2017 was a big year for mergers and acquisitions in the smart-home, security and audio categories. M&A activity in IoT, including security and home automation, was brisk – with deals involving Icontrol, Insteon, iDevices, Z-Wave, Wink, UEI and Resolution Products — but we also saw an unusual number of transactions in home audio, particularly in the high-performance sector.
Higher-end audio companies Triad, D+M, AptoVision, Artison, Arcam, Beale Street Audio and Datasat were all acquired by niche players (ATI) and giants (Samsung) alike. Roku hinted at its next play with the acquisition of a Sonos-like multiroom audio company.
In networking, cybersecurity and lighting controls, most of the deals involved industrial-centric technology companies, but the activity foretells trends in the consumer/residential markets — smarter lighting systems and AI-endowed cybersecurity technologies are coming to the home.
In the custom home-technology sector, the three big ones were the acquisitions of CEDIA Expo (by Emerald Expositions), Milestone AV (by Legrand) and SnapAV (by investment firm Hellman & Friedman).
IoT, Smart Home
In March 2017, Alarm.com (Nasdaq: ALRM) and Comcast finally closed on the acquisition of Icontrol, a pioneering SHaaS (smart home-as-a-service) provider. The acquisition had far-reaching implications for cloud-based security and home-automation services, especially given the strong patent portfolio – much of it shared – belonging to Alarm.com and Icontrol. Honeywell had sued to stop the merger on antitrust grounds, but ended up settling.
After investing $36 million in Zonoff, ADT abandoned that effort and took all of its Icontrol business to Alarm.com, committing to at least five years. Meanwhile, video-doorbell manufacturer Ring hired almost all 75 laid-off Zonoff employees and nabbed important intellectual property that is currently tied up in the courts.
Hubbell (NYSE: HUBB), the $3.5 billion lighting and electronics manufacturer, went small with the April 2017 acquisition of iDevices, provider of consumer IoT gadgets. In August 2017, the companies revealed the first fruits of the acquisition – the iDevices Dimmer Switch – claimed to be the only hubless smart switch compatible with Siri (HomeKit), Alexa and Google Assistant.
Universal Electronics Inc. (Nasdaq: UEIC), a leading OEM provider of remote-control devices and platforms, added to its home-automation arsenal with the acquisition of RCS Technology, developer of connected-thermostat and energy-management systems. The purchase price for the acquisition of RCS assets will be approximately $9 million in cash plus incentive-based cash consideration to be paid over the next five years.
In 2015, UEI acquired Ecolink, a start-up provider of Z-Wave devices and security sensors for professional alarm systems. UEI plans to package a complete smart-home solution for service providers, especially the regional telecom and cable companies it already serves.
SmartHome, one of the original home-automation distributors, was acquired by the private investment firm Richmond Capital Partners in June 2017. The group purchased SmartHome’s parent company SmartLabs, which also owns Insteon, the “dual-mesh” home-automation protocol that works over RF and powerline.
Insteon over the years has been somewhat marginalized by Z-Wave and ZigBee, but many experts agree it is a fine technology and may find renewed relevance as a powerline technology, given today’s crowded RF spectrum.
The new owners intend to infuse $7.5 million into the business.
Flex, the OEM manufacturer of Wink DIY home automation systems, became the unwitting owner of the beleaguered company in 2015. Flex sold it off in July 2017 to rapper Will.i.am for $28.7 million up front, plus a $20 million commitment towards future manufacturing.
Wink joined the rapper’s i.am+ brand of gadgets that include camera accessories and headphones. The first product launch under Will.i.am? Some me-too Z-Wave peripherals. And, this just in, Wink now works with Sonos.
The acquisition of IoT start-up Stringify by Comcast was barely mentioned by either company except for a September 2017 “update” posted on Stringify's Website. Stringify enables connectivity among products and services from disparate providers via an if/then engine not unlike IFTTT. Stringify wrote in the update, “Comcast is a perfect fit for Stringify. With xFi and Xfinity Home, Comcast is delivering elegant, powerful IoT and automation experiences to millions of customers.”
