1

Advancements in AI, cloud-based security and the internet of things (IoT) are accelerating system upgrades and replacement cycles. Businesses are modernizing legacy systems to enhance automation and threat detection. While cybersecurity risks and implementation costs pose challenges, continuous innovation and the demand for cutting-edge security solutions drive sustained growth.

2

Security systems and associated services are a critical component of commercial infrastructure, offering some demand stability across economic conditions, though larger upgrades may get deferred in tougher climates. Most providers also offer long-term service agreements, such as monitoring and maintenance contracts that provide a stable base of consistent, monthly recurring revenue.

3

Security providers are leveraging AI-driven analytics, remote monitoring and automation to enhance efficiency and reduce labor costs. Cloud-based solutions streamline system management, while predictive maintenance lowers service expenses. Companies investing in these innovations can improve margins and strengthen competitive positioning.

4

Security solutions require specialized industry knowledge and an established source of technicians. Established players benefit from brand recognition, certifications and long-standing customer relationships.

5

The security industry consists of numerous regional players and niche providers. Established platforms have the opportunity to consolidate market share through acquisitions and service expansions

1

The market for security systems technicians has become more stable in recent years, but recruiting and retaining skilled labor remains a challenge. High attrition rates are common, often driven by low entry requirements, low wages for a trade and the ease of transitioning to adjacent professions. While training is frequently done on an ad-hoc basis, companies with structured training programs and promotion opportunities tend to have higher retention.

2

Greater consolidation among large fire and life safety (FLS) platforms, driven by PE backing, may create challenges by increasing competition for acquisitions and driving up valuation multiples. As larger players seek to diversify their revenue streams, the pool of scalable acquisition targets could shrink over time, making it more difficult for mid-sized firms to expand through M&A or to find attractive targets.

3

DIY security solutions like Ring and SimpliSafe may pose some competition to the industry, mostly on the smallest end of the SMB segment, where some business owners may opt for these as crude substitutes to professional-grade systems and installations. However, their impact remains limited in the broader commercial security industry, as these solutions are designed for homeowners and lack the features, scalability and advanced access control required for corporations and enterprises.

4

Security systems are mission-critical and insulated from macro and political headlines, but in a harsh economic environment, upgrades can be delayed. The industry also has some exposure to commercial real estate construction, though it comprises a small minority of revenue for most providers—replacement and maintenance are the core services. Tariffs would impact some legs of the supply chain and drive cost increases, though equipment costs are largely passed-through to the end user.