Location industry mergers and acquisitions have been increasing over the past few years. In fact, at least one industry analyst believes that more are coming soon. Location Business News recently interviewed Bruce Krulwich, Grizzly Analytics founder, to discuss indoor location company M&A trends.
LBN: Have there really been that many acquisitions in the indoor location area? Enough to discuss trends?
Krulwich: It hasn’t felt big, but in fact there have been 22 indoor location related start-up acquisitions in recent years. When we realized that the number had gotten that big, we decided to write a report about it. Many of the acquisitions have been small, around $3 million, but many were above $20 million. The biggest was more than $70 million.
LBN: What is the most surprising trend you found in indoor location acquisitions?
Krulwich: One was the number of acquisitions that were not by the classic high-tech companies. The fact that Apple acquired indoor location companies is not a huge surprise. But Acuity Brands, a lighting company, acquired two indoor location companies, and Philips Lighting acquired one. Both have brought to market indoor location solutions embedded in lighting, based on visible light communication (VLC) technology, also known as LED modulation. Who would expect that companies in a ‘low tech’ area such as lighting would be a major trend in indoor location?
LBN: So start-ups in the VLC- and LED-based localization area will be good acquisition targets?
Krulwich: Yes, but there is a whole other dimension that’s even bigger. A major company that gets into indoor location doesn’t only need a positioning technology, they also need a higher level system for the application layer, to support whatever services they want to offer. Acuity Brands didn’t only acquire a start-up for their VLC technology, they also acquired another start-up for their application layer. The same happened in the network area, where companies like Cisco, Aruba and Ruckus Wireless acquired start-ups to add higher level services on top of the localization that they already had in their networks. Major companies getting into the indoor location area are very likely acquirers not only of positioning technology, but also of start-ups in the indoor location services and analytics areas.
LBN: Who paid the most for an indoor location start-up?
Krulwich: Of all our price estimates, two out of the biggest three acquisitions were in the chip industry. A lot of indoor location positioning is moving into chips, not only for mobile devices, but also for Internet of Things (IoT) and smart home devices, drones, robots, and much more. Chip-based localization is also used in industrial and enterprise applications. The race is on for the chip companies to support indoor localization–and they seem willing to pay top dollar to acquire the right companies.
LBN: What about all the start-ups that are offering indoor location services in deployments in stores and malls and factories?
Krulwich: They’re also strong prospects for acquisition. Siemens recently bought Agilion for its indoor location solution for industrial and factory settings, particularly in the automotive industry. We expect that big system integrators and other major companies offering solutions to big sites will move soon to add indoor location to their bags of tricks. If that happens, the companies that will be acquired will likely be those that differentiate themselves at the service and application level, with easy deployment and powerful integration into host applications, not only localization.
LBN: So what indoor location acquisitions are we going to see in 2019?
Krulwich: Unfortunately I don’t have any advance inside information, but I think we’re going to see three main things. First, more acquisitions by chip companies, especially for localization of Internet of Things and Smart Home devices. Second, acquisitions by major mobile companies, especially for SLAM (simultaneous localization and mapping) and sensor fusion technologies. Third, acquisitions of companies that are deploying indoor location systems in real-world sites, by system integrators and makers of systems that can be complemented by indoor location, like retail and enterprise management. Companies in any of these areas that have strong market penetration will likely get a good price.
Bruce Krulwich is founder of Grizzly Analytics. The company’s new study, Indoor Location Mergers and Acquisitions Report, analyzes 22 recent company acquisitions and gives price estimates for 19 of them.