Surveillance Cameras & Video Analytics

Most of the M&A activity in video surveillance this year was on the commercial/industrial side, with the biggest deal being the acquisition of Vancouver-based Avigilon (TSX: AVO) by Motorola Solutions (NYSE: MSI) for $1 billion in cash.

On the consumer side, we didn’t see too much activity in the surveillance category beyond Amazon’s acquisition of Ring. The other significant event was Netgear’s spin-off of the Arlo smart-camera business into a standalone public company (Nasdaq: ARLO), as noted above.

A few more surveillance-related events in 2018 straddled both consumer and commercial markets. Most of the interesting deals involved video analytics—technologies that recognize and track people and items.

Notably, Nortek Security & Control acquired Intellivision, a leader in artificial intelligence (AI), smart cameras and video analytics software. The acquisition has already borne fruit. At CEDIA Expo 2018, Nortek announced several Intellivision-powered products including a video doorbell with “advanced motion analytics” that can distinguish between people and other moving objects.

Also this year, Canon continued its video-surveillance buying spree with the acquisition of Briefcam, a popular provider of technology for rapid video review, search and analysis.

Finally, security giant Bosch led a $28 million funding round for AI start-up AnyVision, a provider of object-recognition software that pixelates faces when transferring data to the cloud.

Pro-Monitored Alarm and SHaaS

DIY-centric

2018 was a shake-up year in the alarm business, as big home-security firms jostled for position in a new era of DIY systems, no-contract monitoring, and the entry of big consumer brands like Amazon (Ring) and Google (Nest).

Both of these giants launched UL-listed, professionally monitored alarm systems in 2018. Notably, Ring shattered price barriers with its $10 fee for professional alarm monitoring, cellular back-up and cloud storage for an unlimited number of security cameras.

In other DIY news for 2018, the big daddy of no-frills (and oft-derided) monitored alarm systems, SimpliSafe, sold a controlling stake to the large private-equity firm Hellman & Friedman in a deal that reportedly valued the DIY company at $1 billion. H&F also owns Verisure/Securitas Direct and SnapAV (as of June 2017), the giant electronics manufacturer and distributor serving the home-technology installation channel.

Also, Nice Group S.p.A. acquired a majority stake in Abode, as discussed below in the “smart-home” section.

Pro-centric

Honeywell spun out its residential security business into a new public company called Resideo (NYSE: REZI), now one of the only pure-play, publicly held residential security and home automation firms in the U.S., along with Alarm.com (Nasdaq: ALRM).

Both Alarm.com and Resideo (Total Connect) have substantial SHaaS (smart home as a service) platforms. A third SHaaS provider, Telular/Telguard, also saw M&A action this year. It was acquired by an unlikely suitor, Ametek, a giant manufacturer of electronic instruments in search of a cloud platform.

One of Resideo’s chief rivals in pro-installed security and home-automation is Interlogix, part of Climate, Controls & Security (CCS) arm of United Technologies Corp. (NYSE: UTX). UTC announced this year it would spin out its CCS fire and alarm businesses into a new group under the Carrier brand. UTC continues to explore the divestiture of these businesses.

REVIEW: Mergers & Acquisitions of 2017

And there is more. DSC, a former Tyco company, was acquired by Johnson Controls in 2016. At the time, Tyco owned a large stake of another competitor Qolsys, and word on the street is that Johnson will acquire Qolsys outright. This year, Qolsys and DSC achieved closer integration between their systems by sharing wireless sensor technology.

Johnson did acquire at least one smart-home company in 2018—the smart-thermostat start-up Lux (below)

2Gig, a security and home-automation brand under Nortek (acquired by Melrose Industries in 2016), largely remains untouched, although Nortek formally merged its security and custom home-technology (“Core Brands”) businesses into a single division called Nortek Security and Control (NSC). The merger has borne fruit with tight product integration between 2Gig and Elan Home Systems, Nortek’s higher-end home-control line.

Of the other biggies, Napco (Nasdaq: NSSC) is still Napco, and the fiercely private Elk Products and DMP are still private.

The ones to watch in the pro-security and home-automation space are the former Resolution Products and IpDatatel – both up-and-comers in alarm/IoT products and platforms, respectively. The two companies merged in 2018 to create Alula, a provider of end-to-end security and smart home solutions for professional installers – from security panels, home-automation hubs, sensors and cellular communicators, all the way to the SHaaS.

Alarm.com sued unsuccessfully to quash the deal.

Meanwhile, in security services, ADT (NYSE: ADT) went public (again) less than two years after it was taken private by Apollo Global Management. Apollo paid almost $7 billion for the security and smart-home firm and merged it into erstwhile competitor Protection 1. The IPO priced at $14 per share— way less than the $17-$19 expected range—and raised roughly $1.6 billion, valuing the company at nearly $10.6 billion, excluding about $10 billion in debt.

