Security Sales & Integration February 2023 - 40

Industry Finance
Annual Security
Investing Analysis
meet increasing customer demands for comprehensive
platforms.
Private equity firms also continue to invest
in the space lured by high growth and recurring
revenues despite the higher cost of debt
financing used to complete acquisitions. Some
of the largest acquisitions announced in 2022
were by private equity firms establishing a platform
investment in the sector, which will likely
lead to smaller bolt-on acquisitions through
2023 as these firms look to expand and augment
their platforms.
The stability of M&A and investment in
the industry demonstrates the critical nature
of companies in the security segment and the
continued optimism of future growth by potential
acquirors.
There were 12 M&A transactions of $1B+
in valuation announced or completed in 2022.
Here's a look at some of the notable transactions
in both physical security and cybersecurity
listed below.
Physical Security M&A
▶ Stanley Black and Decker sold its Stanley
Access Technologies business to Allegion
for $900M in July 2022. This will bolster
Allegion's access strategy and add additional
SMART HOME STOCKS: ONLY 5 OF 55 FIRMS FLOURISH
▶ FOLLOWING SEVERAL
years of strong gains, publicly
traded companies engaged
in the smart home industry
fell back to earth hard
in 2022, with an average
stock price loss of 32% for
the year. It is worth noting,
however, that nearly all 55
companies included in SSI
sister publication CE Pro's
Smart Home Stock Index are
highly diversified businesses,
so any rise or fall in their
stock price is not necessarily
directly related to the performance
of the company's
smart home interests. There
are a handful of " pure play "
smart home companies on
the list - Vivint, NAPCO,
ADT, Resideo and Snap
One - and several of those
companies performed well.
2022 Winners & Losers
Vivint Smart Home was
the biggest public company
stock winner in 2022. The
Ogden, Utah-based firm's
stock rose 21%. Much of that
gain came in December after
utility giant NRG Energy
announced on Dec. 5 it was
acquiring Vivint for a total
transaction price of $5.2
billion, including $2.8 billion
cash as a windfall. Following
the announcement, Vivint's
stock skyrocketed 33% in
one day.
Not coincidentally, the
fourth-largest stock price
gainer last year was another
installation company: ADT.
The No. 1 company in the CE
Pro 100, ADT saw its stock
price climb 8% for the year.
Among the notable actions
that helped ADT thrive in the
otherwise horrible stock market
was the announcement
that State Farm Insurance
acquired 15% of the company
in September. ADT also
expanded its partnership with
Google, which had invested
$450 million into it back in
August 2020.
NAPCO Security Technologies
was the second-biggest
public company stock winner
in 2022. NAPCO had an
impressive 10% increase in
its stock price following a 2:1
stock split on Jan. 5, 2022.
It was the fifth stock split in
the company's history.
The third-biggest gainer in
terms of stock price in 2022
was Belden, which had a 9%
increase. The cable manufacturer
continues to be on the
comeback trail from a turbulent
2020 when its stock fell
24%. In 2021, Belden's stock
bounced back up 57% gain.
The 2022 increase looks
like a continuation of its
comeback.
The only other stock that
showed an increase in 2022
was Honeywell, which was
newly added to the CE Pro
Smart Home Stock Index this
year. The HVAC giant still has
a strong market share with
smart thermostats among
integrators, even though it
spun off Resideo as a pureplay
smart home company
several years ago.
The other two aforementioned
pure-play stocks,
Resideo (down 37%) and
Snap One (down 65%), did
not fare well in 2022.
Other new companies on
the Index this year are:
▶ Cisco, makers of enterprise-grade
networking
gear installed by integrators
▶
Fortune Brands, owners
of Moen and its smart
water system targeted
at the custom channel,
as well as new owners of
Yale and August smart
locks. Both those brands
were recently acquired
from ASSA ABLOY.
▶ SmartRent, makers of
smart home solutions
installed by authorized
integrators for multifamily
property managers
If this were a weight loss
TV show, being labeled a big
loser would be a great thing,
but alas, that is not the subject
matter here. The biggest
stock price drops in 2022:
Summit Wireless Technologies
(WiSA), whose stock fell
92%. That follows a year in
which the stock had risen a
whopping 354%. Tuya, Arlo
and IAC Interactive also had
dramatic drops in their stock
prices in 2022.
- Jason Knott
40
Security Sales & Integration FEBRUARY 2023
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Security Sales & Integration February 2023

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