Security and Communications Infrastructure Solutions Transactions and Valuations

Between Q1 2020 and Q3 2024, approximately $483 billion was invested in the security and communications infrastructure solutions sector through M&A transactions conducted by global firms. This period reflects heightened activity driven by the increasing need for scalable solutions that address growing demands for connectivity, automation, and increased operational efficiency.

The security and communications infrastructure sector plays a critical role in enabling businesses to adapt to complex, multi-vendor environments and rapidly evolving technological requirements. The market spans advanced network management, monitoring systems, and tools designed to improve the performance of communications infrastructure. These solutions are essential for industries reliant on real-time data exchange, secure communications, and reliable network uptime. Key service areas such as telecom cabling, distributed antenna systems (DAS), and end-to-end network monitoring are driving growth, providing essential tools for secure, integrated, and automated infrastructure across industries.

As the demand for automation and interoperability grows, companies are investing in technologies that streamline operations and optimize resource utilization. Increasingly, buyers are prioritizing solutions that support seamless integration, reduce downtime, and increase scalability to meet future demands. The sector’s importance is further underscored by global trends in digital transformation and the modernization of critical communications systems.

This report provides an in-depth analysis of M&A transactions within the sector, highlighting transaction trends, valuation patterns, and strategic drivers. It examines the evolving dynamics shaping the market, offering insights for businesses, advisors, and investors seeking to understand the opportunities and challenges that define the future of security and communications infrastructure solutions.

• The valuation multiples for enterprise value (EV) to revenue in the security and communications infrastructure solutions sector ranged from 1x to 20x, with a mean of 4x and a median of 2x. These multiples reflect the diverse nature of revenue streams within this sector, ranging from high-growth subscription-based models to more traditional hardware-centric businesses. The higher end of the range indicates acquirers’ willingness to pay premiums for companies with strong market positions and scalable solutions.
• EV to EBITDA multiples ranged from 2x to 26x, with a mean of 11x and a median of 10x. These higher multiples highlight the sector’s focus on operational efficiency and its reliance on advanced technologies that can deliver long-term cost savings and productivity gains. Companies with proven capabilities to integrate multi-vendor environments and automate complex systems are commanding the highest valuations.
• Acquirers in the sector are targeting businesses that provide comprehensive solutions for managing critical infrastructure, leading to valuation premiums for companies with innovative offerings. The relatively high EBITDA multiples signal a market environment where buyers prioritize operational potential and long-term strategic fit over immediate profitability.

• Between Q1 2020 and Q3 2024, a total of $483 billion was invested across 1,934 M&A transactions in the security and communications infrastructure solutions sector. The average deal size during this period was approximately $250 million, highlighting the high-value nature of investments in this critical infrastructure sector.
• The sector witnessed the highest capital investment of $56.61 billion in Q2 2021, accompanied by 118 deals. Similarly, Q4 2020 experienced the highest deal count of 144, with $33 billion invested. These peaks reflect heightened demand for communications infrastructure enhancements during the post-COVID recovery period, and government stimuli aimed at modernizing critical networks.
• Beginning mid-2023, deal activity slowed significantly due to tightening credit markets, inflationary pressures, and global geopolitical tensions. By Q3 2024, deal count dropped to its lowest at 64, while investment values were at $30.12 billion. This shift reflects acquirers’ cautious approach and a preference for strengthening internal capabilities over aggressive expansion.
• The stability in capital investment, despite declining transaction volumes, indicates ongoing industry consolidation. Acquirers are targeting assets that offer operational synergies or position them favorably in emerging markets. This trend is further supported by government incentives for digital infrastructure and technological innovation.

• US-based acquirers accounted for 25% of the total capital invested and 27% of the total deal count. This dominance reflects its position as a global hub for security and communications infrastructure, supported by a strong domestic market and significant demand for critical infrastructure modernization. High-value acquisitions were prioritized, driven by technological advancements in 5G networks and cybersecurity solutions.
• The United Kingdom contributed 15% of total capital and 12% of deal count, highlighting its significant role in the European market. Despite having a smaller share of deal activity than the United States, the UK attracted investments focused on strategic infrastructure assets and regional consolidation, showcasing the appeal of its well-established communications ecosystem.
• Italy and Spain captured 10% and 9% of total capital, respectively, while each accounted for 3% and 4% of the deal count, respectively. These markets reflect growing interest in Southern Europe, driven by the need to upgrade aging infrastructure and expand broadband access. Investment patterns suggest a mix of large-scale acquisitions and smaller strategic transactions, underscoring the region’s evolving importance in the sector.
• Germany, representing 5% of capital invested and 4% of deals, emphasized fewer, higher-value transactions. This aligns with its focus on industrial-grade communications infrastructure and a preference for acquisitions that strengthen its manufacturing and logistics networks. Germany’s unique market dynamics support its position as a leader in engineering-driven innovation.
• Countries classified under “Other” collectively made up 21% of total capital and 30% of deal count, reflecting the breadth of international activity in the sector. Smaller markets like India and Czechia saw steady activity, often driven by niche opportunities in emerging markets or regional infrastructure modernization. This trend indicates increasing globalization of the security and communications solutions sector.
• Both Australia and Canada accounted for 3% to 5% of capital and deal activity. Investments in these regions were typically tied to national security upgrades and connectivity in remote areas, underlining their strategic importance in the global landscape.

