Motorola Paid $449 Million for Ava, Calipsa and Videotec Combined (Analyzed)
In the past 3 months, Motorola Solutions has paid approaching a half-billion dollars for 3 video surveillance companies - Ava ($387 million), Calipsa ($40 million), and now Videotec ($22 million).
Since Motorola's physical security buying spree started in 2018, they have now bought 10 companies for a total of $2.7 billion:
For a frame of reference, all 10 of those companies were acquired for $100 million less than what Canon paid for Axis in 2015 ($2.8 billion).
Motorola has now disclosed the price paid for the 3 newest companies in its quarterly press release:
The company closed the acquisitions of Ava Security for $387 million and TETRA Ireland for $120 million, each net of cash acquired.Subsequent to quarter end, the company acquired Calipsa, a leader in cloud-based advanced video analytics for $40 million, and Videotec, a global provider of pan-tilt-zoom and explosion proof cameras for $22M, each net of cash acquired
Note: TETRA Ireland is the provider of Ireland's National Digital Radio Service and not in physical security.
Also noteworthy, Motorola did not disclose the revenue of any of the companies they acquired, though a few months ago Ava disclosed they tripled revenue in 2021 and planned to triple again in 2022.
As we examined in Motorola Speaks on Security / Surveillance Acquisition Strategy, revenue growth and market expansion are clearly the priorities for Motorola over short term cash flow generation, with Motorola repeatedly emphasizing that:
we're absolutely in a growth mode...
we aim to continue to deliver multiples of the total market growth rate...
we are doing everything we can to continue to deliver that multiple of market growth across the industry to our shareholders
In the Research section of this note, we examine Ava's expected loss this year, contrast to Evolv's, examine the potential for a Motorola acquisition of Evolv, incentives to acquired companies, risks, and the probability these deals will succeed for Motorola.
Ava ******** **** ~$** ******* **** ****
******** *********** ******* *** ** **** ~$20 ******* **** **** ***** ** the *******'* ********** **** "*** ** about $*.** ******** ** *** *** the **** ****."**** ****, *** *** $*.** ** ** cents *** ** $*.** ** .* / *.** ** *.**%. ***** ******** last **** *** $*.*** ******* ** that ********** ** *.**% = $**.*** million. *******, *** *** ******** ********* of *****, ** ****'* *** ** months. ****** ** ******* *** ******** assuming * ***-***** **** *** **** period ****** *** **** ** ~$** million *** *** ****.
*** * ******* **** ***** ** triple **** **** (*** ** ***** expect ** *** ** ***** $** million ** ******* ** ****), ****'* reasonable. ** ********, ***** ******* ** grow ******* ************* **** **** **** and **** * **** ** ** least * ***** **** ** ***'*. Worth ******, ******, **** ******** ** a ******** ******** ** ***** *** Motorola's ***** ************ ******** ************** ** *****'* *****.
Evolv ***********?
** ** ******** **** ******** ***** try ** *** *****, ***** ***** buying ***** *** ******** ****** ********. Motorola ***** *** *****'* ****** *************. Plus, *****'* ****** *** ** **** ~$300 *******, **** **** $*.* ******* and ***** ******* ********* ******** ~$*** million ** **** ** *** ****. If ******** ******* $*** ******* **** would ** * **% ******* **** the ******* $* ***** ***** (****** many ********* **** $** *** ***** a **** ***).
** **** **** ******** ******** ** Evolv ****** **** ** ** ******* marketing **. *** ******** ***** ******* Evolv's *************.
** ** *** **** *** ******** views *** ******* ****** *** ******** that ***** ***** *** ******* **** would **** ** **** **** ** directly. *******, ** *****'* ***** ***** continues ** ******* (**** ****** **% in *** **** ****), ******** ***** be ***** ****.
Incentives *** ******** *********
******** **** ********* ******* ********** **** provided *** **** ******** ******* (******** ours):
- ********: "****** ********** ***** ** * fair ***** **$4 ******* to certain key employees that will be expensed over a service period of one ****"
- *******: "*** ******* ****** ********** ***** at * **** ***** **$4 ******* to certain key employees that will be expensed over a service period of two *****"
- ***: "*** ******* ****** ********** ***** and ********** ***** ***** ** * fair ***** **$7 ******* to certain key employees that will be expensed over an average service period of two *****"
*** * ***** ** **********, **** is **** ******** ****************, ******** *** $*** *******, "*** ******* ****** ********** ***** at * **** ***** **$29 ******* to certain key employees that will be expensed over an average service period of three *****." [emphasis added]
*** **** ** **** ******* ** the ********** *** ********** *** ***** term *** ***. **** ***** *** longer ***** (**** *** ********), ********** else *****, ** * ******* **** for *** ******** ********** **** ** stay.
