Editor’s Note: SSI has partnered with the investment banking professionals at Capstone Partners to deliver in-depth updates on the key trends, dynamics and deals defining merger and acquisition (M&A) activity within the Security Solutions sector. This series, brought to you by Capstone Partners’ managing director, Tom McConnell, will provide readers with comprehensive analysis of dealmaking across target segments and buyer types, with valuation insights from Capstone’s proprietary research.
Security solutions M&A activity gained momentum in 2025 after several years of stagnation, invigorated by intense geographic and service line expansion initiatives among sector participants. Total sector deal volume reached 238 announced or completed deals in full year 2025 — a record high since Capstone began tracking the sector’s M&A activity in 2019.
Across all areas of the sector, service providers — including systems integration, installation, maintenance, repair, test, inspection and consulting — represented the largest share (76.1%) of M&A targets in 2025.
The fire and life safety segment of the market fueled the 22.1% year-over-year (YOY) increase in total sector deal volume, accounting for 52.1% of M&A activity. Operators in the space have sought to expand their geographic presence by rolling up systems integrators in key geographic growth areas.
Gemspring Capital-backed Security Franchisors and Altas Partners-backed Pye-Barker Fire & Safety have enthusiastically embraced this investment thesis. In 2025, Security Franchisors acquired six companies and Pye-Barker Fire & Safety acquired 41.
Obtaining adequate boots-on-the-ground systems integration capabilities has served as a critical component of inorganic growth within the fire and life safety segment, driving the heightened deal velocity displayed in 2025.
“Pye-Barker’s mission is to expand full-service life safety protection to all communities. As we continue forward momentum, bringing aboard integration experts like those at United Automation will help us fulfill our goals and shared purpose to protect,” stated Pye-Barker CEO Bart Proctor on the company’s September 2024 acquisition of United Automation, according to a deal press release.
As market competition fuels service line expansion across disparate components of the fire and life safety segment, the ability to capture additional wallet share will likely be defined by systems integration capabilities.
Sector valuations have displayed resiliency compared to the broader M&A market. Security solutions transactions averaged 2.9x EV/revenue and 11.7x EV/EBITDA from 2024 through 2025, small but meaningful gains from 2.3x and 11.1x in the prior two-year period.
In comparison, the average U.S. middle market M&A EBITDA multiple was 9.4x in 2025 — well below the 20-year average of 10.8x, according to Capstone’s Q4 2025 Capital Markets Update. Technology-exposed sector targets have commanded premium valuations as buyers capitalize on system integration tailwinds.
Software Offers Differentiation, Delivers Efficiencies
Technological advancements have introduced new safety and security capabilities to the market, alongside additional service-line opportunities for providers capable of connecting complex systems.
Technology-enabled companies were of particular interest among buyers in 2025, as customers facing turbulent macroeconomic conditions through most of the year sought unique approaches to integrate cost and operational efficiencies across operations.
Innovation in the access control and video surveillance segments, including artificial intelligence (AI) integrations, have introduced advanced capabilities to existing security infrastructure while avoiding hardware replacement costs.
Public sector opportunities served as a key driver of 2025 dealmaking in the space. Chronic staffing shortages in the public safety market have strained municipal resources for years. Average police response times in major U.S. cities have risen, placing citizens at risk while overworking existing personnel.
Municipalities have increasingly turned towards private security contractors to outsource public-safety needs, driving a 150% YOY increase in uniformed guard transactions. Alongside bolstering officer ranks, departments have also turned towards technology to combat manpower constraints and introduce operational efficiencies.
Capstone has witnessed the strong demand for public-safety technology and services first-hand, advising Extra Duty Solutions (EDS) — a leading provider of off-duty program administration services and scheduling software solutions to law enforcement and public-safety agencies — on a significant growth equity investment from private equity (PE) firm Bregal Sagemount in June 2025. Terms of the deal are confidential.
The investment will support EDS’ strategic growth initiatives focused on enhancing its technology offerings, expanding its geographic footprint and growing its portfolio of solutions for law enforcement and public-safety agencies.
Looking to the year ahead, Capstone expects continued consolidation among service providers, supported by aggressive capital deployment from financial buyers leveraging robust levels of dry powder and a borrower-friendly credit market.
Beyond expansion-driven investments, companies that align with key safety concerns — particularly those focused on campus security initiatives — will likely attract buyer attention. Across all segments of the market, technology-enablement and innovative software integrations with existing infrastructure will likely demand premium valuations from acquirers, allowing customers to refresh old hardware with new capabilities.
This dynamic is anticipated to provide renewed end market and M&A demand for security systems integrators, particularly those capable of managing complex information technology (IT) requirements.
Tom McConnell is a managing director and leads Capstone’s Security industry practice as part of Capstone’s Aerospace, Defense, Government & Security (ADGS) investment banking team. Associate Brendan Bradley was the lead market intelligence contributor to this article.
