“This will make ADT obviously larger, but more difficult to manage…and even less flexible, which should give the smaller dealers perhaps more of an advantage to emphasize their ability to provide solutions to security needs of the client versus ADT’s typical cookie-cutter approach to security.” — Dan McKimm, president of Ohio-based ProTech Security
“I think that in a lot of ways what’s going to happen right now is that some of the marketing that the collective two companies had spent in the past won’t get spent this year. My guess is that they will save some of that because they don’t need to go to market twice. At the same time I think there is opportunity for everybody going forward.” — Ed Bonifas, vice president of Illinois-based Alarm Detection Systems and president of the Central Station Alarm Association
Editor’s note: SIW was notably the first to break the story on ADT announcing its intent to purchase Broadview Security. The reporting from SIW was superb and included comments from dealers, as SIW’s Geoff Kohl, editor in chief and associate publisher, and assistant editor Joel Griffin went straight to the integrator market to see what was up. Continue to check SIW for breaking news regarding the acquisition and the best updates in the industry. – Deborah L. O’Mara
Tyco International, owners of the ADT business, announced in mid-January that it intended to purchase Broadview Security. The deal is said to be worth $2 billion and will be paid in a mix of cash and stock to Broadview shareholders at a value of $42.50 per share.
Broadview Security came into existence in June 2009, having formerly been known as Brink’s Home Security. Brink’s Home Security itself was a spin-off of the Brink’s Company, this being their residential and commercial security installing business that they developed alongside the well-known Brink’s cash transport business. Brink’s was credited with inventing and creating the model of the mass-marketed security alarm system in the 1980s—no or low money down for a basic system installed along with a long-term, multi-year monitoring agreement.
According to Naren Gursahaney, president of ADT Worldwide, once the acquisition is completed (which is expected in the second calendar quarter of 2010 after approval by Broadview stockholders and governments regulators), Broadview Security will be rebranded as ADT.
Bob Allen, CEO and president of Broadview Security, noted that in the last year, his dealers have already had to rebrand once from Brink’s Home Security to Broadview Security, but he said that the move to ADT may be even easier.
“ADT has always been the number one brand in the industry,” said Allen. “Assuming the ADT brand may be an easier switch than assuming the Broadview brand was for our dealers.”
The merger brings together over six million accounts; with roughly 1.3 million of those coming from Broadview Security and approximately 4.8 million from ADT. Gursahaney said the addition of those Broadview accounts, which are known for low attrition, would likely increase revenues by 25 percent. As for benefits to his own firm, ADT North America President John Koch said the benefits are allowing ADT North America to broaden its sales, installation and service teams, expand its direct and dealer channels, and widen the company’s geographic base.
Wayne Wahrsager, president of New York Merchants Protective Company, the firm that runs the Smith & Wesson dealer program which competes directly with ADT and Broadview Security, said the merger of the two biggest alarm dealer companies will be good for the industry.
“I believe in the long run that it will help the industry,” said Wahrsager. “It eliminates one more player, one more name in the marketplace. For us, particularly, it broadens the ability of our brand to reach alarm companies that wouldn’t do business under the ADT banner. I really think it’s positive.”
Wahrsager said the move primarily affects the residential security alarm industry, since both ADT and Broadview Security were top players in that space. He said that while ADT has a strong presence in the commercial marketplace for burglar alarms and security systems, Broadview Security was not particularly strong in that area.
“Truthfully, this [merger] is a revelation for our industry,” said Wahrsager. “They just widened the gap tremendously.”
John Mack, executive vice president and co-head of investment banking for Imperial Capital said the merger could run up against anti-trust regulations. He expected the deal to give the combined ADT-Broadview business unit approximately 35 to 45 percent of the U.S. residential alarm market.
Mack added that the $2 billion price gives an RMR multiple of approximately 42 times RMR. That multiple is significantly lower than what many businesses have expected; since the previous range of RMR multiples on sales was typically between 50 and 60 times RMR.
“It portends a significant direction for sale of these types of businesses,” said Mack. “Companies may no longer be getting 50 or 60 times RMR. These are the best players in the residential alarm business, and this is the benchmark transaction in the industry and will be for a long time.”
Mack agreed with Wahrsager’s belief that the deal was very good for the industry and shouldn’t be seen as a negative for smaller alarm businesses.
“If the market wasn’t growing, consolidation would be intimidating for the other companies, but we’re seeing growth of sometimes up to 10 percent a year in this industry,” said Mack. “I generally think there is opportunity for small- to mid-size companies with respectability in the market.” –Reprinted from www.securityinfowatch.com.
Control Panel Standard Gains Additional Flexibility
Recent revisions to the groundbreaking ANSI/SIA-CP-01 Control Panel Standard – Features for False Alarm Reduction, may have the new flexibility in programming options to encourage even more widespread compliance in the voluntary standard by control panel and alarm receiver manufacturers, according to Stan Martin, executive director of the non-profit Security Industry Alarm Coalition (SIAC), based in Frisco, Texas.
SIAC, which is comprised of the Canadian Security Association (CANASA), Security Industry Association (SIA), Central Station Alarm Association (CSAA) and the Electronic Security Association (ESA), originally created the standard in 2000 when it decided it was in the industry’s best interests to have panels manufactured ‘pre-programmed’ from the factory with default parameters, especially related to entry and exit, where most user-caused alarms were logged. The majority of the industry’s control panel and alarm receiver manufacturers participated in the creation of the standard.
