Investment firm to acquire Vivint for more than $2B
Vivint, a Utah-based provider of home automation and security services, announced on Wednesday that investment firm Blackstone, on behalf of its private equity investors, Blackstone Capital Partners VI, has entered into an agreement to acquire the company from its current shareholders including Goldman Sachs, Peterson Partners, Jupiter Partners and other minority shareholders, for more than $2 billion.
In addition, Blackstone will also acquire the company’s solar energy panel installation business Vivint Solar, as well as 2GIG Technologies, which makes security and automation equipment for the commercial and residential markets. Vivint, which is one of the largest providers of home automation services in North America and one of biggest home security firms in the U.S., officially launched its solar business unit less than a year ago after receiving $75 million in financing from a subsidiary of U.S. Bancorp.
Over the last two years, Vivint, formerly known as APX Alarm, has undergone a complete rebranding effort as part its strategy to transition from an alarm installation company to a provider of residential technology services.
According to Vivint co-founder and CEO Todd Pedersen, the acquisition by Blackstone will help expand their access to capital, which he said is critical for a company that is growing at their pace in as many different areas as they are.
"We do a lot of other things besides security and some of them are very capital intense," Pedersen said. "You install a solar system and its $20,000 a system. Now we’re only installing like 20 systems a day, but it’s a lot of capital and we intend to get to hundreds of installs a day at some point. Really, the Blackstone move is partnering with a group that is right there at the top of ability to access the capital markets and the credit markets in an efficient way to help scale the company. For me, this my first time running a $2 billion company, but we would like to go to $10 billion and I’ve never run that so having a partner that actually has managed companies that (are worth) $25 billion-plus we think that is a good strategic partnership."
With this injection of capital, Pedersen said that Vivint will be looking to improve and expand on its current technology and service offerings, while at the same time continuing to focus on what the company already does well. Pedersen added that the company will be entering the commercial space with a new panel that will serve as "hub" for a host of services including security. Vivint also has plans to expand geographically into Australia in the coming months.
"For senior management, we’ve spent the last three or four years on raising capital and we’ve pretty much told Blackstone… 'hey, here is where we want to end up, you help us figure out how to finance that growth,'" he said.
While Vivint may have gotten its start purely as an alarm company years ago, Pedersen said that it would have never been valued at $2 billion had they never branched out into other technology sectors, such as home automation and solar energy.
"Fifty-six percent of the customers we added to the platform this year, which will end up being about 190,000 new customers, will have added additional services to their home on top of security," Pedersen explained. "We love security, without question, but we’re definitely not defining ourselves as a security company."
Pedersen said that this acquisition is proof in and of itself of the success of the company’s revamped strategy and rebranding efforts.
"We changed our name from APX Alarm because if you’re out there knocking on doors and you’re selling solar energy… it doesn’t resonate that well," he said. "It was the right name for what we had been, the wrong name for what we had become or transformed into."
The acquisition is expected to close before the end of the year.
