In the first quarter of 2012 we recorded 15 acquisitions just 1 down on the same period in 2011. In our Report The Physical Security Business In 2011 we showed that 2011 was a record high for mergers and acquisitions for the industry; but we forecast that for this year the value of deals would fall by 2.5% but the volume would increase by 5%. Although many of the deals this quarter did not disclose the financial details their value has fallen significantly, more than we forecast for the average for the whole year and it’s unlikely that any one deal exceeded $100m.
All the acquisitions were strategic with the 2 most notable being HID Global’s acquisition of Easy Lobby and Authentec’s acquisition of Proxure, Inc., a provider of syncing and cloud based storage services. None of the traditional multi faceted manufacturer / suppliers made acquisitions this quarter and for many of them this has been that case for the last 2 years. Despite the fact that these companies are cash rich they have not been tempted to go for growth through acquisition but have secured major deals in other areas of their business portfolio.
Whilst this quarter may be regarded by some as disappointing, given that the demand for Physical Security products and systems has outstripped economic growth; it does follow on from a decline in acquisition activity in the last quarter of 2011. Now that Tyco International has reorganised its businesses into separate entities built upon technologies and markets they are a more attractive target for acquisition. We expect in the next 6 months a little more than just speculation about possible bids.
Over the last 3 months we have been watching the developments in the market for Video Surveillance in the Electrical Transmission & Distribution Industry. This business under its “new” name of Smart Grid is undergoing a global transformation from a traditional low tech business to a high tech one. It is evolving into a fully digital IP based business in order to take on renewable distributed power and play its part in the 21st century low carbon economy. This business will need to invest some $2 trillion over the next 20 to 30 years to enable the world’s electricity grids to become “Smart”, interfacing with all its consumers and distributed energy suppliers.
Security of the Smart Grid is vital because it will now become vulnerable to cyber attacks and a significant part of the expenditure will be spent on software to prevent this happening. Security from physical attacks is also important and here millions of power substations will need to be protected with a high proportion being in remote locations, virtually all being unmanned. They will need to be monitored for safety and maintenance purposes. Real-time IP Video can play an important role in both monitoring their security and providing vital information on equipment performance.
Supervisory Control and Data Acquisition (SCADA) systems, which are already deployed in many power substations, can be easily integrated with video surveillance technology. By installing a real-time video monitoring system and connecting to a central control room, visual data to complement the raw SCADA data can be received. Real-time video monitoring can help ensure normal operations for power equipment, protect against intrusion and tampering by unauthorized personnel and prevent accidents. For example, intruders, physical obstructions or smoke indicating a fire can be seen via video so engineers no longer need to visit the site in-person each time to diagnose a problem, saving both time and costs.
A number of Video camera manufacturers have their “eyes” on this market. Video smoke detection has been operating for the last 10 years in industrial markets and more recently thermal cameras have found application here. These devices look particularly suitable for substation applications offering a combined function of fire detection, recording and monitoring equipment temperatures and security surveillance.