CE Pro September 2021 - 76

BUSINESS
Operations
outside buyer for their custom
installation company.
However, that still leaves
nearly half of integrators
thinking about cashing out
in some fashion. The majority
of integrators got into this
industry because they love it.
Indeed, many are simply AV
enthusiasts or techies who
probably never intended to
build a substantial custom
installation company that
would someday become
sellable asset.
But for many integration
companies, the prospect of
selling your company that
has built value over the years
until it has become a highly
prized resource that can be
sold for a profit is now a reality
versus a myth. Or is it?
For what seems like a
decade or more, there were
virtually no buyouts of
custom integration companies.
Then in 2008, Best
Buy acquired AudioVisions
in Southern California. The
thought at the time was that
big buyout was the first salvo
for major retail players like
Best Buy, Circuit City and
Tweeter to start gobbling up
some of the leading integration
companies. But it didn't
happen. Why?
First, most integration
companies simply aren't large
enough to attract possible
suitors. In a panel discussion
at the first-ever Total Tech
Summit (which was dubbed
the CE Pro Valuation Summit
back in November 2007),
the national players declared
that custom integration
companies needed to be a
minimum of $10 million in
gross income before they
could even be on the radar
for acquisition.
76 | CE Pro September 2021
" We're looking
for companies
that are already
running well,
that are already
profitable and have
the reputation [as
leaders in their
markets]. "
-Ryan Anderson,
Bravas
Second, the housing crisis
hit soon afterwards, spiraling
the revenues for the average
custom installation firm by
51% in 2009. That difficult
economic recession might
have actually been a stroke
of luck for some integrators,
especially if they had been
acquired by Tweeter or
Circuit City, neither of which
survived the turmoil.
Fast forward to 2019 for
the first time in many years,
the industry has experienced
several mergers and acquisitions
led by AVDG/Guitar
Center and Bravas, two
players that are looking to
establish national footprints
for this industry long known
for its local roots. In the past
several years, Bravas has
expanded well beyond its
original 15 companies with
several organic launches in
new cities, as well as acquisitions,
including:
ProStream Digital in
the Dallas/Fort Worth
market to join the teams
from AV Innovation,
Home Theater Technologies
and Smart Systems
as part of Bravas DFW
Bravas Philadelphia added
the AV Environments
team to its existing Audio
Video Hi-fi Sales group
The acquisition of Twilight
Solutions in Walnut
Creek, Calif., to join its
Bravas San Francisco location
with The Homeworks
Group
Bringing in Residential
Systems in the Denver
area for Bravas Colorado
Meanwhile, Guitar Center's
AVDG Group has been
quiet recently, which is to
be expected given its parent
company was forced to declare
Chapter 11 bankruptcy
as a result of the pandemic's
hit on its retail store foot
traffic. But prior to that time,
the company had been active,
acquiring AVDG in the
Bay Area, TVTI in Chicago,
and Maverick Integration in
New Hampshire. The company
has also started two other
branches organically.
Add to those other oneoff
mergers and acquisitions
have taken place in across
the country, such as Desert
Valley Audio Video in
Scottsdale, Ariz., making the
move into California with the
buyout of Audio Concepts,
and ETC in West Palm Beach,
Fla., changing hands under
new ownership.
The bottom line is that for
the first time in many years,
there is vibrant M&A activity
in the residential integration
space.
According to CE Pro data, 52% of integators say they do not have any sort of exit strategy plan
in place. Another 21% plan to sell or give the business to family members or partners.
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CE Pro September 2021

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