ISR goes the way of Stanley

Saturday, January 1, 2005

NEW BRITIAN, Conn. - Stanley Works continued to grow its systems integration business in December, buying one of the largest independent systems integrators to service the government market in a deal valued at $34 million.

ISR Solutions, which boasts 50 percent of its business as coming from the government market, is the latest to join Stanley Works. Other recent acquisitions for Stanley Works include Frisco Bay Industries in early 2004, Best Access, Blick and, most recently, Sargent & Greenleaf and The SafeMasters Co. (See related story.)

The acquisitions are all part of Stanley Works’ plans to build a $2 billion to $3 billion business. With Chantilly, Va.-based ISR Solutions onboard, Stanley Security Solutions, the company’s security business, inched a little closer to that mark with $750 million in business.

“We’re very strong in the retail sector and pretty strong in the university and college sector. But we were not strong in the government sector or as strong as we’d like to be in financial institutions,” said Gerry Gould, vice president of investor relations for Stanley Works. “ISR gives us additional financial and government sector (reach) and those are sectors we’ve identified as targets.”

The deal comes after several months of industry speculation that ISR Solutions was up for sale. The Carlyle Group owned the single largest interest in the systems integrator, coming onboard three years ago to provide additional capital to grow the business. Other investors included Fairfax Partners, Claneil Enterprise and ISR Solution’s founders.

Since then, capital infusion from The Carlyle Group and the addition of two key members to ISR Solutions’ management team, Chief Financial Officer and Chief Operating Officer Kevin Thimjon and Chris Hinker, vice president of operations, helped the company average 35 percent growth each year. In its fiscal year 2004, which ended in June, it reported $40 million in revenues.

For ISR Solutions, becoming part of the Stanley Security Solutions group provides the company with brand recognition. “Everybody in the United States has heard of Stanley,” said Joe Costa, chief executive officer, president and founder of eight-year-old ISR Solutions. “In the Security Solutions space, they have a much larger footprint than ISR. And it will benefit our clients with a national presence with better service.”

It also extends ISR Solutions’ footprint significantly, by adding Stanley Works’ 50 field offices across the country to its base of 14.

Costa and co-founder Tony Padilla, chief technology officer, will both remain onboard at ISR Solutions. Costa will now take on the role of vice president, general manager of Stanley’s security solutions and government business.

The decision to sell ISR Solutions came a little sooner than expected, according to Mark Frantz, principal of The Caryle Group.

“We got one out of the blue in the summer,” said Frantz, about an earlier offer, which did not come from Stanley Works.

When the company received that offer, it prompted ISR Solutions to hire USBX Advisory Services to put together a prospectus.

“They had a pretty strong overture from another, strong strategic player,” said John Mack, chief executive officer of USBX. “We helped them to essentially run that process to do a market check of how much interest there was in the business.”

While The Carlyle Group no longer has a stake in ISR Solutions, the company still has interest in other security-related ventures, such as AuthenTec, BNX Systems and Secure Elements, said Frantz
Related story
Stanley packs a one, two punch