IASG scoops up FSS, looks to reach into specialty loan business

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Thursday, October 6, 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, on Monday 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 central stations.
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 at 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.
The specialty-lending arm that is part of FSS's fold includes loans and dealer finances that have 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.
The changes will not affect dealers and customers, McGinn said.
However, there will be restructuring, to eliminate duplication in the companies' business structures.
McGinn said there where problems at FSS due to the diverse ownership.
In 2004, FSS shifted it services to have a greater emphasis on its financial arm.
"Some wanted to continue to grow business. There are always cross currents. But by bringing it into our business, that is no longer a problem."

To read more on this story, see the November issue of Security Systems News.