The pro AV integration industry has a commoditization problem, and most owners do not fully appreciate what it is costing them in value, not just today, but when it matters most: at transition to the next generation, employees or to an external buyer.
Over the past decade, plug-and-play collaboration hardware has reshaped the pro AV landscape, reducing the need for specialized integration and enabling IT generalists to deploy systems quickly. At the same time, as room systems become more standardized, buying decisions shift toward price, speed and scale, pushing integrators into rollout-driven work with tighter margins and less differentiation.
The result is a market that has become structurally more difficult for traditional integrators to defend their value, their margins and ultimately, the worth of the business they have spent years building.
Commoditization in Pro AV: Problem Hiding in Plain Sight
This dynamic is most pronounced in the workplace technology space, where the convergence of corporate AV and IT has made standardized, room-based collaboration systems the default procurement choice for most enterprise clients.
The “good-enough” mentality has long become the norm, quietly reshaping the relationship between integrators and their clients.
When outcomes are measured against a low bar, the integrator’s expertise becomes invisible — indistinguishable from any other vendor who can deliver hardware and installation services. It is very difficult to charge a premium, build loyalty or justify a managed services conversation when the client’s frame of reference for success is simply that the system turns on.
Once that perception takes hold, price becomes the only decision criterion, leaving even the best operators struggling with inconsistent margins and unpredictable growth.
Patterns We Are Seeing Across the Market
Across North America, EMEA, and APAC, a pattern has become unmistakable: Revenue is growing, and in many cases, meaningfully so. However, profitability is flat or quietly declining. Gross margins are also compressing year over year, while an increasing share of revenue tied to lower-margin hardware and service revenue is failing to keep pace with project volume.
These are the financial fingerprints of commoditization, appearing with striking consistency across geographies and business sizes.
In practice, service and managed services revenue across most AV integration businesses fluctuates between 5% and 15% of total revenue, and 20% at best. Having evaluated several dozen companies across multiple continents, the number of firms where service revenue meaningfully exceeds 20% can be counted on one hand.
That gap between what owners believe their service practice contributes and what the financials actually reflect is one of the most consistent findings in this sector. It is also precisely what sophisticated buyers are trained to find.
What Truly Drives Enterprise Value
When strategic acquirers and financial sponsors evaluate integration businesses, they are not simply reviewing revenue — they are stress-testing its quality, predictability and defensibility.
Buyers consistently assign higher EBITDA multiples to firms with managed services contracts, recurring monitoring revenue and multi-year service agreements even when a project-driven competitor carries a larger top line. The recurring business is more predictable, more margin-accretive and far more difficult to displace.
Equally important is client relationship depth. Buyers distinguish sharply between integrators whose client relationships are built on trust, embedded expertise and a consultative approach that makes them indispensable.
They also assess those integrators whose clients return or don’t based on who submitted the lowest bid. The former is a durable asset. The latter is a pipeline rebuilt from scratch every cycle.
Vertical diversification carries similar weight. Workplace technology alone is not a sufficient foundation for long-term profitability or a premium valuation. Buyers now view single-vertical concentration as a structural vulnerability.
Firms that have expanded into experiential AV, command and control, live events and mission-critical deployments thus demonstrate stronger differentiation and higher barriers to entry, which drive stronger multiples. Each vertical adds a layer of defensibility that makes the business demonstrably harder to displace.
What Owners Can Do About Commoditization in Pro AV
The good news is that commoditization is unavoidable. However, responding to it requires intentional repositioning. There are three levers to help owners navigate the challenge:
Managed Services
The first lever is managed services. Elevating recurring revenue through monitoring contracts, proactive maintenance, staff augmentation, remote support and multi-year SLAs from a secondary offering to a core strategy fundamentally changes the financial profile of the business. It also helps smoothen cash flow and creates an annualized revenue base that buyers assign premium multiples to.
Solution Diversification
The second lever is solution diversification. Command and control environments, NOCs, SOCs, emergency management facilities carry exacting engineering requirements, long-term client relationships, and high barriers to entry. Experiential AV and hybrid broadcast installations demand expertise that no commodity product can replicate. Clients do not shop these engagements on price as outcome certainty is the primary variable. Firms with genuine capability here occupy a fundamentally different competitive tier.
Adjacency Expansion
The third lever is adjacency expansion. Adding electronic security and IT networking to a core AV practice repositions a firm as a complete technology solution provider deepening client relationships, increasing revenue per account, and raising switching costs substantially. In many transactions we observe, adjacent service lines are not just a valuation driver; they are a qualification criterion for the most serious buyers.
None of these moves happen overnight. But the time to begin is well before a transaction is on the horizon because buyers will want to see the trend, not just the intention.
The Ownership Perspective
Commoditization across the pro AV industry will continue to intensify. The firms that will perform best, both operationally today or upon a future exit —whether through a transition to the next generation, employees or an outright sale to a strategic buyer or financial sponsor —are those that have repositioned themselves around outcomes, expertise and recurring client value.
The market is already sorting itself into two groups: The businesses being built for long-term resilience, and the businesses quietly being built for discount.
For many owners, the consequences will not fully reveal themselves until the day they sit across the table from a buyer. By then, the market will have already decided which businesses deserve a premium and which do not.
Ari Fuchs is managing director at The DAK Group. Denis Pozigun is principal at The DAK Group.