Arrayent, an established cloud-service provider that helps manufacturers IoT-enable their devices, was acquired by Prodea Systems, a software and VC firm that announced in 2014, out of the clear blue, that it had become the “first company to make the vision of the truly connected home a reality.” The revolutionary new Residential Operating System (ROS), the company claimed, had “little to no direct competition.”
With a reported $100 million in financing, 1.5 million man hours of R&D, and seven customers worldwide, ROS would deliver “what others have only promised: a truly seamless connected life where everyone and everything speak the same 'digital language' and interact in ways never possible before.” That 2014 press release and the media adulation that followed … was the last we heard of Prodea since the acquisition of Arrayent, a very real and accomplished IoT provider.
Silicon Labs (Nasdaq: SLAB) announced in December 2017 it would bolster its IoT semiconductor business with the acquisition of Sigma Designs (Nasdaq: SIGM), the owner of Z-Wave home-automation technology. Z-Wave will join SiLabs' smart-home portfolio of Wi-Fi, Bluetooth, ZigBee, Thread and proprietary technologies, creating a formidable “one-stop shop for wireless connectivity solutions for the home,” says company CEO Tyson Tuttle.
In 2017, Synaptics Inc. (NASDAQ: SYNA), a leading developer of human interface solutions made two big acquisitions — Conexant and Marvell Technology Group — in line with its “long term strategy to extend its human interface leadership into the consumer IoT era.” Conexant Systems, LLC, a technology leader in voice and audio processing solutions for the smart home, has more than 480 patents granted or pending. The company, acquired for $300 million plus Synaptics stock, has shipped more than 27 million devices equipped with its far-field voice technology,
Marvell’s multimedia product line includes video and audio processing solutions for on-demand immersive media consumption. Acquired for $95 million in cash, Marvell offers “advanced media processing technology, coupled with deep content security capabilities.” The technology currently is deployed in set-top boxes, over-the-top (OTT) streaming media devices, virtual/augmented reality platforms, and digital personal assistants such as smart speakers.
For the first few years since Google acquired Nest, the two factions were (at worst) at war with each other, or at least not collaborating. Heck, each had their own incompatible connected-home platforms called “Weave.” Things changed in 2017 and the two groups drew closer, as evidenced by their collaboration at CEDIA. Shortly thereafter, Nest announced an upgrade to its IQ cameras to enable native voice control via Google Assistant. Not long afterwards, Google held a big press conference to announce the new Google Home Mini and Max, as well as new Nest integrations with the whole Google ecosystem. For example, while watching TV, a user can simply ask Google to “Show me the entryway,” and the camera image appears on-screen via Google Chrome.
In November, the Wall Street Journal reported that “Google may reunite with Nest as it takes on Amazon.” Sources told the paper that Nest might be folded into Google's hardware team.
Top IoT M&A Stories of 2017
- 10 Reasons Why Silicon Labs’ Acquisition of Sigma is Awesome for Z-Wave
- UEI Grows Home Automation Biz, Acquires Smart Thermostat Maker RCS
- ipDatatel, Resolution Products Merger: The One Alarm.com Tried to Kill
- Alarm.com and Comcast Close Icontrol Acquisition: What Now?
- Insteon, SmartLabs Acquired; New CEO Wants to Make Powerline Great Again
- Control4 Thrives in Q3, Triples Stock Price in 52 Weeks
DirecTV tried DIY security for four years after its 2013 acquisition of LifeShield. But not long after AT&T acquired DirecTV, they decided to shed the security business, selling it for an undisclosed amount to Hawk Capital Partners in July 2017.
AT&T has its own security and home-automation group, AT&T Digital, which the telco and ISP has reportedly been trying to sell since mid-2017.
The September 2017 merger between Resolution Products and ipDatatel – a manufacturer of security and home-automation products, and a provider of alarm communicators and SHaaS, respectively – might have been rather uneventful if not for this little thing: Alarm.com sued to stop the deal.
Alarm.com filed a temporary restraining order to halt the merger because former chairman Ralph Terkowitz was behind it. Terkowitz’s private equity firm ABS Capital Partners created Alarm.com in 2009 and at one point owned 80% of the company. In its complaint, Alarm.com argued Terkowitz and team had a “front-row seat” all these years and would use inside knowledge to compete unfairly against the now-public company (Nasdaq: ALRM).
