Honeywell Exec on M&A Strategy: We Will Keep Looking for Value
David Paja, president of Honeywell Security & Fire, discusses the acquisitions of Xtralis and RSI Video Technologies, and how their services complement one another.
Honeywell has been a hotbed of activity as of late, not the least of which was the recent airing of the on-again, off-again romance between rival industrial titan United Technologies. Acquisitions across the conglomerate continue to make headlines. David Paja, president of Honeywell Security & Fire, joins the conversation to discuss recent buys under his purview, Xtralis and RSI Video Technologies, and related topics.
â€¢ Honeywell is bucking the current trend for conglomerates, considering many are subtracting instead of adding. What can you say about how acquisitive Honeywell will be in respect to security and fire?
DAVID PAJA: The two recent acquisitions [Xtralis and RSI Video Technologies/Videofied brand] really show the strategic view that Honeywell has about security and fire. If you follow Honeywell in the press the Honeywell chairman has been explicit about how much he’s going to be using M&A as a strategic tool fundamentally to enhance our offerings in connected homes, connected buildings and industrial space. We are looking for acquisitions that bring significant value in that direction and around that vision.
We keep looking, watching the space. We are always trying to make the right call in terms of what a company is going to bring if it’s software solutions, cloud-based solutions and implement our end-to-end offering with these new technologies. But certainly this is a strategy the corporation is investing in that we’ll continue to see.
â€¢ What would you like dealers to know about how Xtralis strengthens your fire and security business?
PAJA: We see a big trend in the market toward connectivity and more integrated solutions. The first point I would say is that we are trying to bring more value to our dealer and channel partners in this respect. You probably heard we combined our fire and security divisions. The reason is because the way we look at the industry evolving. We are focused more on the end markets, and we talk a lot about connected homes, connected buildings, connected industrials.
More: Get Details on Honeywell’s Acquisition of Xtralis
We brought fire and security together because we think they are complementary offerings going in that direction of connectivity. Basically they are providing us with complementary offerings and software technology that actually enhances the offering we put in for our channel partners. It should help them be more successful and provide added value for their end customers.
â€¢ Can you give an example where Xtralis’ technology fits in to a connected building environment?
PAJA: Xtralis has such robust offerings, so I am going to mention a few. Obviously, their early smoke detection technology; they basically invented and developed this market. They also bring, most importantly, what we call remote visual verification or remote visual monitoring capabilities – end-to-end solutions that work from the edge devices [with integration] into the central monitoring station. It consists of a lot of software solutions. In particular, the video alarm verification that significantly reduces the cost of monitoring by filtering for false alarms and streamlining the whole process. Overall this is very complementary to what we already have in the building space. Most aspects of Xtralis are significantly enhancing our offering, particularly in terms of remote visual monitoring.
â€¢ Are the Xtralis and RSI acquisitions viewed as synergistic?
PAJA: Actually we see them as complementary. The key reason is that the two put together actually provide an end-to-end solution to remote visual monitoring from residential all the way up to critical infrastructure. So that’s what they provide. In terms of what they cover, as you know one is more residential and one is more commercial. Xtralis is more remote visual monitoring, really focused more on enterprise level and more critical infrastructure. In that way they are complementary, but even when you think to [RSI] they provide both indoor and outdoor video verification or video monitoring solutions. And they also provide the connectivity all the way to the monitoring station. In terms of the two put together, we think they allow us basically to provide more connected solutions and a full portfolio to our dealers whether they are in residential or commercial or industrial integrations.
Related: Honeywell Buys RSI Video Technologies for $123M
â€¢ Does the need to help channel partners generate RMR play a significant part in targeting an acquisition?
PAJA: Absolutely. We consider our channel partners really at the core of our position and everything is considered with them at the forefront of our decision. As we thought about doing these two acquisitions, the angle that we see is basically everything is going visual. When you think of it, you think of the world, you realize that visuals and the ability to visualize events is a consumer trend that is spreading very, very quickly into the professional world.
Just providing the notification of alarms or events is not enough. Moving forward the people are going to want to see what is going on, whether it is an intrusion event or a fire event or smoke event. People want to see it. In that respect, video verification or visual monitoring remotely opens up new opportunities for dealers to provide to their end users and it provides them with more opportunities to generate more RMR.
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