ADT competitor MONI (formerly Monitronics), the alarm central station and dealer network firm owned by Ascent Capital Group (Nasdaq: ASCMA), acquired the rights to the Brinks brand in 2018 and now goes by Brinks Home Security. 

Smart Home & IoT: Home Automation Hubs and Smart Devices

Amazon acquired Ring for about $1 billion this year, just a few months after the e-commerce giant acquired smart-camera maker Blink. The Ring acquisition gives Amazon a highly popular brand of video doorbells and related surveillance products, a professional monitored DIY security system (Ring Alarm), and perhaps most importantly a massive network of highly engaged communities via the Ring Neighborhood app.

Foxconn spent nearly as much ($866 million) to acquire the IoTrio Belkin, Linksys and Wemo this year, giving the OEM/ODM giant its first consumer-facing brand – much like Flex (formerly Flextronics) did in 2015 when it rather unwittingly acquired Wink, which was later sold to rapper Will.i.am.

What Foxconn also nabbed in the Belkin deal was the Belkin joint venture, Phyn, developer of water management and leak detection technology. While leak detection has emerged as a hot IoT category in the last couple of years, primarily due to loss-mitigation efforts by insurance companies, the M&A activity in the category has barely begun. A good six or seven start-ups should be well positioned for equity events in the coming year.

Also this year, European controls company Nice Group S.p.A. upped its home-automation game and enhanced its U.S. presence with the acquisitions of Fibaro and Abode. Fibaro is a well established European developer of advanced home-automation systems and sensors. Abode is a U.S.-based up-and-comer that develops monitored security systems with home-automation capabilities, and also provides its own SHaaS platform for remote monitoring and control. Both Fibaro and Abode have been working to push their DIY-friendly systems into the professional installation channel.

Both Fibaro and Abode compete with MiOS, which was acquired by eZLO Innovation this year. MiOS makes the DIY-centric Vera home-automation system, powered by the company’s own SHaaS back-end.

eZLO, now helmed by former Savant COO Mark Samuel, is a four-year-old manufacturer of smart-home devices and platforms – mostly Z-Wave, mostly OEM, and mostly slow to launch. This year, the company introduced eZLO Atom, a Z-Wave-enabled smart-home-on-a-stick dubbed “the smallest hub in the world.”

In addition to MiOS, eZLO acquired sister companies Fortrezz and C&S Electronics in late 2018. Fortrezz is a fairly well-established maker of Z-Wave devices, and C&S is the proprietor of the DAM-it Water Control leak detection system, the preferred water-control solution for many Control4 dealers.

eZLO claims its new home-automation portfolio will position the company as a preferred vendor for insurance companies.

In smart thermostats, Johnson Controls acquired start-up Lux this year, and Legrand acquired Netatmo, which makes indoor-air quality and other smart devices, in addition to smart thermostats.

Many of the other smart-thermostat makers were acquired in recent years (Nest by Google, RCS Technology by UEI) – and several others enjoyed large funding rounds this year.

Ecobee, the company that arguably invented smart thermostats with geo-fencing, snagged its biggest funding round to date in 2018— $61 million—led by Energy Impact Partners with participation from Amazon’s Alexa Fund. Germany’s thermostat leader Tado, already backed by Siemens, fetched another EUR 43 million (USD 49 million) from Amazon and Total Energy Ventures this year.

Networking and Data Security

While ADT was going public this year, the company was investing heavily in its data security business. Last year the company acquired Datashield for its new ADT Cybersecurity unit serving commercial customers.

This year, ADT purchased Secure Designs, an Internet security firm with solutions for “every consumer” ranging from $5 to $30 per month under the brand Digital Security by ADT. Options include different levels of identity theft monitoring and protection, a personal secure virtual network (VPN) for “easy and secure app-based Wi-Fi privacy” outside of the home, and home network security via a secure Wi-Fi router that can be installed by a “trained ADT technician.”

Ruckus, which makes robust networking gear primarily for the enterprise but with a strong following in the home-technology channel, went to CommScope this year as part of a $7.4 billion acquisition of Ruckus parent Arris.

One of the more interesting deals in the home-tech channel was the acquisition of data-security firm Sienna Group by ConnectWise, which makes productivity software for a variety of service providers including home-technology installers.

ConnectWise will enable these service providers to more easily sell and support cybersecurity services.

Finally, Cypress Semiconductor this year acquired Cirrent, developer of software and cloud-based services for Wi-Fi provisioning and network security. Many of the top router providers and ISPs use Cirrent’s technology to help their customers connect.

Swapping out a router or changing a password? All Wi-Fi devices already provisioned for the original router automatically connect with the new credentials.