• Mergers and acquisitions (M&A) accounted for $239 billion in capital across 1,108 transactions, making it the most significant deal type. These transactions reflect the industry’s strategic focus on consolidation, with buyers seeking to expand capabilities and integrate advanced solutions to address the increasing complexity of network management and infrastructure demands. M&A has become a preferred approach for accessing innovative technologies and building stronger competitive positions in key markets.
• Leveraged buyouts (LBOs) captured $157.03 billion over 707 transactions, indicating a focus on acquiring businesses with scalable offerings and the potential for operational growth. These deals highlight investor interest in companies with innovative solutions and a clear path toward delivering value through improved service delivery or market reach.
• Corporate divestitures accounted for $87.38 billion across 120 transactions. These deals often enable companies to reallocate resources to their most critical operations or focus on growth opportunities. For acquirers, divestitures provide access to specialized technologies and tools, creating opportunities to bolster their own market presence or increase operational capabilities.
• There is a focus on strategic integration and innovation on these deals. Buyers are seeking opportunities to adopt innovative platforms that support end-to-end monitoring and automated network orchestration. These investments often focus on increasing multi-vendor management and enabling seamless integration. Technologies that deliver actionable insights for operational efficiency are becoming a key priority, helping companies address the challenges of complex and dynamic environments.

M&A Transactions Case Studies

Transaction Structure

Motorola Solutions completed the acquisition of Openpath Security on July 15, 2021, for $298 million. This transaction was structured as a full acquisition, integrating Openpath’s operations and solutions into Motorola’s expanding portfolio of security technologies.

Market and Customer Segments Combination

The acquisition combined Openpath’s expertise in cloud-based mobile access control systems with Motorola’s comprehensive suite of security and communication solutions. Openpath’s technology, which enables touchless and secure entry systems for commercial buildings, complemented Motorola’s presence in video security and analytics. By acquiring Openpath, Motorola gained access to a broader customer base, including enterprise clients seeking integrated, user-friendly security solutions for workplace safety and convenience. The combination strengthened Motorola’s position in the commercial security market, catering to the growing demand for innovative, contactless access technologies.

Acquisition Strategic Rationale

Motorola’s acquisition of Openpath supported its strategic objective of delivering seamless, end-to-end security solutions by adding cloud-based access control to its product offerings. Openpath’s innovative platform aligned with the shift toward hybrid work environments, where secure and flexible access solutions are critical. This acquisition enabled Motorola to capitalize on trends in workplace security and scalability, creating synergies with its existing video surveillance and communications infrastructure. By integrating Openpath’s solutions, Motorola increased its ability to provide a unified, cloud-based security ecosystem, driving growth in high-value markets and reinforcing its leadership in the security technology sector.

Transaction Structure

Nokia announced the acquisition of Infinera on June 27, 2024, for $2.3 billion. This transaction was structured as a strategic acquisition to fully integrate Infinera’s optical networking technology and expertise into Nokia’s communications infrastructure solutions portfolio.

Market and Customer Segments Combination

The acquisition combined Nokia’s strength in telecommunications equipment with Infinera’s leadership in high-capacity optical transport systems. This integration allowed Nokia to broaden its offerings in security and communications infrastructure solutions, particularly for telecom operators and data center providers. Infinera’s customer base in advanced optical networking complemented Nokia’s global presence, positioning the combined entity to address increasing demands for high-performance network infrastructure in key markets such as 5G deployment, broadband expansion, and secure communications networks.

Acquisition Strategic Rationale

Nokia’s acquisition of Infinera aligned with its strategic focus on enhancing its portfolio of security and communications infrastructure solutions. Infinera’s proprietary optical transport technology and innovation in data transmission positioned Nokia to better meet the demands of evolving network environments. This transaction allowed Nokia to deliver scalable, high-capacity solutions for mission-critical applications, including 5G backhaul, secure broadband networks, and data center interconnectivity. The acquisition also created operational synergies, leveraging Nokia’s global market presence to amplify the reach and impact of Infinera’s advanced solutions. This strengthened Nokia’s position as a leader in integrated communications infrastructure solutions.

The security and communications infrastructure solutions sector is undergoing significant transformation, driven by a sharp focus on integrating advanced technologies. Recent M&A transactions highlight the industry’s strategic push to increase automation, interoperability, and real-time monitoring capabilities. As companies consolidate strengths and expand service portfolios to meet growing demands for scalable and secure infrastructure, the sector is poised for further innovation and growth, particularly in high-value markets like critical infrastructure, public safety, and enterprise connectivity. This momentum signals sustained opportunities for strategic investments and operational synergies in the years ahead.

Source: SIS Internacional, Fortune Business Insights, Pitchbook Data.