Now, with a drop in dispatch rate by 70 percent, even with a much larger installed base of alarms, SIAC has made revisions to portions of the standard to make certain default parameters more flexible—which may result in more widespread adoption in the voluntary standard by manufacturers of these products.
SIAC announced there were several significant changes pending to the standard, barring approval by the Security Industry Standards Council, according to Martin. Two of the proposed default programming changes are expanded swinger shut-down programming and the abort window (communication delay).
Swinger shut-down programming is how many times a zone may trip before automatically bypassing. Prior to this most recent revision, the default number was one and it could only be programmed to a maximum of two. The revised standard would allow the user to program to allow for a maximum of six zone trips, giving an additional margin of safety before bypassing the zone. Most users will not change the default from more than two, but if the programmer so desires they can set it to the maximum of six, Martin said.
Another significant issue was the 30-second minimum communication delay. A small group thought the 30-second communication delay was not necessary with the advent of two-call verification and cellular telephones which allow central station operators to quickly reach responsible parties to determine alarm status. Now, that delay can be programmed to zero and the zone type to immediate but the control panel factory default would still be the 30-second delay. This communication delay would not apply to panic or duress signals.
Every major manufacturer has had one or more control panel products meet CP-01 standard but there was resistance to using the standard because of the former swinger shut-down parameters and communication delay. Now, this removes some of the obstacles and may result in even more panels becoming CP-O1 compliant.
Editor’s note: Check out the SD&I archives at www.securityinfowatch.com and look for the July 2009 issue, The State of False Alarms, page 82, for more information on the standard. Also, like other non-profits, SIAC is dependent on donations to promote the industry. Visit www.siacinc.org and make a small donation; it will make a difference.
INFORMATION TRANSPORT CONFERENCE DRAWS STRONG CROWDS
BICSI, the organization focused on the information transport systems industry, held its Winter Conference & Exhibition in January in a smaller venue at the Rosen Shingle Creek Resort in Orlando, Fla., but the more compact exhibit space and show venue didn’t seem to bridle any enthusiasm attendees had for the show.
By the second day, the parking lot was completely full for exhibit hours, which continue to be held during the evenings so attendees can gain continuing education credits to maintain their certification status. And even though the show was downsized in its exhibit area and venue for the second year in a row (it’s previously been held in the larger Gaylord Palms Resort) the conference was hopping and the aisles crowded as attendees glimpsed new products and solutions—many tied of course to the continued move to systems and services on the network, as well as IP-centric solutions. In the daytime educational and certification sessions as well, rooms were crowded with folks eager to learn about new products and technologies which may result in a business edge. Overall, it seemed to be one of the most exciting and dynamic trade shows in recent times.
The final statistics from the show attested to its popularity. Some 4,666 attendees were recorded, 83 first-time participants scoped out what the show had to offer.
Registered Communications Distribution Designers (RCDD), the lifeblood of BICSI, and other credentialed technicians and network specialists use the show to earn the continuing education credits required to maintain their certification. Since 2000, BICSI has introduced three Specialist design credentials: Electronic Safety and Security (ESS) Specialist; Outside Plant (OSP) Specialist; and Wireless Design (WD) Specialist in addition to its RCDD credentials. It also has an ITS or Information Transport System (ITS) Cabling Installation Program. The show included the BICSI Cabling Skills Challenge, where installers wired systems to their heart’s desires and competed for prizes—all on the show floor!
After completing several events—including structured cabling; copper cable terminations; fiber termination; cable assembly; cable troubleshooting; technical support; professionalism; and a written competency exam—winners of each level were named during BICSI’s Annual Awards Banquet.
The overall winner with the highest score of the competition was named the Installer of the Year. Jessie Spearman, ITS Technician, Vision Technologies received top accolades as installer of the year and $5,000--for the third year in a row.
Quick takeaways from the show: the move to IP cameras has gained the interest of BICSI members, who are increasingly interested in what else they can put on the network besides the infrastructure itself to increase their company’s productivity. Instead of convergence, manufacturers were focusing on the term ‘coexistence,’ allowing current analog products and services to reside on the network while adding IP as the user wants to grow into the technology. This is also palatable to users, who now in the third year of a recession don’t want to have to throw out what they have to get the more modern solutions they want. They simply don’t have the money to do it right now.
CAA Winter Convention a ‘Wrap’
More than 300 industry leaders attended the 2009 CAA Winter Convention at the Hilton San Francisco Union Square. California Attorney General Jerry Brown gave the welcoming address to attendees. George DeMarco received the George A. Weinstock Award.
ESA Leadership Summit Scales New Heights
More than 230 attendees and members showed support for the Electronic Security Association (ESA) Summit in Fort Worth, Texas last month. Formerly the National Burglar and Fire Alarm Association, (NBFAA), the event marked the first since the name change and was a successful turnout with three days of meetings, seminars and networking receptions.
A highlight of the 2010 Leadership Summit was the Leadership Awards dinner where guests gathered at the Fort Worth City Club. Awards presented during the dinner included 2010 Chapter of the Year as well as other member accolades.
