Since its founding in 2012, ACRE has been among the biggest movers and shakers in the security industry regarding M&A activity and 2021 was no exception.
In March, the firm, which is the parent company of Vanderbilt, RS2 Technologies, Open Options, ComNet, and Razberi, was itself acquired by UK-based private equity Triton for an undisclosed sum. The following month, the company purchased Dublin, Ireland-based Time Data Security (TDS) to bolster its footprint in the UK and Europe and just last month, ACRE announced that it would be adding to its access control portfolio via the acquisitions of Feenics and Matrix Systems.
However, adding yet more companies to the corporate quiver also poses technological and logistical challenges. To learn more about ACRE’s plans for integrating its latest acquisitions under its ever-expanding canopy, SecurityInfoWatch.com (SIW) recently caught up with Joe Grillo, the company’s CEO, to discuss his thoughts on how their various brands fit together and the broader industry challenges that await in 2022.
SIW: Now that you have brought two more access control software companies under your umbrella, what is going to be your strategy in the market moving forward?Grillo: It’s already happening; it has been happening. We probably move slower than other big corporations that have more of a higher-speed playbook about how to do that, but for example, at the ISC West show you will see an ACRE booth with access control in it, not a RS2, Open Options and a Vanderbilt booth. We have started to consolidate and migrate customers and products as well. A lot that is happening in the background.
We tend to leave newer acquisitions alone for awhile and take the time to figure out where the brand value is, look at the technology, compare and contrast to see are there geographical, vertical, or size of enterprise differences in use cases for the products that we have. And then we start to go forward and pull those things together and we are doing that. It may not be so obvious, but we absolutely have started to do that and will continue to do so, particularly as we potentially accelerate the number of acquisitions we do with the new owners that came on board in March.
SIW: Is there a point at which you see consolidating some of these brands or will they all retain their individual brand identities?Grillo: I think the company names will go away as brands over some period of time and the product brands may stay where there is value, so yes, absolutely. We’ve done that in Europe. In Europe, the ACT acquisition that we did in late 2016, we only use the product name; the company sort of ceased to exist and became fully integrated. But ACT365 is an important product of ours and it is sold internationally, not in North America or the Americas. I think you will see that come at a measured and steady pace.
SIW: Being primarily a holder of access control firms, you also seem to have a few companies that do not fit into that mold, such as ComNet and Razberi. Have you given any thought to divesting companies like this that do not fit into your overall long-term strategy?Grillo: No, I wouldn’t say so. The combination of Razberi into ComNet gives us significantly greater capabilities and our access control system sales are increasingly going out with technology from Razberi, which is part of the overall ComNet product line. I’m a firm believer in channels to market, so if you look at ComNet’s largest channel partners in ADI and Anixter, those potentially offer us opportunities for our access control product lines as well. I’m not going to say we would never divest anything – we divested Mercury at one point in the ACRE journey – but there is no set plan or determination that, as we sit today, everything does not fit together.
SIW: When you look at the broader industry picture heading into 2022, how are things like supply chain shortages, inflation, the lingering pandemic, etc. going to impact the market and how are you planning to address them at ACRE?Grillo: The whole business environment around Covid and now lockdowns coming again, we just had all our employees in Ireland – we have over 120 employees in Ireland – and they all just started working in the office and they were told go and work at home again. Some of those things are unpredictable. But, in general, our business was not hugely impacted, even in 2020. Our sales were down slightly, 5%, but they are significantly stronger and growing again in 2021, so we will be careful there and monitor things as we go. Other trends that we see around technology, we are staying ahead of all that with some of the acquisitions we’ve done on the technology side and becoming more broader based. Our expectation is to continue to grow top line and bottom line in 2022. I’m not sure about everyone else, but we’re at least staying at pace if not doing a little better than other parts of the market and we think we can keep that up.
SIW: ACRE has had a busy year this year with the Triton acquisition and now your purchase of Feenics and Matrix. Do you anticipate another busy year on the M&A front in 2022 and what factors do you expect to impact the M&A market the most next year?Grillo: The answer is yes; we believe the investment thesis around why Triton thought that ACRE was a good investment has to do with our ability to be a platform that can continue to grow both organically and acquisitively. We don’t see that slowing down. Valuations are always a challenge – you have to meet in the middle. It is kind of like selling your house, you always think it is worth more than someone will pay, but if you get a reasonably good value and maybe in the current market some of those valuations are being pushed upwards. We have been fortunate that we have not gotten into any huge bidding wars, and I don’t think we would, so we are happy to pay robust and valid valuations that complement the entrepreneurs that have grown businesses without being insane about that. We will continue to be acquisitive in the new year and it is absolutely a fundamental part of why Triton invested in ACRE was the landscape and the ability to be a good home for businesses in this arena.
SIW: Are there any pieces of the security technology puzzle that you feel ACRE is still missing and what are you plans with regards to addressing that moving forward?Grillo: There are areas we continue to look at. It doesn’t mean we will do anything – whether it is video, audio, etc. If you look at everything around a door or everything in a building that reports to a group of security professionals or a guard center, maybe it is less onsite and more remote and more virtual these days, we will take a look at all of those as parallels to our core of access control and access control is certainly at our core. But with our video transmission business and the intrusion business that we have in the U.S., as well as the visitor management business with the TDS acquisition that we did in April, those are closely related areas that we will continue to try to focus on and see where there are opportunities.
Joel Griffin is the Editor of SecurityInfoWatch.com and a veteran security journalist. You can reach him at [email protected].
