The last 6 months have shown that security suppliers are working hard on all those strategies that can deliver new business opportunities. This has ranged from buying companies and assets, to forming alliances with other suppliers and getting new finance to implement product development and marketing and promotion. Our reports show that all these activities are well up on the same period in 2009. It is a real credit to this industry that despite some of the worst trading conditions and tight money supply in the last ten years, it has performed so well.

9 merger and acquisition transactions in June were more than double last month and 50% up on the same period in 2009. Consolidation activity has regained its momentum this month and the aggregate for the first 6 months of 2010 is still ahead on the same period last year. However the A&E; Business which security has a lot in common with, is still down on 2009 so by comparison the security industry is performing well. There are 2 mergers of note this month which stand out for different reasons. Nice Systems because of completing 4 strategic buys in 10 months and the sale of Protection One for $828m at a very healthy exit price confirming that nothing is being given away yet.

Nice Systems continued to accelerate its acquisition programme with the purchase of Eglue Software Ltd. This is the fourth acquisition that Nice have made in the last 10 months. The previous three companies are based in Israel and Eglue in the US, but was initially founded in Israel. All manufacture very specialist products and have been strategic acquisitions to enhance their security and real time decision and guidance offerings. Could Verint be the next target? There was a time some years ago when Verint had a serious interest in acquiring Nice so this would really be a twist in the tale. The other alternative is for IBM to resume their interest, which was rumoured a year ago.

GTCR one of the US’s leading private equity firms purchased Protection One for $828m. This marks its third collaboration with security industry expert Tim Whall, who previously partnered with GTCR on its successful investments in Cambridge Protection Industries ("Cambridge") and HSM Electronic Protection Services, Inc. ("HSM"). P-One is the third largest provider of electronic security monitoring services in the U.S. based on recurring monthly revenues ("RMR") as reported in SDM Magazine. GTCR paid $828m making an exit multiple on sales for Protection One of 2.23.

Alliance activity continues at a brisk pace and this month was no exception with some 10 arrangements being confirmed. Interoperability may no longer be enough according to Steve Titch of Security Squared. Vendors of IP-based surveillance cameras and video management systems are upping the ante on integration certification, providing integrators and users with documented validation of more comprehensive functional integrity between their respective platforms. As IP drives more user interest in assembling best-of-breed solutions, and as standards from groups such as the Open Network Video Interface Forum (ONVIF) and the Physical Security Interoperability Alliance (PSIA) are incorporated into commercial products, vendors find they need a stronger differentiator beyond basic plug and play.

Whilst consolidation in the security business, together with alliance arrangements has brought with it new business opportunities there has been in the last two months little news on the influx of investment funds to strengthen balance sheets. In the last two months we have identified some 2 to 3 investments per month in security companies, whilst in the first 4 months of this year this figure stood at 5 to 6. We hope this trend reverses because this investment has enabled our industry to outperform many of its peers because it has allowed new and better products to be development. This has been a major reason for its robust performance in these difficult times. In Technology Sections 4.3 and 4.4 we identify articles on some interesting trends in technology this month.

The security industry is in good shape but as always when a market goes through traumas and new technology is introduced there will be losers as well as winners. IP is the arbiter here and those who do not embrace it will not survive.