The judge denied the TRO and the merger proceeded. No word yet from Terkowitz or merged companies on their next moves.
ADT made a major investment in digital security with its November 2017 acquisition of Datashield, a leading cybersecurity software provider with managed detection and response (MDR) services.
The acquisition puts ADT in a strong position to serve as both the physical security and digital security providers for corporate customers, protecting people and property, as well as data and privacy. Increasingly, businesses are merging both of these security functions under a single office of the CSO, or chief security officer. ADT could become the CSO for businesses and (eventually) homes that don’t have their own dedicated resources for the jobs.
Security and home-automation giant ADT filed paperwork for a $1.5 billion IPO, which would value the company at more than $15 billion. The stock is expected to trade on the NYSE under the ticker symbol ADT.
August Home, a leader in DIY smart door locks, announced in October 2017 it would be acquired by access-controls giant Assa Abloy, owner of erstwhile competitor Yale locks. Yale makes both ZigBee- and Z-Wave-compatible locks, and is the first (and only) company to announce a product compatible with Nest’s Weave home-automation protocol. When the Yale Nest Lock ships in 2018, it will be able to communicate locally with Nest thermostats, smoke detectors, cameras and new security system.
August, which announced its first Z-Wave product this year (August Pro), has been an early innovator in unattended access, enabling service providers to enter a premises while the homeowners are away.
Just before the close of 2017, Amazon announced it would acquire Blink, maker of Wi-Fi security cameras and, most recently, a video doorbell. Blink is best known for its dual-radio technology that conserves battery power by letting Wi-Fi sleep until awakened by a low-power sensor.
Smart Home Technologies at CES 2018
Privately held Leviton beefed up its new Lighting Business Unit with the acquisition of Birchwood Lighting, known for its specification-grade linear lighting solutions. Birchwood joins recent acquirees JCC, ConTech Lighting and Intense Lighting in Leviton's effort to “expand its lighting product offering, sales footprint and continuous effort to deliver the broadest portfolio of innovative, high-performance and sustainable lighting solutions and fixtures in the industry.”
Legrand has been buying light-fixture companies at a rapid clip over the past few years. Most recently the company acquired Original Cast Lighting, Inc. (OCL), a manufacturer of contemporary lighting solutions. Also in 2017, Legrand completed its acquisition of Finelite. In 2016, the company acquired another manufacturer of light fixtures, Pinnacle Architectural Lighting.
Digital Lumens, a start-up with a sensorized, networked IoT lighting platform was acquired by Siemens spinoff Osram. Terms were not disclosed but Reuters reported Osram paid something in the “mid-double-digit millions.” That's exactly how Digital Lumens described its 2016 sales. The company had raised more than $55 million in venture capital.
It wasn't a merger per se, but smart-lighting ecosystem provider Gooe acquired a $7.5 million stake in Evrything, IoT-enabling service for a wide range of applications including lighting. The duo says they can now provide “the world's first full-stack lighting operation platform” combining lighting components with lighting as a service (LaaS). Gooee calls this IoT suite “Lighting as a Host.”
Leading home automation provider Control4 (Nasdaq: CTRL) acquired ultra-custom speaker manufacturer Triad for $9.6 million in February 2017. The acquisition seems to be paying off. Less than one year after the acquisition, more than 1,600 Control4 dealers are purchasing Triad products, up substantially from the exclusive dealer base Triad used to serve. Triad revenue in Q3 2017 was $3.8 million, up 52% from the same period in 2016 before the acquisition.
In March 2017, Sound United LLC created an audio powerhouse with the acquisition of D+M Group, parent company of Denon, Marantz, Boston Acoustics and Denon’s HEOS wireless audio brand. These new brands join Sound United’s existing audio portfolio including Polk Audio and Definitive Technology. Sound United is a division of DEI Holdings, a portfolio company of Boston-based private equity firm Charlesbank Capital Partners, LLC. The acquisition put the group in a somewhat awkward position of being a gung-ho supporter of DTS Play-Fi for wireless audio on the one hand … and the purveyor of the Denon HEOS wireless platform on the other. Sound United is part of DEI Holdings, Inc.