Service providers such as Comcast Cable employ Cirrent’s ZipKey hotspots to enable existing customers to connect automatically. The ZipKey network now covers more than 120 million homes.

Lighting

M&A activity has been rampant in the lighting category over the past few years – less so in the controls business than the fixtures business, and mostly in commercial/industrial sectors, rather than the consumer market.

The big residential-lighting event of 2018 was Lutron’s acquisition of Ketra.

Lutron’s deal was notable because it accelerated the lighting giant’s position in the consumer “Circadian” lighting market, where Ketra plays. It was also notable because Lutron doesn’t, as a matter of course, purchase other companies. The last big deal was the 2000 acquisition of Vimco, which propelled Lutron into the motorized shading business … in a big way. The same could happen in the wellness-lighting market with Ketra.

Also in 2018, Ring rather quietly acquired Mr. Beams, a leader in sensor-enabled LED lighting for the consumer market.

On the commercial scene, Siemens acquired innovative smart-lighting firm Enlighted, Masco acquired Kichler Lighting and Legrand acquired Kenall.

NEXT PAGE: IoT Silicon | Home Tech Channel | Health & Wellness | Bose | More

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IoT Silicon and Smart-Home Technology

While Qualcomm, Broadcom and NXP flirted and courted and failed to consummate, a few interesting IoT technology deals did go down this year.

Silicon Labs (Nasdaq: SLAB) acquired the Z-Wave business unit of Sigma Designs in 2018 for $240 million in cash. It was a coup for the chip-maker, which was already a leading provider of IoT solutions around ZigBee, Bluetooth, Wi-Fi, Thread and sub-GHz wireless.

ARM rounded out its Mbed IoT device management platform this year with the acquisition of Stream Technologies, provider of “unified connectivity management of devices anywhere on any network,” including cellular, LoRA and satellite.

ARM says the integration of Stream into Mbed will enable an “end-to-end IoT platform for managing, connecting, provisioning and updating devices.”

Google, too, upped its IoT game this year with the acquisition of Xively for a reported $50 million. Xively, formerly part of LogMeIn, is an IoT-enabling platform that powers smart-home solutions like Lutron’s Caseta Wi-Fi bridge. Google is incorporating Xively into the Google Cloud IoT platform.

Also this year, relative start-up Chirp Microsystems, with 15 employees in Berkeley, Calif., was acquired by Japanese electronics giant TDK. Chirp creates miniature, ultra-low-power, ultrasonic sensor technology that “outperforms infrared-based alternatives by every metric in real-world applications,” according to the California firm … and reviewers, too.

The sensors are being tested in drones, robots, virtual reality systems, and smart home devices.

As mentioned above, Cypress Semiconductor this year acquired Cirrent, the Wi-Fi provisioning and security platform. So too did Summit Wireless (Nasdaq: WISA), the technology company (formerly Summit Semiconductor) behind the WISA wireless surround-sound platform adopted by such companies as Microsoft (Xbox), Klipsch, Bang & Olufsen and LG.

Home Tech Installation (‘CEDIA’) Channel

Some of the usual suspects in the residential channel, like Legrand and Nortek, were pretty quiet this year on the home-tech front. And at least three historically non-acquisitive organizations—Lutron, RTI, and CEDIA—went shopping in 2018.

SnapAV, which itself was acquired in 2017 by private-equity firm Hellman & Friedman, continued its buying spree—but in a brand new way.

Here are some of the notable equity events of the year on the home systems integration channel:

Distribution

The custom home-technology channel saw a few very significant M&A events in 2018, including a major shakeup in the distribution landscape.

SnapAV surprised the industry with the acquisition of two strong regional distributors— Allnet in the Midwest and Volutone in Southern California.

SnapAV is a leading manufacturer and distributor in the home-tech channel, with arguably the best e-commerce, logistics and remote support engines in the industry. The acquisitions gave SnapAV its first brick-and-mortar branch locations—11 for now—and portend a buy-up of more regional distributors in the future to gain national coverage.

Meanwhile, two other top distributors merged this year— AVAD and WAVE Electronics—creating a national powerhouse with 32 branch locations in the U.S. and Canada. AVAD had been acquired by the private-equity firm Kingswood Capital in 2016, and the recent merger occurred when Kingswood acquired WAVE this year.

On the commercial-integration side, Stampede, a leading distributor in the pro A/V market, was acquired by the technology division of Dublin-based DCC Technology, a £14.3 billion “supply chain partner for global technology brands.”

Control

In the home-tech channel, M&A activity was fairly light in 2018.

Control4 began the year with the acquisition of Ihiji, the original remote network monitoring company in the home-tech channel. As it did with Pakedge, Control4 immediately killed the monthly fees that Ihiji used to charge dealers for each client account.

