Diversified Industrials M&A Trends: Fall 2020
Published April 20, 2021
Fire & Life Safety and Security Services Spotlight
- Private equity investors for general industrial funds are continuing to prioritize opportunities in resilient sectors, such as Fire & Life Safety and Security
- Fire & Life Safety and Security are seeing high levels of consolidation as multiple PE firms and major national strategics pursue roll-up strategies
- Expanded IoT and 5G modernization are continuing to drive hybrid industrial technologies and building automation models. As a result, there are substantial upgrade opportunities over the coming years via commercial or DIY mode
COVID-19 has driven a high level of market uncertainty in numerous sectors of the private markets. The Fire & Life Safety and Security markets have been fairly resilient relative to the overall market attracting a high level of investor interest. At Meridian Capital, we cover the Diversified Industrials industry including Fire & Life Safety and Security. Meridian’s Diversified Industrials practice provides deep sector expertise, comprehensive access to industry wide strategic and financial sponsor relationships, and proven transaction experience to help maximize shareholder value.
Fire & Life Safety and Security Services Market Insights
Financial Investors Increasingly Focused on Industrial Services Sectors
- With economic headwinds in key industrials sectors, private equity investors for general industrial funds continue to prioritize opportunities in resilient facilities services sectors.
- Investors are focused on investing in companies where there is a high level of recurring monthly revenue (“RMR”) and near-term opportunities for expansion in services and scale.
- With more than 60 deals in the space over the past year, two thirds have involved a financial sponsor.
COVID-19 Drives Changes in Forecasted Commercial Real Estate Occupation Levels
- Stay-at-home orders have resulted in vacant and vulnerable commercial buildings, emphasizing the importance of ongoing fire safety inspection and maintenance services.
- While the sector tends to be recession resilient, the evolving commercial real estate market, challenges to the hospitality sector, and forecasted suburbanization could impact installation-focused businesses.
- Covid-19 has also driven increased demand for enhanced HVAC filtration systems at commercial properties.
Continued Emphasis on Modernization and Updating for Smart Buildings
- Expanded internet of things and 5G modernization are continuing to drive hybrid technology and services building automation and security models.
- The ongoing conversion of fire alarm systems to cellular will provide substantial upgrade opportunities over the next few years.
- The significant recent investment by Google in ADT represents a major milestone in the maturity of the smart security market and is expected to accelerate the growth of DIY home security systems.
Source: CB Insights, U.S. Small Business Administration, PitchBook Data, IBISWorld, Company Press Release, IHS Markit, National Fire Protection Association, Feedonia, SDM, and Meridian Research
What We’re Reading
Google invests in ADT, will integrate its Nest devices into smart home business – The Verge
Takeaway: Big Tech is making headways into the security services business as legacy security services providers look to integrate smart-home devices.
SDM: State of the Market: Fire Alarms 2020 – SDM Magazine
Takeaway: Industry continues to experience strong growth despite challenges related to COVID-19 as fire & life safety businesses continue to look for opportunities to build more RMR.
Retrofitting homes with lower cost sprinkler technologies – U.S. Fire Administration
Takeaway: The U.S. Fire Administration is supporting research on the retrofitting of homes with fire-sprinkler systems, which could help open up incremental residential fire-sprinkler system opportunities for fire & life safety businesses.
Fire & Life Safety and Security Services M&A Activity
M&A Activity and Market Trends
Source: CB Insights, U.S. Small Business Administration, PitchBook Data, IBISWorld, Company Press Releases, IHS Markit, National Fire Protection Association, Feedonia, SDM, and Meridian Research
Recent Transaction Spotlights
Description: National Fire & Safety, a portfolio company of Highview Capital, has acquired Element Fire Protection LLC.
Rationale: The acquisition meaningfully expands National Fire & Safety’s subsidiary RCI Systems, Inc.’s scale and leadership in the Phoenix market.
Description: Certasite has merged Advanced Fire Company, Approved Fire Protection, and Advanced Fire & Security to form Advanced Fire, a CertaSite Company.
Rationale: The acquisition continues CertaSite’s regional roll-up strategy and expands the company’s presence in Pennsylvania.
Description: ADT acquired Alliant Integrators, a provider of commercial fire alarm detection, installation, inspection, and maintenance.
Rationale: The acquisition bolsters ADT’s ability to serve mid-market and national commercial accounts by deepening the Company’s geographic footprint in Kentucky and southern Indiana.
