Recent acquisitions in the building controls and automation industry – is consolidation good?

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It seems every few weeks so far this year there’s been news of another acquisition in the building controls and automation industry. Back in February, Acuity Brands announced its purchase of Lucid Design Group, Inc for their building analytics platform Building OS. In what felt like the blink of an eye, news broke that Siemens acquired J2 Innovations and their flagship product FIN Stack. Quickly on the heels of that announcement, Siemens surprised the industry again with the purchase of Building Robotics Inc. for their Comfy App, the web-based platform that allows individual occupants to control their space temperature.

In all three examples, the acquisitions seem mutually beneficial for each company. The start-up gets an infusion of capital for software development at scale plus access to established global markets. The large corporation gets new technology that is somewhat proven plus teams of software developers who have already been through the trenches.

What about how this benefits the end user and the market as a whole? Different industries have different relationships with mergers and acquisitions. Acquisitions are of course commonplace in technology sectors. Silicon Valley is fueled by dreams of billion-dollar acquisitions that leave founders with 6- and 7-digit payouts. The healthcare industry has been on a tear with acquisitions particularly since the passage of the Affordable Care Act. Mergers and acquisitions in financial sectors, once rampant, seem to be flat of late.

The true effects of this consolidation can’t be known for years, perhaps decades. We do know that fewer companies own larger stakes in markets across the board. Meanwhile, the building controls and automation industry has puttered along below the radar. Until now, there hasn’t been a catalyst for consolidation in this industry. Everyone was fine minding their own terrain. The major manufacturers were investing in enough R&D to keep their product offerings fresh and their channel partners happy.

It’s hard to pinpoint exactly when and what changed but there’s something in the air that feels different now. Major, established, huge companies are placing high bets on small teams and niche technologies. Acquiring a company is one thing. Welding together old and new within one corporate structure is another thing entirely.

On the ground and in the buildings, it may not matter who signs the checks of the people making the technology you use in your projects. But acquisitions bring a welcome spotlight to the industry. Newsy, presumably high dollar acquisitions also bring a renewed sense of competition to the market. It feels like people are watching, and those who are trying new things are rewarded.

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