Blogs

Rapid Security Solutions of Sarasota, Fla., is growing rapidly following an acquisition, announced today, of Armenti Construction and Access Control, Inc, of Lake Worth, Fla.

I had a chance to speak to Steve Paley, president and COO of Rapid, (and also president of the new Florida chapter of ESA) this afternoon.

Paley said the deal doubles the size of his company, bringing 10 new employees and a number of accounts, notably with gated communities in the Palm Beach county area. "The former owners (Bill and Danielle Armenti) will stay on for the transition." New staff members include 6 technicians and 4 sales and office personnel. "They're outstanding. We're happy to have them join our team," Paley said.

"It's a great location; we needed to be there," Paley said. Armenti's work involved installing lots of security gates and "about 5 percent video [at the communities]," Paley said.

Rapid's plan is to go in and "on top of the gate work, we lay in video and access control ... it's a huge opportunity to gain a greater share of their wallet."

Rapid now has two offices: its home office in Sarasota and now one in Lake Worth. It has warehouses and staff members in Tampa, Orlando and Cape Coral, but Paley said the company will have brick and mortar in all locations--and plans to "double in size within two to three years."

The growth will come from acquisitions and organic growth. Paley said Rapid is "fortunate to have good financial partners that believe in our strategic plan."

Steve Rubin of Davis Mergers and Acquisitions assisted Armenti in the deal.

Look for more on this deal later this week.

Businesses v. Fire Sprinklers. That could be the headline of a story this week in the Chicago Tribune about a fire sprinkler requirement for businesses in the village of Westmont, Ill.

It appears businesses and the village are at odds over such basic fire protection, but they needn’t be if only Congress would stop stalling and pass the Fire Sprinkler Incentive Act, or FSIA. The act would provide tax incentives that make sprinklers more affordable.

The story says that the village requires businesses to install fire sprinklers but has put that safety requirement on hold because businesses say they can’t afford to add sprinklers. Here’s what the story had to say:
 

The village began a moratorium on the sprinkler requirement in 2010 for three years, citing that it had deterred businesses from locating in Westmont. The moratorium expires in spring and the board plans to discuss the issue at a meeting in February.

Trustee Ellen Emery said the moratorium was intended, in part, to allow property owners more time to become compliant. But many businesses have not, she said, adding that building owners, not lessees, should be responsible for installing the fire sprinkler systems.

Still, trustees said many landlords are requesting tenants install the systems.

"If a building is not up to code, a new business isn't going to want to invest their life savings into it," said Emery. "There have been many cases where businesses decided not to open up in town after learning they would have to pay for the installation of the sprinkler system."

Emery says a strip mall on the south end of town is almost completely vacant because the owner doesn't want to pay for the installation of a sprinkler system. Fire officials also told trustees that 65 businesses have not installed a mandatory wireless fire alarm system while 550 buildings have. Of those not in compliance, about 55 are in the downtown area, they said.

The fire code issue comes as the village is considering enacting a tax increment financing (TIF) district on the south end of the community and possibly in the downtown to help revitalize the areas.

A TIF is one answer that communities like Westmont could employ to resolve this issue. But that approach is piecemeal when compared to the Fire Sprinkler Incentive Act.

After 100 people were killed in The Station nightclub fire in West Warwick, R.I. in 2003, coalition of groups, including firefighters, fire sprinkler manufacturers and fire and life safety groups have been lobbying Congress to pass FSIA.

According to the latest version, introduced in the House of Representatives in 2011, the act would amend the Internal Revenue Code “to allow: (1) 100% expensing in a current taxable year of the cost of an automated fire sprinkler system, as defined by this Act; and (2) accelerated depreciation (i.e., a 15-year recovery period) of such an automated fire sprinkler system that is installed in a building where the floor of any occupiable story is greater than 75 feet above the lowest level of fire department vehicle access.”

Since ADT spun off from Tyco International Sept. 28 and began trading on the New York Stock Exchange, the news about its performance has been upbeat. And earlier this week, according to news reports, Credit Suisse Group reaffirmed its outperform rating of the The ADT Corp. and raised its target price from $50 to $54. It cited ADT mergers and acquisitions as a factor.

Here’s more from Credit Suisse’s Jan. 14 assessment of ADT:
 

Some investors think they "missed" the chance to own ADT. We disagree, and see upside to the mid/high $50's over the next 12 months. TP raised to $54 (from $50). We think ADT's M&A spend will exceed their budgeted $150mn in 2013 and drive revenue and earnings growth above current market expectations. The fragmented security monitoring industry is filled with potential targets for ADT and given most industry competitors operate near identical business models, most M&A should offer significant cost synergies and earnings accretion. An additional half turn of EBITDA leverage to ADT's current targets would give ADT $700mn to spend on M&A; this could mean $175m in incremental EBITDA before synergies (10%+ accretive).

In trading yesterday, ADT closed at $47.25. Its 52-week range went from $35.38 to $47.50.

Make it eight deals with high-profile video providers for ObjectVideo. The video analytics provider on Jan. 9 announced it had signed a global patent licensing program with Panasonic.

Panasonic approached OV last year,  Raul Fernadez, chairman of Object Video, told me. OV is in discussions with six other manufacturers, he said.

With many of the biggest names in video surveillance now signed on with licensing agreements, will OV turn its attention away from its licensing program?

Yes and no, Fernandez said. OV is involved with other revenue-generating divisions, notably some R&D work with federal government clients, but licensing will continue to be an important business. There are new player in the video world all the time, Fernandez noted. And if OV lets up on its enforcement of patent infringement and licensing policies, current licensees would potentially be put at a disadvantage, he said.

However, Fernandez anticipates there will be less litigation involved in future licensing deals with video providers.

Aside from the licensing stuff, Fernandez wanted to talk about some software and services work OV is doing with "DOD and intelligence community sponsors … working on next-generation challenges for indexing, searching and retrieving images.”

It’s the kind of government-sponsored R&D work that OV did more than a decade ago that led to today’s mainstream analytic technologies (object tracking, object class, tripwire), Fernandez said.

The work OV is doing today with the government involves “a lot of indexing, image segmentation … taking images and crossmatching with large databases to geolocate images.”

Fernandez said it this research will propel “next generation innovations” for its government client, OV and the security industry.