Consolidation in Fire & Life Safety and Security Market
Fire and Life Safety Services
Highly fragmented market in early stages of aggressive consolidation with multiple PE firms pursuing roll up strategies
Market further along consolidation curve with major national consolidators and a handful of regional consolidators continuing to be active
Select Fire & Life Safety and Security M&A Transactions
|Date||Target||Buyer||Target Description||EV ($M)|
|Sep-20||American Fire and Safety||Pye Barker Fire & Safety, Leonard Green & Partners||Provider of fire and life safety services in Laurel, Mississippi.|
|Jul-20||Kennebec Fire Equipment, Inc.||AI Fire, Audax Group||Provider of fire protection equipment.|
|Apr-20||Basic Fire & Safety, LLC||Performance Systems Integration, The Riverside Company||Provider of fire and life safety services in Washington, United States.|
|Mar-20||Alpine Fire & Safety||Pye Barker Fire & Safety, Leonard Green & Partners||Operator of a fire protection company based in Burlington, Washington.|
|Mar-20||Advance Fire Extinguisher Company||CertaSite, The Riverside Company||Provider of fire and life safety services in the Puget Sound area of Washington State.|
|Feb-20||Florida Fire Safety||Pye Barker Fire & Safety, Leonard Green & Partners||Operator of fire extinguisher service company based in Miami, Florida.|
|Feb-20||Certified Fire Protection, Inc.||Leonard Green & Partners||Operator of a fire protection company based in Las Vegas, Nevada.|
|Feb-20||Florida Fire Safety||Certified Fire Protection||Operator of a fire protection company based in Las Vegas, Nevada.|
|Feb-20||LRC Fire Safety, LLC||Ai Fire, Audax Group||Operator of a full-service fire and safety company.|
|Jan-20||Defenders Inc.||ADT Security Services||Operator of a home automation company intended to provide home security and automation option services to users fitting their needs.||$289|
|Jan-20||Strauss Security Solutions||Security Equipment||Provider of full-service home security systems based in Urbandale, Lowa.|
|Dec-19||Bay Line Fire Protection, Inc.||The Summit Companies, CI Capital Partners||Provider of fire protection system installation and inspection services.|
|Dec-19||Allied Universal||Warburg Pincus||Provider of security and facility management services in the United States.||$7,000|
|Dec-19||Byrd’s Fire Protection||The Summit Companies, CI Capital Partners||Provider of fire equipment sales and services based in Murray, Utah.|
|Nov-19||Florida Fire Service, Inc.||Align Capital Partners||Provider of fire protection services.|
|Nov-19||Pye Barker Fire & Safety||Leonard Green & Partners||Provider of route-based fire protection and commercial cleaning services to restaurants and food service companies.|
|Sep-19||Southern Supply Inc||The Summit Companies, CI Capital Partners||Manufacturer and supplier of fire protection, first aid safety and emergency products & services.|
|Sep-19||PAW Security, LLC||The Summit Companies, CI Capital Partners||Provider of fire safety products and services.|
|Sep-19||Hoodco systems Inc||AI Fire, Audax Group||Provider of fire protection systems for the restaurant industry.|
|Aug-19||Performance Systems Integration, Corp.||The Riverside Company||Provider fire and life safety services.|
|Jul-19||County Fire Protection, Inc.||CertaSite, The Riverside Company||Provider of fire protection services based in Kent, Ohio.|
|Jul-19||Field’s Fire Protection Inc.||CertaSite, The Riverside Company||Provider of fire protection services.|
|Jun-19||Security Corp.||Red Hawk Fire & Security||Provider of integrated security systems and services.|
|Jan-19||Red Beetle Fire and Safety, LLC||Cintas||Provider of fire and safety products and services to multi-unit family complexes, industrial buildings, retail buildings and stores, restaurants, office buildings and more.|
|Oct-18||Flametamer Fire Protection, LLC||CI Capital Partners||Provider of fire protection products and services.|
|Oct-18||Clark Fire and Safety||CI Capital Partners||Provider of fire protection products and services.|
|Oct-18||Dunbar Security Solutions||ControlScan, Thomson Street Capital Partners||Provider of managed security solutions for businesses.|
|Oct-18||LJR Security Services, LLC||NuLife Sciences||Provider of security systems services.|
|Aug-18||ABCO Fire Protection, Inc.||Align Capital Partners||Manufacturer of commercial fire alarm systems and technology.|
|Jul-18||Systems By Design Inc.||ADS Security||Manufacturer of security and fire alarms in Alabama.|
|Jun-18||YPS Integrated Systems, Inc.||Select Security||Provider of security and life safety solutions intended to protect customers, neighbors, and families.|
|Feb-18||Convergint Technologies LLC||Ares Private Equity Group||Provider of electronic security, fire alarm, healthcare technologies, physical security, communications and building automation systems.||$1,620|