MacGuard Insights: Carrier's Exit from Fire & Security
Carrier's most recent announcement that they will exit the Fire & Security business in 2024, along with its Commercial Refrigeration division, is giving several of its brands déjà vu.
Following a familiar pattern of industrial conglomerates that included GE acquiring their way into the industry only to sell it after failing to gain traction, Carrier hopes to sharpen its focus on intelligent climate and energy solutions.
“When the original spin off becomes another spin off, leadership did not have the fortitude or appetite to make the fire business great again,” said Kirk MacDowell, president of MacGuard Security Advisors. “History tends to repeat itself and this is no different in the security and fire alarm manufacturing business."
MacDowell noted that it's not uncommon for large corporations to look for ways to gain additional share of wallet with ‘like’ businesses that they believe can be folded into an existing portfolio. However, in many instances, leadership believes if you build it they will come. “That’s not reality, but in their minds, they keep thinking about how that can enhance the brand and quite possibly their own career,” he said.
“What I continue to see about three years after a large entity swallows up another manufacturing company...is that leadership decides that it’s too costly, too time consuming, and no one steps up to be the person who will make it work. Because of this, the business is jettisoned and the executives high five each other for another M&A accomplishment, this time getting rid of an asset that they should not have purchased in the first place.”
The Fire & Security business accounted for about 17% or $3.6 billion of Carrier’s total sales in 2022. Among the brands affected by the decision are the recently rebranded Kidde Commercial and Kidde Fire Systems, Edwards, GST, Autronica, Marioff, Det-Tronics, Supra, LenelS2, Aritech and Onity.
While there is no news on an interested buyer, Kirk's advice for those looking is to, "Make security and fire your core business. Don’t repeat history.”
As part of the strategic actions, Carrier will also acquire Viessmann Climate Solutions, the largest segment of Germany-based Viessmann Group. For more information on the announcement, read SDM's article "Carrier to Exit Fire & Security, Commercial Refrigeration Businesses."