Avigilon

Avigilon was a Canadian technology company that became a major player in the global security market. It specialized in designing and manufacturing high-definition surveillance solutions, including advanced cameras, video analytics software, and access control systems. Think of them as the creators of super-smart, high-resolution security systems that could not only see what was happening but also understand it. For investors, Avigilon represented a classic case of a high-growth company operating in a niche, technology-driven industry. Its story is particularly interesting because it didn't just fade away; it culminated in a major acquisition by Motorola Solutions in 2018, providing a valuable lesson on how shareholder value can be unlocked. While you can no longer buy shares in Avigilon, its journey from a plucky startup to a billion-dollar acquisition target offers timeless insights for any investor.

While often labeled a “growth stock,” Avigilon's story is a goldmine for the value investing practitioner. It demonstrates that value isn't just about buying statistically cheap, slow-growing companies. It’s about buying a great business for a fair price, and Avigilon, for much of its life as a public company, was a truly great business.

Avigilon’s success wasn't an accident. It was built on a powerful competitive advantage, or moat, that protected its business and allowed it to generate impressive profits.

• Technological Edge: The company was a pioneer in high-definition imaging and video analytics. Its cameras could capture crystal-clear images, and its software could automatically detect and flag specific events, reducing the need for constant human monitoring. This technological superiority allowed it to command premium prices.
• End-to-End Solution: Unlike competitors who might only sell cameras or software, Avigilon offered a fully integrated, “plug-and-play” system. This created high switching costs for customers, as ripping out an entire Avigilon system to replace it with a competitor's would be a massive headache.
• Impressive Financials: For years, the company posted staggering growth in revenue and maintained healthy profit margins. This financial strength was a clear signal of a high-quality business that was winning in the marketplace.

An investor applying the principles of Warren Buffett would have recognized these signs of a “wonderful company.” The key challenge, as always, was determining a “fair price” to pay for that quality.

In 2018, the story took a decisive turn. Motorola Solutions, a giant in the communication and public safety sectors, announced it would acquire Avigilon for approximately $1 billion in cash. For shareholders, this was the moment of truth. The deal, priced at C$27.00 per share, represented a significant premium and a successful exit for those who had invested in the company's long-term potential. This acquisition wasn't just a payday; it was a validation of Avigilon's business model and strategic importance. Motorola didn't just want a camera company; it wanted Avigilon’s advanced analytics platform to integrate into its own mission-critical communications network for police, fire, and other first responders.

Avigilon is no longer on the stock market, but its legacy provides sharp, practical lessons.

1. Quality First: Avigilon proves that a superior product and a strong business model are the foundations of a great long-term investment. Don't get so caught up in finding a statistical bargain that you overlook a fantastic business.
2. Look for Acquisition Potential: A key catalyst for unlocking a stock's value is an acquisition. When you analyze a company, ask yourself: “Is this business so good and so strategic that a larger company might want to buy it?” Companies with strong technology, a loyal customer base, and a dominant market position, like Avigilon, are often prime targets.
3. Growth and Value Can Coexist: The debate between growth investing and value investing is often a false one. Avigilon was a high-growth company that, at the right price, was also a fantastic value investment because of the durability of its future earnings power.

Avigilon's journey is a powerful reminder that investing is about owning a piece of a business. It was a company that innovated, dominated its niche, and ultimately rewarded its owners handsomely. For today's investor, the lesson is clear: search for companies with a durable competitive advantage and a clear growth path. Even if you don't get an acquisition offer, owning a portfolio of wonderful businesses is a time-tested strategy for building wealth.