Why regional? Inside ADT's mergers and acquisitions of US security integrators
ADT Inc.’s acquisition of Red Hawk Fire & Security, Boca Raton, Fla., is the latest move in ADT Commercial’s strategy to buy up security integrator firms around the country and grow their footprint. In addition to the Red Hawk acquisition, announced in mid-October, ADT has acquired more than a half-dozen security system integration firms in the last year or so.
Here’s a quick rundown of integrator companies acquired by ADT:
Protec, a Pacific Northwest commercial integrator (Aug. 2017);
MSE Security, the USA’s 27th largest commercial integrator (Sept 2017);
Gaston Security, founded in 1994 as a video surveillance integration company and whose services have since expanded to include intrusion, access control, and perimeter protection (Oct. 2017);
Aronson Security Group (ASG), which delivers risk and security program consultants and offers advanced integration services, consulting and design engineers and a National Program Management team (March 2018);
Acme Security Systems, among the largest privately held security systems integrators in the Bay Area, focusing on electronic security systems, access control, video networks and more (March 2018);
Access Security Integration, a regional systems integrator specialising in design, delivery, installation and servicing of electronic security systems including enterprise-level access control, video and visitor management solutions, perimeter security and security operation command centers (Aug. 2018);
In addition to their moves in the commercial integrator space, ADT has also sought to expand their presence in cybersecurity with the following two acquisitions:
Datashield, specialising in Managed Detection and Response Services (Nov 2017);
Secure Designs, Inc., specialising in design, implementation, monitoring, and managing network defense systems, including firewall services and intrusion prevention, to protect small business networks from a diverse and challenging set of global cyber threats (Aug. 2018).
ADT has acquired more than a half-dozen security system integration firms in the last year or so
For additional insights into ADT’s game plan and the strategy behind these acquisitions, we presented the following questions to Chris BenVau, ADT’s Senior Vice President of Enterprise Solutions.
Q: ADT has been actively acquiring regional integrators this year – more than a half a dozen to date. Please describe the history of how ADT came to embrace a strategy of acquiring regional integrators as a route to growth? ADT's acquisition of Red Hawk is set to close in December, and brings premiere fire and life/safety solutions
BenVau: Our acquisition strategy started at Protection 1 when we embarked on our journey to build out our commercial and national account business and add enhanced integration capabilities to our portfolio. The merger of Protection 1 and ADT brought that foundation to ADT which up to that point was primarily a residentially and SMB-focused company. After the merger, we set out to identify and acquire additional regional integrators that would continue to build on that foundation and deliver enhanced technical solutions, advanced technologies and an expanded service, install and support footprint. Through our acquisitions we now operate two Network Operations Centers and three Centers of Excellence. We are also unique in the industry with the number and variety of certifications, like Cisco and Meraki, our engineers hold which ultimately allows us to offer Managed Security as a Service. They have also enhanced our operational capabilities.
Q: What criteria do you use to evaluate whether an integrator is a good “fit” for ADT?
BenVau: First and foremost, we look at the culture of the companies. The companies that we target for acquisition must be metrics- and customer service-driven. Secondly, we look at the leadership teams. ADT view their acquisitions more like mergers and take a patient approach to integrating them into their business We have been fortunate in the fact the leadership of the companies we acquired remain with us today in key management and executive positions helping to drive continued growth within their organisations. We also evaluate their current customer base, unique solutions and their ability to complement and enhance our portfolio with the goal of becoming a leading full-service, enterprise commercial provider. Our acquisitions have bolstered our network capabilities, brought enterprise risk management services, and a broader solution set in high-end video and access control solutions. Our most recent acquisition – Red Hawk, set to close in December – brings us premiere fire and life/safety solutions.
Q: What changes are typically needed after an integrator is acquired in order to adapt it to the ADT corporate model?
BenVau: We view our acquisitions more like mergers and take a patient approach to integrating them into ADT while taking into account their culture. We want to ensure that we find the right positions for their people, embrace the right messaging and put the right processes in place. We acquire these companies because they are the best in their respective businesses and geographies and bring their knowledge and experience in markets or with solutions that we may not have had previous access to.
ADT can support clients with their own in-house technicians which helps to ensure a consistent security program
Q: How can regional integrators benefit from the ADT brand? Have your newly acquired integrators realised additional growth?
BenVau: The companies we have acquired, generally, have exceeded expectations and surpassed initial goals. ADT brings expanded opportunities for these companies as well with our national footprint. Our National Account Sales Team has seen impressive growth over the years and are only limited by our ability to deliver. These integrators help to deliver on that. In the past, the regional players may have had to rely on sub-contractors to service their larger clients. With ADT, we can now support those clients with our own in-house technicians which helps to ensure a consistent security program across multiple locations.Our National Account Sales Team has seen impressive growth over the years and are only limited by our ability to deliver"
Q: Are additional integrator acquisitions planned this year and into 2019? How much is enough and when will it end (or slow down significantly)?
BenVau: We expect to close on our latest acquisition, Red Hawk, before the end of 2018. Red Hawk brings a national footprint focused on fire/life safety and security to ADT. While ADT already had a robust security offering, Red Hawk will contribute significantly to the fire side of the business. In addition, we will continue to evaluate the companies in the industry to determine if additional acquisitions make sense.
Q: Do you expect greater consolidation of the integrator channel in the industry as a whole? Why is this a good time for consolidation? Is it a good M&A market for buyers like ADT?
BenVau: We will continue to evaluate companies in the industry to determine if further acquisitions make sense. As for the industry, we can only speak for ourselves. Our focus is on investing in our field organisation, in particular our service technicians, engineers and project management teams"
Q: What other trend(s) do you see in the industry that will impact ADT (on the commercial side) in the next year or so, and how?
BenVau: In addition to their moves in the commercial integrator space, ADT has also sought to expand their presence in cybersecurity Networking is a big one. As we continue to drive integration of devices and services, from AI, “the cloud,” machine learning and even analytics, there will be more focus on the network they ride on. A deeper knowledge of network design, bandwidth impact, and system integration will be critical. As part of our acquisition strategy, we focused on talent to add to the team and have been able to add to our bench strength in this area.
Q: Any other comments/insights you wish to share about ADT’s strategy, future, and role in the larger physical security marketplace?
BenVau: Our focus is on investing in our field organisation, in particular our service technicians, engineers and project management teams. The cornerstone of our success lies in our ability to deliver outstanding customer support and service. It starts with sales and the ability to deliver security and life safety technologies, but it ends with a delighted customer who partners with us to help secure the things that matter most to them. Our recent acquisitions have more than doubled our commercial field operations teams and are key to establishing the ADT Commercial brand as a leading full-service provider of enterprise solutions to the marketplace.