*** ***, ***** *** **** ****** paid ($*** *******) *** **** *** core **** *** *** * ******** exit, *** ********* *** **** ** Ava's ******* ******* ****** ****** **** later.
Ava ***** **** ********
**** *****, ** ******* **** *** price **** *** *** ** ********** given (*) *** **** ****** ****, (2) ********* *********** ** ****'* *******, *** (*) ** ***** ** well ********** ** * *********** ** direct-to-cloud ******* *** **** ******** (********* at ****** ******* ***** ** *** ****** ****). ********, ******** **** **** *** own ***** ******* (********* ******** ******* enabling ******** ******* ** **** ***) that ***** ** ****** ******* **** Motorola **** ** ******* ******** ** millions ** ******* ** *** ******** in *** **** *** *****.
** ******** **** *** **** *** ***** disclosed, *** ***** **** *** *** selling ** ** ***** **** **** out *** * ************* ****** *********** price * *** ***** **** ***.
Calipsa ***** **** ********
*** *** $** ******* ***** **** and ****** ******* ** *** *** single-digit ********, ** ********, ** **** this **** ** **** *********** *** Motorola ** ** ********** ****. **** of *** ******* ** **** ******* serves * ***** ** * ***** (cloud ***** ******** ** ******** **-**** cameras, **** ******** *** ****** ********** providers). *** ****** ** **** **** will ****** **** ********** **** *** next *** ***** ** **-**** / on-camera ********* *******. *******, ** ******** / ******* *** **** ** ****** features ** *** ***** **** ******** value **** ****** ** ** *** done ******, **** *********** ***** ***** proposition.
Videotec ***** **** ********
*** **** **** *** ******** ** that ** **** *** ******** *********** profits ** ****** (~$** ******* **** ******* **** ~*% net ******) *** ** * **-****-*** *******.
**********, *** ***** ** ***** ******** was *** ****** ** *** * acquisitions, ** **** **** **. *******, Motorola *** ********'* ******* ******** ** they *********** ********* ****** ***** *** business.
*** **** **** ** **** ******** historically *** ********-*********** *** ***** * small ***********, ** ********* ** ****** the ********* ****** ******* ****-************ (****, Bosch, *********, ***.). ******** ********* ***** issues.
** *** ****** *** ******** **** Motorola *** ****** ******** **** *** overall ***** *******, *** *** ** confident ** **** ***** * **** deal *** ********.
Outlook - *** ** *** ***
* ***** **** ***, ** ****, we ****** *** *** *********** ** be *** **** *********** ******* *** Motorola (**** ********** **** *** *** brand ***** **** ****). *** ******** a **** **** *** ******** ** expand **** ******-**-***** ******* *** ** put ******** ** ****** **** ****, Bosch, *** ****** *** ** *** have ** ********** ******** (*** **** be ********* ** *** *** ****, or ****, **** *******).
***** ********** ******** ***** ** *** SPAC *** ************ ** *** **** / ****. *** **** ******** ******** in ******, ** ***** *** **** a **********. ***** ******** *** * single ***** ****, ********* **** ********* it ** * ******** ********** *** a ***-****** ***.
*********** *********. ** ********** **** *** execution ** *** ****** *********, **** and ******** *********, ***. (“********”), * stockholder ** ****** *****, ******* **** a *********** ********* (*** “*********** *********”) pursuant ** ***** **** ****** ** nominate ** ********** ********** ** ******** to *** ***** ** ********* ** Evolv, ********* ** ** *********** ***** to *** ******* ** *** ******.
************ *********. ** ******** ****, ****, the ******* ******* **** ** ******** equipment ************ *********** ********* **** ********. On **** *** ****, *** *********** agreement *** ******* ** *** ******* and ******** ********************* (*** “************ *********”). Pursuant ** *** *********** *********, **** Kedzierski, ****** **** ********* *** ******* Manager ** ***** ******** *** ****** Control ** ********, ********* ****** ** as * ******** ******** ** ******** our ***** ** *********.
**** **** ***** **** ***** $***,*** worth ** ***** ********:
****** *** **** ***** ******** **, 2021 *** ****, ******* **** ********’* distributor ******** *** $*.* ******* *** $0, ************.
**** ******* (** **** ***), ***** **** ***** $***,*** ***** of ***** ******** (******* **):
****** *** ***** ****** ***** ***** 31, **** *** ****, ******* **** Motorola’s *********** ******** *** $*.* ******* and $*, ************.
