Former GE exec Trotter lays out theory on security

GVI | Samsung just first of acquisitions, investments in the space for GenNx360
Tuesday, December 22, 2009

NEW YORK—Equity firm GenNx360’s recent purchase of surveillance manufacturer GVI | Samsung should have come as little surprise. With $500 million in “dry powder” and former GE board member Lloyd Trotter as one of the partners, security was always squarely in the crosshairs.

“If you roll the clock back,” said Trotter, “I was an executive at GE when the company decided to move into security, and for me it wasn’t a passing kind of look. It’s a space that I think is very relevant. It’s a space where I think you can add a lot of value. And it’s a space that’s pretty fragmented, even yet. When you think about the size of the space, there’s still a ways to go from a consolidations point of view. Plus, technology is valued and you get paid for it.”

Thus, “when we rolled out our firm, one of the spaces that was on my agenda was security because I think we can do a lot of work there in helping with consolidations and making relevant business out of what we buy.”

First up was a roughly $12 million investment in buying GVI | Samsung, which Trotter said was attractive because of the management team’s turnaround of the company and the fact that its public status was hampering growth. “A public company their size is somewhat resource-constrained. It’s hard to put a tone of feet on the street and open and expand markets as fast as they would like to. It’s very difficult to do the public stuff while growing.”

He thinks GVI is poised technologically for the future of the industry, as well. “Things are going to get smarter, more sophisticated,” he said. “Security will have to add more value to every application that they serve. I think with Samsung, they get it. With the resources they have behind them, Samsung won’t be left at the starting gate. They’re just going to be great partners, I believe, and that will be able to satisfy the markets in the future.”

GVI CEO Steve Walin said Samsung is primed to enter the IP space aggressively. “As Samsung has rolled out technology in this space,” he noted, “they’ve never been the first. They wait until the early folks go out, and learn from their mistakes, and then enter. Even on the DVR, three and a half years ago, they were late to enter that, but we’re now in there big time.”

Trotter said GenNx360 will continue to look for similar opportunities in security. “We look at GVI as a first step,” he said. “The thought process is a portfolio of security-related companies that we believe we can help grow in the space. The strategy for how we go about that? I’m not going to get into that.”

He laughed: “The ink isn’t even dry yet on GVI.”