32 million euros, an increase of over 85% compared to 2017. For the current year, the company estimates turnover of about 42 million euros.

Nordomatic AB, the leading independent building automation systems integrator in Sweden, is pursuing an aggressive acquisition strategy. Backed by the Adelis Equity Partners Fund, Nordomatic embarked on the next phase of growth in 2016, aiming to be the leading smart buildings and real estate automation specialist in the Nordic region.

In the last three years, Nordomatic acquisitions include dominus A/S, a leading provider of open building management systems in the Danish market, Kabona, a Swedish energy efficiency specialist and Danish building automation specialists including Modus Control in Aabenraa, JTN Automatik in Kastrup, Aarhus and Esbjerg, as well as H & N Technology in Næstved and most recently Dansk Automatikservice in Greve and DP Bygningsautomatik A/S in Aarhus. Nordomatic has over 400 employees and estimated sales of 78 million euros of which approximately 54 million originates in Sweden.

The Czech utility group, CEZ entered the German market for energy services for companies and public administration with the July 2017 acquisition of Elevion. Elevion Group is a leading integrated provider of multi-technical building services and a well-established trademark on the German ESCO market. The company represents a strong platform for providing energy services to industrial corporations, cities and municipalities. In 2018, the Elevion Group generated sales of around 400 million euros and employed around 2,500 people at over 40 locations and in 2019 is expected to report a total output of around 500 million euros with around 3,000 employees.

The building automation business of the group has been recently augmented by the acquisitions of several small companies including Kirschbaum & Rohrlack and En.plus, and by the May 2019 acquisition of the Hermos Group, an automation and IT specialist with around 100 million euro revenues.

In July 2018, CEZ Group also acquired Kofler Energies, a German group providing a broad range of ESCO services, with the aim of acquiring a growth platform also for energy solutions. Kofler Energies has nine branches in Germany, with sales of approximately EUR 28 million in 2018. Kofler Energies complements Elevion Group's presence on the German market. Engineers at Kofler Energies focus on designing and planning energy solutions that Elevion can then implement.

Other strategic buyers in the building automation and energy services market include Bravida, a multi-technical service provider in the Nordics; Engie, the French utility group; Bouygues, the French construction and energy services player, SPIE, the French multi-technical services provider and Dussmann, a German technical facilities management group.

The above-mentioned deals are covered in Memoori’s report on M&A and Investments in Smart Buildings H1-2019 which consists of 70 slides and supporting Excel files with complete listings of acquisitions and investments covering 2.5 years since January 2017, based on Memoori’s relational database of deals. The report includes 20 company profiles of acquisitions and investments together with 20 profiles of buyers and investment firms, presenting our view of their respective strategies and significant M&A or investment activity. The H2-2019 report will be published in January 2020.