Kontrol Technologies is reorganizing and is seeking to acquire businesses that focus on sustainable building technologies.
Kontrol, founded in 2016, is based in Vaughan, Ontario, Canada. The company offers smart building technologies to help customers improve their energy management and decarbonization efforts.
Kontrol has faced some growth and focus challenges within its own business. Revenue was $3.7 million in Q2 of 2024, down from $4.7 million in the corresponding quarter last year. Key moves include selling off its CEM Specialties Inc. business unit for a roughly $13.3 million gain in June 2024. The sale involved air monitoring and compliance-related assets.
In a prepared statement, Kontrol CEO Paul Ghezzi said: “During the second quarter we significantly improved the balance sheet, grew our cash position and closed out the secured debt facility. We are now in a position to focus on growing our core business both organically and through strategic acquisitions.”
Ideal acquisition targets typically generate:
- $1 million to $5 million in revenues;
- up to 50% in recurring revenues; and
- gross margins in the range of 40% to 50% with an established customer base, Kontrol said.
Building Decarbonization: City Regulations Drive M&A Opportunity
M&A activity in the sustainable building market has been steady to strong.
For instance, Legence, backed by Blackstone, in August 2024 acquired AMA Group -- an engineering company that helps building owners and property managers to decarbonize their infrastructure. Financial terms of that deal were not disclosed.
What's driving the M&A activity? One potential answer: Cities and countries worldwide are launching regulations that will force building owners and real estate investors to decarbonize their commercial and residential assets.
Examples include:
Meanwhile, demand for building energy management systems appears steady to strong, depending on which market forecast you potentially believe. For instance:
- The global building automation and control system market will reach $168.8 billion by 2031, up from $87.3 billion in 2022, Transparency Market Research forecast. That's a compound annual growth rate (CAGR) of 7.9%, the firm said.
- Spending on building management systems is expected to reach $19.25 billion in 2023, up from $6.65 billion in 2016. That's a 16.7% compound annual growth rate (CAGR) during the forecast period, according to MarketsAndMarkets.
The U.S. government also is assisting the market. For instance, the federal government plans to spend $250 million to help federal agencies implement net-zero building projects.
We'll continue to watch Kontrol for potential business and ownership updates.