**** *** **** ***** **% ** Evolv's ********* ******* *** ***** ** systems, ******** **% ** *** ~*** new ******* ****.
********'* ********* ***** ***** *** ** 2026 (*-**) **** ** **** *** ****** for ****** ****:
***** *** ******** *********, ***** *** Motorola ****** ** ********* ******* ******** agreed ******** *** *************, ********* ***** provided ** ********, **** ******* ***** Express ******** ** ***** ** ****** a ******* ********** ******* *** ********’* exclusive ****** *** ************ ** ***-**** customers ******* ********’* ****** ******* ** channel ********. ******** *** ****** *** to ******, **** ** ********* ********** any ******** ** ******** **** ******* with, ** ******* ************* *** **** function ** *****’* ******** ******** ** products. *** ******* **** ** *** Motorola *********expires ** ******** **, ****. Either party may terminate the Motorola Agreement in the event the other party breaches the agreement and fails to cure the breach within thirty days’ receipt of written notice or immediately upon insolvency of either party. However, in the event that the Motorola Agreement is terminated, both parties have agreed to follow through on contractual obligations already in place with a channel partner for the integrated products for the remainder of the contracted subscription term.
** ******** *** **** **** *** signed ** **** *** ** ********** by ****** **** **** ~* ****** notice:
***** *** ******* *********, *** ****** as *****’* *********** ** *** ***** Edge, ***** ******* *** ******** ********, and ******* *********** *** ******** ** the ****** ****** ** * ***-********* basis *** ****-**** ************ ***** *** end *****. *** ******* ********* ************* renews *** ***-**** *****, ***either ***** *** ********* the Johnson Agreement (i) upon ** ****’ ******* ****** *** *** ****** or (ii) in the event that the other party breaches the Johnson Agreement and fails to cure the breach within 30 days receipt of written notice, provided that each party will follow through on any contractual obligations already in place at the time of termination. However, no orders and associated product subscriptions can be terminated for convenience once Evolv accepts such orders and subscriptions. As a condition of the automatic renewal, JCI must have a marketing plan, including a sales and promotion plan, the development of a sales channel and a forecast of unit sales per quarter.
**** ********'* ***********, ** **** **** considering ****** ***** ********, *** **** Evolv's ******* ***** ***** ****** **** the ********?
** *** ***** ***** ***** *** high (**** ****** **** *** ******** investors) ** ***** **** **** * bunch **** $$ ** **** **** move.
*** ** *** ***** **** **** even **** (*****, ****** **** *** minority *********) ** ***** **** **** less $$ ** **** **** ****.
**** ** **** **** ** ** Motorola ***** **** **** *** ** so, ****?
*** ***** ***** ** *** ***** factor *** **** *** ** ** least *****.
(*) *** *** ***** *****, ********** else ***** *****, ****** **** ***** more ********** ** ********. *** *****, as ***** ** ***** ****** *****, does *** ***** ** ******* *******, so **'* ******** ** ** * prime ****** ** ***** * ****.
(*) **** ******** ****** ** *** fair ***** ** ***** ** * major ******. ** **** **** **** dozens ** ***** ******* *** *** aggressively ********* ** ***** ***, ** Motorola ******* **** ***** ** *****. Given *****'* *** ***** (~$*** ****** cap - *** $*** ******* ** cash), **'* ***** ******** ****** ***** is * **** **** ** **** price.
(*) *** ******* ****** ** **** Evolv ********** *** ******* ************ ***** of *****'* *****. **********, **** ***** the *****'* ***** ** **** ****** than *****'* $*.** ***** ** *** trading ** $**+, ** ****** ***. And ***** ***** *** $*** ******* in ****, **** ** *** **** to **** ** **** *** ******* today.
*** ** ** * **** ** two, *****'* ***** ***** ** ***** at ***** ****** (** *****), ***** might **** * **** **** ******** at * ***** ******** ** *** SPAC *****.
**********, *****'* ******* ** *** *********** expectations ** ***, ***** ** *********** and **** ******** **** ****, ***** growth. ***** ** *** ********* *** a ********** ********, **** ******** ** the ***** *** ************* **** ***** told ********* * **** ***.
*** ******** ******* ** *** *********** evolve (*** *** ********). ***** ** charging * ***** ******* (~$*,*** * month *******). ***** ****'* ******** ** investors, ** *****, ** *********** **** CEIA *** **** ***** ******* ** a ***-**** ***** ** **** **** a **** ** ***** (***** **** ** ***** *******), **** ***** *** *********** ******** on *****'* *********.
**** ** ********'* ******* ******** ******** in ***** - *** *** *** this ******* ** ***** ***** *** tanked ***** ********'* ******* **********? *.*. have **** **-********/******** ************* **** *** stock *****'* *****-*** ****** **** **?