AGC's Physical Security Technology October 2026 Market Update

AGC Partners has published its latest Physical Security Technology report, which examines how applying AI to the sector’s installed base of security infrastructure presents an opportunity to both meaningfully improve the efficacy of these technologies and expand the addressable market.

AI enables security teams to continuously process large volumes of camera, access control, and sensor data, shifting the physical security posture from retrospective remediation to proactive monitoring. This shift extends the role and value of software and AI across threat detection and response workflows, enabling teams to identify and respond to critical security events faster and more effectively. As key technology segments such as AI-powered remote monitoring and access control become more integrated, response times compress and operators have more options to contain and respond to incidents as they unfold. Demand for these modern, AI-enabled physical security capabilities is accelerating into large end markets such as healthcare, hospitality, and corporate campuses. Physical Security vendors can leverage AI products to grow recurring revenue and deepen customer relationships without the need for capex-intensive hardware replacement.

A few findings from the report:

• Total M&A deal value is rising while the number of transactions is stable. Annualized 2026 activity points to $7.9B of disclosed value across 127 deals. Capital remains readily available for emerging disruptors and mature companies selling into large end markets.

• Financing remains resilient. ’26 activity is pacing toward $2.25B across 101 rounds, consistent with 2025. Capital is funding AI-driven investigation and monitoring, data platforms, and autonomous response systems.

• The public market valuation gap has narrowed considerably. The broader SaaS premium over physical security has fallen from approximately 150% at the indices’ respective post-COVID peak to approximately 26%. The sector’s direct connection to physical infrastructure and critical safety outcomes serves as a relative buffer against the AI-driven pressures facing broader SaaS.

AGC brings extensive experience across security and safety technology and deep relationships with the sector’s most active acquirers and investors. We would welcome the opportunity to connect and discuss our perspectives on the trends and capital markets activity shaping the sector.