Tyco announced yesterday that it has agreed to buy Exacq Technologies, a developer of open architecture video management systems, for $150 million in cash. The purchase would undoubtedly boost Tyco’s position in the IP video surveillance market.
In 2010, Exacq ranked 173rd on Inc.’s list of fastest-growing US companies. By 2012, it had fallen to 826th on that list, but its growth has been significant, to say the least. Exacq’s revenue grew a massive 184 percent from 2010 to 2012 to reach almost $55 million. Tyco expects that figure to climb to $75 million in 2014. If Exacq were to continue growing at its current rate, the Indiana company’s revenue could exceed the purchase price by the end of 2014.
Mike Ryan, president of Tyco Security Products, said in a press release announcing the deal:
The addition of Exacq to our video portfolio expands our best-in-class video solutions. The quality of Exacq’s products coupled with ease of use and ease of installation help us address the needs of a very different type of video user than we do with our current portfolio. Meeting the varied requirements of the diverse video customer base provides us with a unique position in the security industry, and increases Tyco Security Products’ leadership position in the video security business.
Exacq’s VMS offerings, including exacqVision, have been extremely well received by the industry as a whole, and this acquisition would immediately give Tyco a strong foothold in the desktop and mobile VMS market.
Reaction to the deal has been mixed. One US integrator tweeted, “With Tyco acquiring Exacq this week how long before their good tech support goes away, taking bets.” However, sources suggest that Exacq would be afforded a large degree of autonomy and would be allowed to continue growing organically, as it has since its founding in 2002.
Click here to view Figure 1.
This deal is relatively small beer for Tyco, whose annual revenue exceeds $10 billion. In 2012 alone, it added nearly $300 million of annualized revenue to its books through acquisitions. In its 2012 annual report, CEO George R. Oliver said that acquisitions would be “aligned with our organic growth initiatives focused on technology, product expansion and services.” The acquisitions Tyco made in 2012 offered “a good example of the type and size that we intend to pursue.”
Completing the spinoff of its residential fire and security business last year allows Tyco to focus more clearly on expanding its commercial fire and security businesses. Last year, it generated $5.3 billion of its global revenue in North America and $2.8 billion in Europe, the Middle East, and Africa.
What do you think? Is this deal good news for the industry? Is it a big deal? Or will it mean little change in the way Exacq works?
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I don’t know if I would say that it’s good for the industry since I’ve seen so many security companies trade hands but this definitely sounds like good news for Tyco customers. Hopefully this helps them bring down costs and offer some alternative solutions at competitive pricing. It’s hard sometimes to differentiate yourself from the crowd when everyone is using the same gear and buying through the same channels.
So Tyco’s existing customers could see the benefits of Exacq’s VMS’ offered to them at preferable prices?
@Robert Brown: Seems like YES to me. I feel that is a good sign for both parties.
@Robert Brown, thanks for the post. This is a very good move by Tyco because Exacq offers products that range from small single camera applications to large, integrated systems with thousands of cameras and this product lineup will definitely compliment Tyco Security Products’ portfolio.
That’s what I’m expecting, and any time you have different tiers of products being offered by one company, Tyco on this case. You get better solutions in general. Instead of the one size fits all take what we sell or leave it Tyco can offer different product lines and tailor solutions a bit better.
It will be interesting to see how much of the open architecture Tyco keeps from Exacq product line. I have no doubt Tyco bought them because they build a quality product and will only boost the strength of Tyco’s product line. Its always interesting when companies combine to see how much stays, how much goes, and what new shows up.
@Mike Clauss:Yes when you have everything under one roof it’s easy to manage things plus with a good brand name to follow
yes, could not agree more as this type of setup would offer better control and easy management… but thing change… as at the present time economy is not moving up fast… and many customers not in the buying mood…
yes, but sometimes it depends on the Co. goals of management ideas… or the market trends or how fast customers buy in…
Hard to see how this will make much of a difference one way or the other. Exacq is already an OEM provider for some of the Tyco “Intellex” products (Intellex HD, for one), so Tyco customers have had access to at least part of the product line for some time now. Also, Tyco doesn’t have such a great track record for leaving well enough alone. As with most large corporations, realizing synergies will likely be job one, and that inevitably leads to cutbacks somewhere that tend to hit service and support. Not picking on Tyco at all, just observing… Read more »
@Robert Spurr, thank you for the insight. I was not aware that Exacq was building Tyco branded products. I kind of see the same issues with Tyco and scooping up partners but I have also seen that some of the issues with a smaller company cleared up after they were picked up by Tyco.
Disclosure: I worked for Tyco for a period of time, as Director of Product Line Management for video products. While this is in no way meant to be a “shot” at Tyco, I witnessed several companies purchased and ultimately shut down, either for strategic reasons or because they were an unimportant part of a larger acquisition. Remember Delta Video (part of DSC) or BEC Technologies? Granted, other large firms are guilty of this as well — GE alone has rationalized two of the formerly leading fiber optic module companies, IFS and Fiber Options. My point is, even with the… Read more »
Just seen this comment, really interesting. History, by that measure won’t be kind to Exacq as a separate business. The deal just closed, so I’m due to talk to Tyco next week more about the acquisition.