There are two major forces that are reshaping the Security and Safety Industry. The first is a rapid consolidation process that is inevitable but it is particularly powerful when any business is young, immature and growing fast. The second is a heady cocktail of converging technologies, from the even faster growing, Web Services, IT and Digital Electronic industries that have only been introduced into our industry in recent times. For these to combine to provide a profitable business require some fundamental changes and reshaping of the industry. This is why new alliances and partnerships are occurring, between these businesses and the security industry. But to leverage the research and development costs there is a need to rapidly scale up and establish a global presence. This can be best achieved through or by the acquisition of those companies that have either the technology, financial resources and or the distribution networks in place.

Both Schneider Electric and UTC commenced business in the Security and Safety industry in 2003 through the acquisition of major players. Since then they have both pursued a policy of buying companies with a very significant share of the business and geographic spread. They have both made a heavy investment in a series of acquisitions in this business and are in 2008 amongst the top ten world suppliers and achieved within 5 years. Now they have size, expect their additions to be smaller high tech companies. Stanley Works is another company that has spent heavily in the electronics security market since 2003, making its first change in future direction from mechanical to electronic systems with the purchase of Blick Plc. Since then it has majored in buying large US installer / automatic receiving service suppliers building up a country wide network and is now also included in our league table of the top major suppliers in the world market. Siemens and Bosch both well established leaders in this market for many years have not pursued an aggressive acquisition policy favouring a more selective acquisition of strengthening technology and geographical gaps in their portfolio. Tyco and GE Security have in the last few years slowed down their policy of acquisition, but the former has in the last three months made a couple of acquisitions in the retail sector further establishing its world dominance in this vertical market.

One of the most powerful indicators shown through the analysis in the monthly report is the correlation between value benchmarks and the capability and adoption of leading edge technology of the target company. Relatively small companies in IP Video analytical software and communications are exiting at ratios of 3 times annual sales and those with biometrics technology can exceed this. Some will argue that the buyer is paying too much. But a quick check on L-1 Identity Solutions a leader in its field, who have acquire around 10 companies having biological identity solutions in recent years shows that they are a very profitable operation working on high margins so their business from paying well for successful high tech companies.

Acquisition activity is taking place right across all applications but video surveillance is making the largest number of deals followed by access control and then intruder alarms. IP Video is currently the star when taking into account the issue of IPO's and influx of seed capital. We have identified almost 100 companies in various aspects of analytical software IP cameras and communication software and hardware that have entered the business since 2000 with the majority in the USA being no more than 3 years old. Israel is another country punching well above its weight when it comes to innovation in security technology. The future continues to look bright but it is inevitable that growth will slow down a little and with it the consolidation process adjusting to the effects of the world wide credit crunch. The majors in the business have strong balance sheets and no restrictions on financing suitable acquisitions but medium and small companies will find it more difficult to obtain finance and this will also apply to management buy outs.