The fire and security industry is one which comprises of many different aspects and service offerings. Most of the major sectors within this industry are demonstrating significant growth, for example, the fire protection industry has shown consistent growth over the last three years.
The sector is diversifying rapidly and M&A activity has increased in recent years. A number of significant deals have been completed, including the acquisition of Cape plc, by Altrad UK Ltd for £332m, the acquisition of ADT and the Johnson Controls mega-deal.
Matthew Sibley, Deal Executive at KBS Corporate, has completed several significant deals within the fire and security sector, establishing an extensive network within the industry.
As a sector which is showing consistent growth, as well as high levels of buyer interest, we spoke to Matthew Sibley on some of the key deals he has completed within the industry over the last 12 months, his predictions for the future and the trends he is witnessing.
What do you enjoy about advising on deals within this sector?
“It is a very interesting sector to work in due to the high demands that companies must meet, and the levels of service they provide. Our clients have spent a significant amount of time and money, and shown dedication to establish themselves in this complex industry. Therefore, it is particularly rewarding when a buyer is found that will continue this.”
Is there a deal you have completed that is particularly memorable?
“One of the key deals completed in FY18 was the acquisition of Fire Bright Solutions, by JLA Ltd.
“Fire Bright, established in 2003, offers a wide range of services which include the installation and system design of fire alarm systems, AOVs, emergency lighting and portable extinguishers, to customers throughout the UK. As the shareholders began to consider their gradual retirement plan, they were keen to find a buyer that would continue the growth of the company.
“It was important to make sure this was our priority throughout the process. There was a lot of interest in the opportunity, and over 20 trade buyers expressed an interest in acquiring Fire Bright, but for me, and others involved in the project, it instantly became clear that JLA were the ideal acquirers.”
What do you mean by ideal acquirer?
“Well, we wanted to ensure the hard work and dedication put into Fire Bright by our clients was protected, and it was important for them that the acquirer would continue to build on the momentum already started. From the first meeting, JLA seemed to fit this criteria, and are regarded as market leaders with the potential to help growth, as well as diversify the service offering and scope of Fire Bright.
“Within fire and security, being able to offer services to both commercial and residential sectors helps to drive value, and as JLA hold several substantial contracts with university accommodation companies, care homes and hotels, they seemed an ideal fit for Fire Bright.
“As well as this, JLA will also benefit from the acquisition as they are interested in diversifying their product offering to include Fire Safety, as well as expand their geographical reach.”
Is there something in particular that trade acquirers look for in target companies?
“When it comes to companies within the fire industry, a strong reputation really drives value. Larger trade buyers, as well as private equity investors, are particularly interested in gaining a significant market share within a geographic location, and a strategic acquisition is often the quickest, most convenient way to achieve this.
“This can be true for security companies, but security buyers also place an emphasis on targets being able to provide a demanded service. Typically, investors favour companies with a significant growth curve, as well as high recurring revenue.”
What industry specific research is conducted when finding a buyer?
“At KBS Corporate, we have completed a number of deals within this industry, so we have established a thorough network of connections and interested parties.
“From there, we are looking for a range of acquirer types. We always ensure a full analysis of the market is conducted, which includes private equity and venture capital investors being presented with the opportunity.”
Are there any trends you are seeing across the industry?
“The sector is undergoing high levels of change, predominantly due to new technological advancements. These are creating opportunities to diversify and expand into a different service offering.
“Often companies need to adapt to meet changing consumer demands, such as a push for increased protection, and therefore M&A is an excellent way for companies to achieve this whilst still protecting their established service.
“I am also noticing an emphasis on location, there are more and more expressions of interest from companies looking to gain a market share in a set location.
“Overall, the industry is seeing high levels of activity, as both UK and overseas buyers become increasingly interested in acquiring UK companies within fire and security.”