Vanco International, a 50-year-old manufacturer and distributor of connectivity devices, has upped its game over the past several years, adding innovative, patentable solutions for home-technology installers. Most recently, in June 2017, Vanco acquired Beale Street Audio, a speaker manufacturer known for its products’ deep bass reproduction, wide soundfield dispersion and clarity.
Just a few months after Samsung closed on its acquisition of Harman, Harman announced in July 2017 it would acquire A&R Cambridge, Ltd. (Arcam), developer of VRs, amplifiers, DACs, speakers, and lifestyle music and movie technologies.
Arcam would join Harman’s luxury audio portfolio that includes JBL, Lexicon, Mark Levinson, Harman Kardon, Revel, Infinity, and Harman Kardon.
Amplifier Technologies Inc. (ATI), a designer and manufacturer of high-performance audio amplifiers and processing products, acquired Datasat Digital Entertainment (DDE) in July 2017, adding more high-end audio processing and audio amplification products to its lineup. Terms of the sale were not disclosed.
Home-automation developer Savant had a busy 2017, with the return of founder Bob Madonna to the helm, and several product launches in the motorized shades and multiroom A/V categories. In August 2017, the company announced the acquisition of Artison, a niche manufacturer of high-performance custom-made loudspeakers.
Apparently working on a Sonos-type speaker system, Roku acquired Denmark-based multi-room audio start-up Dynastrom ApS in September for $3.5 million, plus Roku stock. Dynastrom provides “AROS” middleware for Wi-Fi audio streaming. “The adaptive solution ensures users get the best possible audio experience, in good or challenged WiFi conditions,” according to the company. “Network conditions are monitored and the streaming strategy that provides the best audio experience is applied. … Multiple users can use the system at the same time, from different app’s and control interfaces.”
Roku (Nasdaq: ROKU) went public on Sept. 28, 2017, in a $252 million IPO that closed at 67% up on the first day of trading.
In December 2017, Auro Technologies, developer of the Auro 3D immersive audio platform, spun off its hardware arm, StormAudio, provider of A/V processors that support multiple immersive audio technologies including Auro 3D, Dolby Atmos and DTS: X. Aura now will focus on licensing Auro 3D.
Networking & Cybersecurity
Extreme Networks completed a $100 million acquisition of Avaya's networking business in July 2017, six months after Avaya filed for Chapter 11 bankruptcy. In October, Extreme closed its $55 million acquisition of Brocade Communications’ data switching, routing and analytics business lines, putting the company on a path to achieve $1 billion in annual revenues.
In December, Arris closed its $800 million acquisition of the Ruckus Wireless and ICX Switch businesses from Broadcom. The deal was contingent on Broadcom’s $5.5 billion merger with Brocade Systems, which owned Ruckus and ICX.
In February 2017, cybersecurity leader Symantec completed its $2.3 billion acquisition of LifeLock, which had 4.5 million members of its identity-protection service.
Palo Alto Networks (NYSE: PANW), a leading data-security firm, acquired LightCyber in February for $105 million. The privately held cybersecurity company, according to PANW, “has been leading the industry in the development of automated behavioral analytics capabilities, using sophisticated machine learning to quickly, efficiently and accurately identify attacks based on identifying behavioral anomalies inside the network.”
Cybersecurity provider ForeScout Technologies (Nasdaq: FSCT) went public in October 2017, raising about $116 million in an IPO that valued the company at about $800 million.
Misc. Home Technology Installation Channel
The big CEDIA Expo trade show will no longer be run by the association that launched the event almost three decades ago. The show was acquired by Emerald Expositions (Nasdaq: EEX) in January 2017 for $36 million. CEDIA is now focusing more heavily on education and regional trade events.
Nortek is reuniting its security and mass-market home automation group (Nortek Security & Control, or NSC) with its custom home-technology division Core Brands.
The combined group, now known as NSC, is led by current NSC president Mike O’Neal. He says, “The combination of NSC and Core Brands helps us serve our customers with an unparalleled suite of solutions for the residential and commercial control, security, entertainment, access and personal wellness markets.”
Nortek was sold in 2016 to Melrose Industries for $2.8 billion.
