Red Hawk's nest egg supports its growth

Wednesday, June 1, 2005

INGLEWOOD, Colo.--Thanks to a recent round of debt refinancing and an additional acquisition line of credit totaling $41.5 million combined, systems integrator Red Hawk Industries had the funds for a pair of back to back acquisitions in late April and early May.
The two transactions involved Red Hawk buying BVI Inc., a systems integrator in Trevose, Pa., and MPA Systems of Sanger, Texas.
BVI Inc. is similar to other companies bought by Red Hawk in the past since it provides traditional security services to financial institutions. However, the acquisition of MPA Systems is different because its expertise is providing emergency facilities for the financial market. For example, if a bank closed due to a fire or other damage, MPA Systems brings in a temporary structure to the branch that is equipped with a security system and vault.
"If the bank burned down, this would be up there in a matter of hours to get the bank back in business," said Greg Johnson, president and chief executive officer of Red Hawk.
Officials from Red Hawk declined to release financial information surrounding the two deals, except that it bought 100 percent of the stock of BVI Inc. and that former owners of the company--Jack Belsinger, Bruce Dearnley and Tom Carrol--plan to remain on board.
For Red Hawk, the pair of deals follows nearly two years of work to integrate prior acquisitions into the company. Since forming in 1999, the company has bought more than a dozen security service providers. Its reach now spans 14 regional offices that service 21 states. Today, it employs 550 people and reports annual sales of nearly $100 million.
Moving forward, the company plans to use the funds provided by Allied Capital for acquisitions that will expand the company's reach along the East Coast and in the Midwest and Florida.
"We're going to continue our strategy to acquire good, solid businesses in this market," said Johnson. "Growing geographically is part of these plans."
Of the $41.5 million from Allied Capital, $13.5 million is earmarked for future acquisitions, said Johnson. But according to Jeri Harmon, managing director at Allied Capital, the refinancing enabled Red Hawk to bypass tapping its acquisition line for its purchase of BVI Inc. and MPA Systems and save the acquisition line for future deals.
Red Hawk's business relationship with Allied Capital is one of several the company has forged with financial providers over the years. The company is privately funded, with Florida Capital Partners serving as its primary equity partner, GE Capital Corp. serving as another financial partner and management has also invested in the business.