This Year SnapAV Acquired Autonomic and Visualint … Is Savant Next?

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Acquisition announcements always generate a lot of excitement. For an industry as small and interconnected as ours, news traveled particularly fast when SnapAV announced it was acquiring industry favorite Autonomic earlier this month.

For those who don’t know, Autonomic powers music distribution for Savant and other control systems. The company has been around since 2006, and its Mirage Audio System works with the most popular music services to enable streaming anywhere in the home.

SnapAV, on the other hand, has grown from a simple service that allowed dealers to buy from one source directly, to a full home automation solutions provider. This year, SnapAV has been busy with four acquisitions (that we know of) across a number of different verticals. The biggest thing currently missing from SnapAV’s portfolio is a home control system.

Lately we’ve been hearing rumors from various integrators that Savant might be a perfect fit. While this could just be speculation, it certainly got us thinking …

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First, does Savant want to sell? Let’s consider what we know:

In September 2014, Savant announced a $90 million investment from the private equity firm KKR for 35%. Raising such a large amount of money from a well-known financial player is a fantastic achievement. This sort of investment legitimized the company and our industry. This investment also provided Savant an opportunity to venture beyond the custom channel.

Part of this fundraising effort included the hire of William Lynch as Savant’s new CEO. Lynch came from the mass consumer market as the former CEO of Barnes & Noble. The Savant founder and CEO at the time, Bob Madonna, made it clear he wanted to grow Savant beyond the custom channel, and hiring Lynch was the first step.

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As a result of raising from KKR, Savant had fuel to grow but also pressure to perform quickly. When you raise private equity, typically there’s an expectation to go public or get acquired in order to trigger a capital event (for a good read about private equity strategy, check out this article from Harvard Business Review). Savant likely became focused on satisfying the demands of investors as opposed to sticking with the custom channel.

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Savant’s growth strategy became clear when it announced that it had created a DIY product that would be available on the shelves of Best Buy and other consumer electronics stores: a $499 home controller in the form of a remote. As expected, although some in the industry thought it was a good move, there was frustration among integrators and home tech professionals about the company selling directly to consumers. A product like this cuts into the margins of the integrators.

Has Savant’s DIY remote been a commercial success? The answer is unclear. From a user experience perspective, based on anecdotes and conversations at different industry events, the general consensus seems to be that the remote is a slick product that provides a nice experience. The problem is that it is a tough direct sale to the consumer.

Last year I wrote an article about why the consumer “smart home” is still a few years away, which I believe to still be relevant today. The general public isn’t yet ready for an automated smart home, and it may have been too early for Savant to bet on consumer adoption of a home automation hub.

In a surprise move, Savant announced at the end of September that founder and previous CEO, Bob Madonna, would be replacing Lynch and taking his old job back with a focus on re-engaging the pro-channel.

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Savant’s Headquarters in Hyannis, MA

Earlier in November, we started hearing rumors and reports that Savant was noticeably cutting its sales force, possibly by as much as 50%. Savant says this was to create more efficiencies in the sales process and to add greater value to the pro dealers. That said, this would also be consistent with making the company more attractive for an exit.

So, to sum up the points here:

  1. KKR is expecting a return on its investment.
  2. The mass market remote may not have lived up to expectations.
  3. Madonna returned and is restructuring the company.
  4. SnapAV has been making strategic investments this year.
  5. SnapAV and Savant could be a perfect fit.

While we don’t have any inside information and can’t know for certain what will happen, this is certainly a year of change in the industry. This year we expect a number of new, innovative companies to emerge, the loss of a few unfortunate ones, and a handful of mergers and acquisitions.

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This post was written by Nader who heads Business Development at Josh.ai. Previously, Nader was managing partner at GenYrator and before that he was Vice President / Supervising Execution Trader at Bank of America Merrill Lynch. Nader has an MBA from USC and a BS in Electrical Engineering from UT Austin. He likes to play volleyball, travel, and rock out to pop music.

Josh.ai is an artificial intelligence agent for your home. If you’re interested in learning more, visit us at https://josh.ai.

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