Multiple Ihiji-like companies have come and gone in the pro channel. The only other pure-play competitor that remains in the channel is Domotz. SnapAV’s four-year-old OvrC, however, is a fierce competitor, and networking companies have added remote monitoring and management tools to their routers and other networking gear.

Beyond the Control4 deal, Lutron purchased human-centered lighting provider Ketra (as mentioned above in “Lighting”), and RTI acquired Miravue, a start-up provider of A/V-over-IP systems. Notably, RTI became the “exclusive U.S. partner” of UK-based Pulse-Eight, which makes video-distribution and A/V control systems.

CEDIA

This year, home-technology trade association CEDIA made its first and second acquisitions ever, just one year after it sold its flagship CEDIA Expo to Emerald Expositions.

With the loss of its namesake trade show, CEDIA invested in regional events with the acquisition of Technology & Business Summits, a series of eight events around the U.S., hosted by independent reps and their vendors.

CEDIA also acquired The Cinema Designer (TCD), and renamed the company and the product The CEDIA Designer. A lightweight version of the theater-design software is now available free of charge to CEDIA members, and discounts are available for the full-blown version.

Audio/Video

The big news in A/V this year was the IPO of Sonos (Nasdaq: SONO), which is not faring well on Wall Street.

In the home-tech channel, in addition to RTI’s acquisition of Miravue, we saw UK-based Pulse-Eight acquire U.S.-based Zektor. Pulse-Eight specializes in multiroom video and Zektor on distributed audio.

This year, Leon Speakers boosted its commercial and outdoor audio (and lighting) line with the acquisition of Terra Speakers.

Sound United, which already owns Denon, Marantz, Polk, Definitive Technology and Boston Acoustics, acquired the former B&W brand Classé Audio, a manufacturer of high-performance amplifiers, pre-amplifier processors and integrated amplifiers.

Bose made some interesting detours in 2018. Literally. It (quietly) acquired the audio-tour startup Detour, an app designed to help people discover a city through narrated walking tours. In addition to its AR initiatives, Bose is getting busy in wellness, detailed in this feature story.

In IPO land, we noted above that Sonos (SONO) went public in 2018, as did Summit Wireless (WISA).

There was also the aforementioned CEDIA’s acquisition of TCD, and a formal merger of Nortek’s Core Brands and security companies into one happy Nortek Security & Control (NSC) business.

Health, Wellness and Aging

With all the hype in health, wellness and senior living these days, the M&A activity in the categories seemed pretty light this year.

Heck, companies are even giving BACK their health and wellness properties. Nokia, for example, sold Withings back to its original owner two years after it acquired the maker of Wi-Fi scales and other connected wellness devices. Nokia had used the $200 million acquisition to launch Nokia Digital Health. Er, never mind.

There were a couple of very interesting health-and-wellness acquisitions this year from rather surprising sources: Best Buy and Bose.

Best Buy paid $800 million to acquire GreatCall, provider of personal emergency response systems (PERS) with two-way talk. GreatCall, which had 900,000 paying subscribers when it was acquired in August, had itself been acquired one year earlier by Chicago private equity firm GTCR for an undisclosed price.

READ THE FEATURE:  Bose Ventures Made Some Really Interesting Moves in 2018: AR & Wellness

In addition to PERS, GreatCall provides healthcare/medication reminder apps and 24/7 access to a nurse or doctor and other services via a senior-centric wireless plan.

The acquisition bolsters Best Buy’s Assured Living service for seniors.

Bose has entered the wellness category. Through Bose Ventures, the company acquired Hush, a start-up that makes “smart” noise-masking earbuds designed to help users sleep, and Sync Project, which is pushing music as medicine. Sync co-founder and CTO Yadid Ayzenberg is now director of wellness software at Bose.

Other

We would be remiss in omitting the acquisition of CE Pro and other (former) EH Media brands by Emerald Expositions (NYSE: EEX), the trade-show and media company that acquired CEDIA Expo in 2017.

Also in 2018, Netgear acquired the Wi-Fi digital-frame and content company Meural, and plans to add a Netgear router into the frames. Forbes interviewed Netgear CEO Patrick Lo on the acquisition:

“We branched into Arlo [which Netgear is in the process of totally spinning out] which is about home security and safety. Now we’re into Mural and Orbi Voice [a WiFi router integrating Amazon Alexa] which is about home lifestyle,” Lo told me. “Orbi Voice gives you streaming of sound while Meural gives you the streaming of art, graphics, and pictures.”

Finally, in 2018, Monster Products filed a $300 million ICO (cryptocurrency offering) to sell “Monster Money” but later kiboshed the offering.

Did we miss your merger, acquisition or other big deal this year? Email the author, Julie Jacobson