Acquisition Examined

By John Honovich, Published Jun 04, 2009, 08:00pm EDT

This week, Thermal/IR manufacturer Axsys was acquired by General Dynamics [link no longer available] for $643 M USD. That's a high sum for a security/video surveillance company. However, look at their Q1 financial performance [link no longer available] and notice that revenue is high ($250M USD annual revenue run rate). While the acquisition price was 2.5 x revenue, it was only 22 x earnings.

This acquisition is not likely representative of the broader market. Axsys' profitability and relatively low number of direct competitors is in contrast to other segments in the market (e.g., IP video software, video analytics).

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