The June 26 acquisition of SnapAV by the Hellman & Friedman was a really big deal. We just don’t know how that bigness might manifest itself in the future. H&F isn’t known for collecting a bunch of profitable organizations, and letting them ride.
Instead they tend to do “transformational” things with their acquisitions, often supplementing them with other major transactions that would allow H&F to own or disrupt entire industries. So far, SnapAV simply continues as usual, dominating numerous categories in the home technology integration market – loudspeakers, networking, power-management, video surveillance, outdoor TVs, remote monitoring and control, whole-house A/V, mounts, racks and more. We are told that H&F had no particular play in mind when it acquired SnapAV, but we sure had fun playing the game: Who would SnapAV acquire under H&F?
Legrand, a leading provider of electrical and low-voltage systems, announced in June 2017 it would acquire Milestone AV for $950 million. Milestone is a leading provider of A/V peripherals.
The combined company will meld industry-leading brands in the home-technology sector including, from Milestone: Chief and Sanus (mounts) and Da-Lite (video projection screens); from Legrand: OnQ (infrastructure and mass-market home automation), NuVo (multiroom audio), Qmotion (motorized shades), Middle Atlantic (equipment racks and storage) and Vantage (lighting controls), among others.
More significantly, Legrand could come to dominate boardrooms and other commercial spaces that use the full breadth of products (and service providers) for A/V and control.
Old-style matrix switchers are quickly giving way to AV-over-IP schemes, and the battle is just beginning among competing technologies. SDVoE, developed by AptoVision (BlueRiver technology), is one of them. The organizations acquisition by semiconductor giant Semtech was announced in June 2017.
Semtech develops silicon for video signal processing, wireless IoT (LoRa), wireless charging and more.
Highland Partners, a private equity firm, announced in December 2017 the acquisition of Biamp Systems, a leading provider of audio, video and communications systems for commercial applications. Rashid Skaf, former CEO of AMX, was named president and CEO of the venture.
Top Custom Electronics M&As of 2017
- CEDIA Sells Ownership of CEDIA Trade Show
- H&F Acquiring SnapAV Not Just to ‘Accelerate Growth’ But to Do Something Huge in Home Tech
- In Depth: Why Legrand is Acquiring Milestone AV for Nearly $1 Billion
- Savant CEO Bob Madonna: Artison Acquisition ‘Shows the Strength’ of Home Automation Co.
- Control4 Purchases Triad Speakers for $9.6M
♦ Bose acquires Hush, a start-up provider of noise-masking earbuds designed to help users sleep.
♦ Apple acquires computer-vision start-up Regaind.
♦ Apple acquires Beddit, provider of sleep-monitoring solutions.
♦ George Risk Industries (GRI), a maker of security-system sensors, acquires Labor Saving Devices, one of the most beloved makers of wire-fishing and other installation tools. ♦
♦ Blackstone Group is eyeing an IPO for Vivint, which could yield $3 billion.
♦ Honeywell expands its industrial cybersecurity business with the acquisition of Nextnine and its ICS shield technology.
♦ Second-tier brands like Hisense and TCL are making a big splash in the consumer TV market these days, and Hisense recently got a boost from its $114 million acquisition of Toshiba TV. With that purchase comes Toshiba Visual Solutions Corp. (TVS), giving Hisense a “significant IP portfolio,” as well as two Japanese factories and a strong position in commercial displays.
♦ Lennar acquires CalAtlantic for $5.7 billion to become the largest U.S. homebuilder. The combined companies sold more than 40,000 homes in 2016. The deal is particularly newsworthy given Lennar’s move to strip most wiring from new homes and provide DIY security and automation systems rather than professionally installed solutions.
♦ Ooma, a telecommunications provider and developer of the Ooma Home security system, acquires Butterfleye, Inc., an AI-powered video camera and security platform with facial and audio recognition.
♦ Amazon acquired Whole Foods for $13.7 billion, which is significant on many levels. First, Amazon gets more brick-and-mortar outlets, where the company already is selling Alexa products alongside fresh produce, and erecting lockers for Amazon deliveries and returns. Second, the e-commerce giant can tie Whole Foods into its Prime rewards program, offering discounts to members and enticing them to pay an additional $14.99 per month for the AmazonFresh delivery service.