AGC's Insights: Technology & Innovation in Physical Security

Physical security, with its legacy on-prem and human-intensive operating model, has long been ripe for disruption. Heightened threats like gun violence, civil unrest, terrorism, and geopolitical tensions are now joining with a more stringent global regulatory environment to accelerate adoption of new technologies and to bring physical security top-of-mind for customers, investors, and acquirers alike. The pace of innovation is striking, with infrastructure refresh cycles enabling the proliferation of cloud-based solutions and AI-powered platforms. Further, cyber and physical security are rapidly converging, introducing new threat vectors, as well as new opportunities to build and offer comprehensive security platforms.

Nearly every technology investor we've recently spoken to has identified physical security as an area of interest. This enthusiasm carries over to the transaction data, with 2024 investment into physical security on track to grow 140% from 2022. Over that same period, investment into the broader technology ecosystem is down roughly 40%. The increased minority investment activity is likely a prelude to sector consolidation and elevated M&A activity in the coming years. Growth and private equity firms are already placing their bets – the most prominent example so far this year being Thoma Bravo's $1.8B take private of Everbridge.