KKR Buys $90M Stake in Savant Home Automation, Valuing Co. at $215M
Private-equity firm KKR to acquire 35% stake in Savant Systems, maker of higher-end, professionally installed home automation systems, valuing the company at about $215M, less than half the value of Control4 (CTRL) on IPO day last year.
I speculated recently that Savant Systems, maker of higher-end, professionally installed home automation systems was positioning itself for an IPO or some other major equity event. That equity event was revealed today by the Wall Street Journal.
Private equity firm KKR is leading a $90 million round of financing to acquire a 35% stake in Savant. The deal (somehow) values the company at about $215M, according the the WSJ, which cites a “person familiar with the matter.”
Based in Hyannis, Mass., closely held Savant entered the market in 2007 with a very high-end system ($20,000 and up) sold and installed by professional installers or “home systems integrators”.
In the past two years, however, the company has de-emphasized its commercial and high-end offerings in favor of moderately priced smart home solutions that are still sold through professional integrators, not direct to consumer.
That’s not to say the high end is going away for Savant, but all of the company’s competitors at the high end are going down-market these days with solutions that start at less than $1,000—far more than the overly hyped DIY systems of late, but inexpensive by custom-installation standards.
The all-Apple platform that made Savant the cool kid on the smart-home block has given way to small Linux-based machines, anchored by a new product called the Smart Host, that can control lights, thermostats, audio, video, security, motorized shades and other smart-home devices. (The WSJ reported incorrectly that a Savant system starts with an Apple computer, which is no longer required.)
KKR is hoping to catch Savant on the upswing, as it did in 2012 when it invested $130M in Sonos.
Sure, Savant, like Sonos, will go public some day, just not today.
Is $215M a Good Valuation?
Savant is only the second pure-play home automation company, especially in the custom installation channel, that can provide any clues to company valuations. The first was Control4 (Nasdaq: CTRL), which has always made economy-minded control systems.
I estimated that Savant would come in at about the same or lower valuation of then-unprofitable Control4, which was valued at $500 million on IPO day, or slightly less than 5x revenues. Granted, today CTRL is trading low, giving it a market cap of around $350 million or roughly 2.7x revenues.
Savant would have the advantage of all the obscene valuations for DIY solutions these days (Nest, Dropcam, SmartThings, most notably), but would suffer from the widespread (and growing) perception that professionally installed, pricier systems are passe.
Rumors are that Savant had revenues of maybe $50 million at some point last year, with today’s estimates closer to $100 million. Financial figures have not been revealed.
I’m inclined to believe, however, that KKR arrived at a valuation for Savant that is consistent with Control4, especially since Savant has become much more CTRL-like this year.
Working backwards, then, and going on nothing but revenue, we might expect Savant to have revenues of something like $80M. That actually seems about right, but only with all things being equal ... which they never are.
CE Pro has been briefed by Savant and will have more insights tomorrow morning when the official news is released. “Exciting new products” will be revealed at next week’s CEDIA Expo 2014.
Valuing a Home Automation Co.: An Historical Perspective
CEDIA Home Automation Vendors Go Down-Market as DIY Thrives
Is Savant Systems Poised for Home Automation IPO?
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Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at email@example.com
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