Doing the alarm business reshuffle
Change is ahead in the residential security market and all you need to do is read the front page of Security Systems News to see what is happening.
Protection One and its more than one million accounts have just changed hands and HoneywellÃ¢â‚¬â„¢s 140,000 U.S. alarm monitoring account business is just about to. Together, they represent not just a large movement of accounts in the residential market, but changing times in the industry as more companies exit the residential market to enter the commercial arena.
Sure there have been other deals in the past, but some of the largest purchases happened years ago and lacked the one-two punch of back-to-back deals carried by the Protection One and Honeywell transactions. Those deals also occurred at a feverish pace.
Years ago, in early 1999, Tyco bought Alarmguard (remember them?) and that companyÃ¢â‚¬â„¢s 103,000 customers. Prior to that, their single largest deal was a 200,000 account acquisition of Entergy Ã¢â‚¬â€œ now IÃ¢â‚¬â„¢m dating myself. And, letÃ¢â‚¬â„¢s not forget TycoÃ¢â‚¬â„¢s scoop on Cambridge Protection, formerly known as SecurityLink Ã¢â‚¬â€œ topping out at one million customers changing hands.
Monitronics also got into the action when it perhaps made its single largest acquisition in 1999 when it bought finance company DMAC and its portfolio of 64,000 accounts.
But unlike the deals of yesteryear, these two, HoneywellÃ¢â‚¬â„¢s and Protection OneÃ¢â‚¬â„¢s, are different. Honeywell has been on the block twice. The first time around it didnÃ¢â‚¬â„¢t strike a deal with top suitor Tyco, according to our sources. Protection One has also been up for sale for a while, with almost a year passing before its majority shareholder, Westar, found an appropriate buyer.
Acquirers of alarm companies are picky these days. Deals take longer as companies are more cautious than before. WeÃ¢â‚¬â„¢re also seeing a new breed of players coming in, namely private equity firms.
Is this shift good for the security market? I believe so. The deals appear to be more calculated Ã¢â‚¬â€œ both on the side of the seller and the buyer and in the residential and systems integration market alike.
The industry is wiser and companies have a plan for growth like never before. The question is, is your company going to be part of that future of growth?