I have been covering the M2M arena for 15 years now and you could say I know where all the bodies are buried. I know all the movers, shakers, and even all the players, if you know what I mean. I know who is serious about the market and who just wants to make a buck. I know who wants to build an M2M community and who is just here for the moneymaking ride.
It’s no wonder many of today’s M2M company owners have dreamed of growing their own small business into larger ones. And we all know that getting from point A to point B is never an easy road to travel. But for as long as I can remember Stratton Nicolaides, CEO and chairman, of Atlanta-based Numerex, http://www.numerex.com/, has wanted to take that journey. He has always wanted to sit at the head of the largest table.
He has never been content to be second best and thus he has always strived to create a multi-million dollar company that would earn the respect of the M2M industry. But like anything there is still one fundamental truth in all of this, how would he jettison from small-town firm and grow his business? One way, of course, is to grow it organically. This would mean to build a strong revenue base and a strong bottomline through a healthy customer base.
Nicolaides and Co., had to make some tough decisions. Do you grow organically or inorganically? Most businesses recognize the rate of a business expansion through a company’s own business activity can be tenuous at best considering today’s economic climate. On the other hand, inorganic growth can give a company great opportunities through mergers, acquisitions, or takeovers.
After much deliberation, Nicolaides made some very strategic decisions. Despite some steady organic growth, Numerex execs decided the path to travel would be through M&As (mergers and acquisitions). Even though there were other MVNOs that have been very successful in leading and even dominating the M2M services platform arena. From its perspective, there was still room for more MVNOs to enter the market and steal some marketshare. At the time, Nicolaides’ decision to expand and bolster the company’s M2M portfolio seemed to be a logical move if he was going to differentiate the company and still remain viable because there was no question other service providers saw the full potential of this rapidly growing landscape.
And it goes without saying anyone who has been around the block a few times with M2M knows, M&As have a formative effect on the industry landscape. Throughout the first quarter of 2014, the space has already seen a good deal of activity and it’s likely to heat up as the year unfolds. In fact, the industry as a whole has already witnessed more than 210 M&As since Connected World started tracking them dating back to 2003.
Following on its mission to grow, Numerex just announced it will acquire Omnilink Systems, http://www.omnilink.com/, expanding its product portfolio in its core and emerging markets. Omnilink Systems offers an M2M platform capable of monitoring the location, safety, and condition of all sorts of assets—from fleets and personal vehicles to employees, loved ones, and even criminal offenders. The agreement, which requires Numerex to pay $37.5 million in cash, is yet another stepping stone in the company’s long-term growth strategy, especially in key enterprise verticals.
According to the companies, Omnilink’s products, technologies, and strategic alliances will broaden Numerex’s position. However, this is where things get a little fuzzy for me. What is Numerex’s market objective and what will it be in the future?
Let’s look back. With a vision in one hand and a pocket book in another, in January 2006, Numerex began its M&A campaign purchasing the assets of AirDesk. This was its first in a series of acquisitions. In August 2007, Numerex acquired satellite technology provider Orbit One Communications Inc.
At the time, this was the company’s second acquisition in 18 months. While growth was steady it still didn’t come fast enough, so the top brass turned their affections to software and service provider Ublip of Dallas, Texas, in October 2008. Numerex tried to scale some real stock heights, but it struggled from peaks to valleys through the next few years. So in February 2013, the company continued its M&A streak acquiring the assets and business of AVIDwireless, the next-generation M2M platforms and managed services.
Now when you look at all these companies what do they have in common and what will Numerex be able to deliver to market as a result? As a business, Numerex now has a lot more to manage and as a result, I have to wonder what is the direction the company is headed? Candidly, that means it has a learning curve while still managing the new debt from the current acquisition. Only time will tell, but it will surely be interesting to watch as Numerex’s competitors try to capitalize on any missteps it just might make along the way.
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