Cloud will enhance M&A activity

"New" security dealer will emerge, John Mack says
Wednesday, December 9, 2015

FOSTER CITY, Calif.—The cloud’s benefits to end users, dealers and integrators will lead to more funding for M&A, according to John Mack EVP, co-head of investment banking and head of mergers and acquisitions, Imperial Capital.

Cloud is an important theme among many 2015 deals, Mack said, noting, among others, FLIR’s recent purchase of DVTEL.

Mack was speaking at the Cloud+ conference, held here. During “The cloud enables a new security dealer” session, Mack said that “private equity is very interested in the cloud-based business model.”

Customers are taking to the cloud for a number of reasons, he said. End users on the cloud have lower costs, paying per-month versus paying thousands for hardware on their own sites.

For dealers and integrators, cloud-based services—hosted video, hosted access, or a combination of the two—can be a profitable portion of their business.

Like the alarm model, dealers will have to invest up front and get customers to sign a three- to five-year contract, but there are a number of financing options. In some cases, manufacturers may help with financing, Mack said.

Putting information in the cloud and managed services “go hand in hand,” he said. “All physical security systems will be a managed service offering,” Mack predicted.

Manufacturers and integrators are adopting cloud-based business models. Also, “there are a bunch of startups that are cloud-based.”

The market opportunity is huge with small- and medium-sized businesses, and “the same opportunity applies in the national accounts marketplace,” he said.