IASG scoops up FSS

Purchase includes loan portfolio, Securion central station
Tuesday, November 1, 2005

ALBANY, N.Y.--Integrated Alarm Services Group acquired Financial Security Services, a provider of financial services and the owner of a UL-listed monitoring center, in October for $23 million in cash.
IASG plans to use FSS's portfolio to grow its specialty loan business, develop a larger dealer relationship in the Midwest, and add accounts and contracts to the company's wholesale monitoring business.
Dan Linscott, vice president at Securion Central Control and FSS, said, "Operations will continue as is and the central station will remain intact."
With a larger balance sheet, IASG will take advantage of the specialty lending market, said Tim McGinn, chairman and chief executive officer of IASG.
There is a gap of specialty lenders in the $1- to $5-million capital financing range, McGinn said. This is an area IASG plans to capitalize on, he added.
"We are tackling the area where the other players are not," McGinn said.
McGinn said there were problems at FSS due to its diverse ownership.
In 2004, FSS was partially owned by Alsop venture partner, shifted it services to emphasize its financial arm. Prior to that it dabbled in a number of different sectors, such as residential installation, which at its high point generated 300 accounts per month, and all the while continuing to operate a monitoring center.
The specialty-lending arm that is part of FSS's assets includes loans and dealer financing with a par value of $17 million and a portfolio of security alarm contracts totaling $11,000 in recurring monthly revenue.
McGinn noted that FSS's billing business is attractive. IASG will add to its portfolio the monitoring and account billing activities totaling $220,000 of recurring monthly revenue.
"They (FSS) have a very efficient billing business, nice return and it's scalable," he said.
The purchase will bring more than 55,000 accounts from FSS's monitoring company, Securion Central Control in South St. Paul, Minn.
Last November, IASG completed its largest deal to date, acquiring National Alarm Computer Center from Tyco International for $50 million. The transaction brought 240,000 subscribers into the fold, as well as a central station, loan portfolio and alarm contracts.
Following the acquisition of NACC on the West Coast, IASG merged the Santa Fe Springs central station into the NACC facility in Irving, Calif.
The current deal with FSS and Securion will bundle services together for the independent security alarm dealer and the company will increase the yield on the wholesale monitoring business, said Matthew Rogers, managing director, security practices at USBX Advisory Services.
The acquisition will not affect FSS dealers and customers, McGinn said. However, there will be company restructuring to eliminate duplication, he added.