Control4 is growing again, but in a somewhat unexpected way. The global provider of smart home solutions has acquired Triad Speakers, a pioneer in high-end audio technology and speaker design, demonstrating a deeper commitment to “high-fidelity audio.”
During a Monday afternoon phone call with Residential Systems, Control4 chairman and CEO Martin Plaehn joined Triad Speakers founder Larry Pexton to share the news from Triad’s Portland, OR, headquarters, saying that they were “both really excited” and that the deal “came together very fast.”
“The acquisition enables Control4 to immediately deepen its entertainment offerings and to develop new integrated-audio experiences for the future, according to Plaehn.
“It’s a big piece of our growing business,” he said. “When we launched the EA Series controllers a year ago, we put very high-quality digital audio converters and decoders in those products. We’ve continued to work with other companies in the digital audio and multi-room space, and felt that when we look over the horizon to what we can build two years out, three years out, four years out, at the mid to high end of the connected home experience… we felt that having acoustical engineering expertise and high-quality custom product creation expertise in-house was really really important.”
Triad manufactures a range of built-to-order premium audio speakers for home theaters, family rooms, whole-home or multi-room audio, as well as for outdoor environments. This acquisition is a strategic addition to the Control4 entertainment portfolio, which includes the fully programmable Control4 EA-series controllers with native high-resolution streaming music services, its family of multi-room audio matrix switches and amplifiers, and its family of ultra-HD 4K video matrix switches with audio down-mixing capabilities.
Plaehn added that there’s a big portion of the market that is not well served by “commodity products” and that Control4 wants to be an “elite provider” of technology in that entertainment space. “We built core competence within Control4, and Triad has a longstanding reputation for acoustical engineering,” he said. “We want to harness that and connect it with our [engineering].”
At age 70, Pexton said it was time to take a step back from running Triad and to make sure the company that he built almost four decades ago was set up for the future. “Triad has been my baby for 37 years, and I wanted to find it a secure home where it could prosper and grow,” he said. “We’ve also been constrained as a small company with how many of our ideas can be put into action. Triad has been probably under-marketed and certainly hasn’t been able to put out all of the products we want to. So having a big public company that shares our values, that shares our enthusiasm for a certain part of the market was just a natural fit.”
Effective immediately, all Triad dealers in North America are now able—for the first time—to place their product orders and customization requests via a new online dealer portal. Control4 and Pakedge dealers may also order Triad solutions online. In the coming weeks, the Triad dealer portal will also include technical training information and additional marketing resources.
Nearly the entire Triad team will be joining Control4, including Pexton, as well as the Triad’s R&D, manufacturing, and custom-services employees, all of whom will continue operating from Triad’s existing facility in Portland.
“I have been offered a very interesting new position with Control4, and I’ll be able to have some influence throughout the company,” Pexton said. “I look at it as a new adventure on a bigger stage and really don’t have any plans to retire at any particular point, and I don’t think my wife has any plans to have me around the house at any particular point.”
Plaehn emphasized Control4’s commitment to keeping the Triad brand in tact, maintaining “that magic” between engineering and materials, supply chain, and manufacturing. “We’re putting their entire system on our ERP system,” he said. “We’re an SAP shop built for scale, so we’re going to be able to provide resources at scale to help the team [in Portland] continue to deliver the quality of work that they have, and we are going to hire more people. We’re a profitable company.
“Triad is growing and profitable,” Plaehn continued. “By combining the two and getting efficiencies through the sales channel, through finance, through HR, through legal—where those functions don’t need to be duplicated—we can enable the team to really focus on their differentiation, which is product and service and customization, and drive that through a pretty powerful business platform focused at the connected home focused through the professional install channel.”
Total consideration for the acquisition of Triad consisted of $9.6 million in cash. Triad generated approximately $9 million in revenue in 2016. Control4 plans to invest in the operations of the business during 2017 to push adoption of these products through its larger sales channels. As a result, Control4 anticipates that the acquisition will be net income neutral in 2017, after adjusting for acquisition-related expenses.