Industrials: Spotlight on Security

In our recent briefing on the TICC sector, Finding the value in TICC, we explored the continued interest in businesses offering Testing, Inspection, Certification, & Compliance (TICC) services across a range of sectors. We are seeing similar trends in the security sector. According to Pitchbook, there were 31 European (11 UK) deals in the security sector (not including cyber) over last 18 months. There is no reason to think interest will diminish as we look ahead to 2022 and beyond.

Security has remained resilient over the last 18 months and will continue to attract attention for the following reasons:

  • Companies need to protect their people and their assets, regardless of market conditions and it is not something that can be turned on and off
  • High potential for repeat if not recurring revenue, and low likelihood of switching supplier
  • Opportunity to land and expand with a range of products and services once a relationship has been established with a customer
  • Fragmented market which can be difficult to differentiate in, but with many small local businesses provides opportunities for buy and build strategies
  • Customer expectations, wireless, remote monitoring and switching off of the PSTN network are all driving the adoption of new technology
  • Installers have historically been slow to embrace technology, but this is changing rapidly. Early adopters recognise the value of moving beyond basic installation, monitoring and maintenance and seek smarter device installation, wider integration with building management systems and smarter ‘false alarm’ detection management. Proven technology from a trusted brand will dominate in an industry with a low appetite for risk
  • Regulatory requirements remain a significant barrier to entry for any new market entrants looking to supply to Grade 2 and Grade 3 security standards

Security investment considerations

Beyond the fundamentals, Armstrong would advise considering the following areas when assessing a security target.


Barriers to entering the industry are high and switching is difficult. However, there is a large base of regional players which may put pressure on prices.

  • Is the end market growing, or at least stable?
  • What opportunities are there to grow into adjacent markets?
  • Is there an appetite to integrate?


Most key security players have broadly similar offerings and compete on service. Differentiation through customer service and innovation is becoming increasingly important.

  • How does the business differentiate?
  • Does it have anything unique, beyond competitive pricing and customer service?


  • Technology innovation has largely been driven by end users.
  • Apps are widespread though functionality varies, how is the business integrating its products and more widely using digital services to meet customer needs?
  • To what level will technology continue to disrupt this area of security?


  • In a penetrated market with low churn rates, growth may be a challenge.
  • What plans has the business to grow organically?
  • Are there opportunities to take market share from larger players who have security as part of a wider offering?
  • How will insurance and regulatory requirements drive demand in target sectors?

Buy and build strategy

  • Is the business suitable as a platform?
  • What complementary services could be added to the business, or how could it extend its geographical footprint?
  • Are the buy and build targets attractive to bolt on to a larger platform, and can management/PE focus improve them?

Armstrong has helped several investors answer these and similar questions on recent security deals. To find out more about security or other Industrial opportunities please contact:

Matt McNally

+44 7894 736 523
[email protected]

Email Matt