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The Industry
The homeland security industry is among the fastest growing industries in the United States. We expect that the billions of dollars of governmental and private sector expenditures for homeland security will result in increased demand for homeland security products and services. We believe that this anticipated growth has created attractive acquisition opportunities with significant potential for capital appreciation.
The homeland security industry is not an easily defined market. In July 2002, the Department of Homeland Security published the National Strategy for the Homeland Security, which defines homeland security as “a concerted national effort to prevent terrorist attacks within the United States, reduce America’s vulnerability to terrorism, and minimize the damage and recover from attacks that do occur.” It identifies six mission areas:
- Intelligence and Warning
- Border and Transportation Security
- Domestic Counterterrorism
- Protection of Critical Infrastructure and Key Assets
- Defense Against Catastrophic Threats
- Emergency Preparedness and Response
According to the market research firm Homeland Security Research Corporation, the worldwide homeland security market, including private sector expenditures, is forecasted to grow by nearly 100% from $231 billion in 2006 to $518 billion in 2015 assuming no new major terrorist attack. According to USBX Advisory Services, an investment bank serving the security industry, the overall security industry is highly fragmented with more than 130 large, public companies and thousands of emerging private companies in the industry. Another significant trend impacting the homeland security industry is the growing decentralized procurement for homeland security products and services between federal, state and local levels. We believe that the highly fragmented nature of the homeland security industry is a driver for industry growth and consolidation.
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