How does ADT/Broadview deal affect the market as a whole?

 - 
Thursday, January 21, 2010

YARMOUTH, Maine—Who comes out ahead when one behemoth swallows another, as in the ADT/Broadview deal, which took much of the industry by surprise this week? Many independent alarm company owners believe the deal spells opportunity for everyone—except perhaps some ADT and Broadview dealers, who may not, initially at least, be too happy about this surprise.

“If I were a dealer, I’d be concerned,” said Mike Jagger, CEO of Provident Security in Vancouver. “Both sides, both the Broadview dealers and the ADT dealers, lose differentiation in the deal.”

Have your say about the effect of the ADT/Broadview at the most recent Security Systems News Poll.

Wayne Boggs, owner of Richmond Alarm Company in Richmond, Va. concurred. For some, he said, the Brink’s/Broadview name conveyed a slightly “higher value” than the ADT name. Some Broadview dealers may consider this a step down. On the other hand, he said, current Broadview dealers, once they settle in, may find more opportunities with industry giant ADT. “They’ll have more support, more resources for marketing, and they have a ton of money,” Boggs said.

Both ADT and Broadview have national footprints and there will be some overlap in branch offices and dealer territories. Broadview has roughly 215 dealers and 69 branch offices.

"I can't wait for the closing," said Pat Egan, CEO of Select Security in Pennsylvania, adding that independent alarm companies  should be “cheering and toasting with champagne about this deal.” He predicted that Broadview branch offices that are in the same location as ADT offices, would be consolidated. Those Broadview offices around the country have “a lot of well-trained residential service, sales, installation and managers,” who will be looking for jobs. “There is no way ADT can incorporate that many people, they don’t need them.” The smart independent alarm company owner does, he said. “It’s going to be a free-for-all … smart independent alarm company owners should be targeting those Broadview dealerships for new employees.” 

Few details have been shared on this element of the deal. During the Jan. 19 investor call, Tyco CEO Ed Breen said there would be an “integration of the corporate group … and some branch offices.”  During a conference call with trade reporters, ADT president John Koch said that ADT “expects to bring the Broadview dealer program and the ADT dealer program together.” 

“It is very early in the integration planning,” Naran Gursahaney, president ADT Worldwide, noted during the investor call.

Broadview dealers just underwent a re-branding process this summer after Brink’s Home Security re-branded as Broadview Security. During the conference call, Bob Allen, Broadview Security CEO, said dealers were notified of the acquisition on Jan. 19, shortly after the deal was publicly announced. “A communication went out to all of the dealers.” In addition, Shawn Lucht, Broadview’s EVP operations, held a conference call with Broadview dealers on Jan. 20, he said. Allen predicted that the move from the Broadview brand to the ADT brand “will be easier” than the switch from Brink’s to Broadview.

How do independent alarm company owners believe the deal wlll affect their businesses and the market in general? Rich Perry, CEO of super-regional Security Networks, like others who spoke to Security Systems News, called it a “positive for the industry and certainly for Security Networks. This deal takes out one of our biggest competitors.”

Boggs and Jagger said they expect some business to come their way as the result of the deal, but pointed out independent alarm companies have always had to differentiate themselves from the ADTs and Broadviews of the world to be successful.

Both noted periods of consolidation are cyclical. “It ebbs and flows, and we’re on a bit of a consolidation cycle,” Jagger said. They’ve got to continue to differentiate themselves from ADT, but  “this creates an opportunity for small companies to get a stronger foothold in the market,” he said.