Earlier this week, French conglomerate Schneider Electric announced that it had finalized the sale of video surveillance pioneer Pelco to California-based private equity firm Transom Capital Group for an undisclosed sum. For Pelco, one of the physical security industry’s most iconic brands and a proverbial powerhouse in the analog space, the sale marks the end of an era for the company that saw its market share decline as the industry transitioned away from analog to more advanced IP-based technologies.
Conversely, new ownership also means a fresh start and renewed investment into products and personnel. From the outside looking in, the purchase of Pelco by Transom, whose investment portfolio until now has largely consisted of consumer product companies, the pairing would seem to be somewhat of an odd fit but, according to Russ Roenick, Managing Partner at Transom Capital Group, their firm doesn’t have a particular industry focus when it comes to the companies they decide to invest in but rather they look for businesses where they believe they can make a difference.
“For us, it is really about the functional fit of what the businesses needs are and whether we feel like, as in investors and as operators, we have the experience to lean in and add value,” Roenick says. “If you look at our broader portfolio, we’ve invested in IT services and software businesses, we’ve invested in consumer product businesses and retail concepts, and so… we will invest in any industry as long as the characteristics of the target that we’re investing into fit with our skill set and expertise as an investor.”
Roenick says they were also attracted to innovative nature of the video surveillance market and the strong brand reputation that Pelco has built within the industry over the years.
“In terms of the industry, it’s already a very large and nicely growing marketplace which is characterized by innovations. Historically at Transom, we have a track record of investing in businesses and in industries where innovation is a key component of growing market share, being successful and we have a model for achieving that,” Roenick adds. “When we saw the opportunity (to invest in) Pelco, given that it has a great brand, has been a leader in the space for many, many years and that we could lean in and help the company – it was a combination of all of those factors that got us excited about the opportunity.”
Changing Industry Perception
According to Pelco CEO Jean-Marc Theolier, Pelco has undergone a transition over the past three years to change the industry’s perception of the company as being hardware-centric manufacturer to one that can also deliver cutting-edge software. Under Transom’s ownership, Theolier says they plan to continue grow these offerings.
“If you look at our core corporate clients today, the video management systems which basically drive the cameras and takes care of the storage and information, it’s our number one product line at Pelco so we really balance ourselves today between hardware – the cameras – and software, including the firmware which goes inside the cameras and delivers the quality that Pelco has been known for from the beginning,” Theolier says. “Really what we are building is end-to-end video solutions. We are specialized in bringing to the market the end-users, partners, systems integrators with both cameras and software.
As part of the company’s strategy that was unveiled several weeks back at ISC West, Theolier says that Pelco will be focused moving forward on providing a new suite of cloud services that promises to deliver next-generation video analytics and simplify surveillance system maintenance.
“This will allow Pelco and systems integrators to take managing the health of the video system to the next level. For example, if they wanted to solve an issue on a camera or switch, using the upcoming Pelco Breeze cloud system, they could do it remotely and address specific challenges or call for help under the same Breeze system,” Theolier adds. “The cloud is something we have been investing in for the past year and half to create the infrastructure that we need for this new offering and that will be commercialized by October 2019 and that’s really the big next step for Pelco in the marketplace.”
The Road Ahead
While not divulging specific details, Roenick says that the industry can definitely expect to see changes at Pelco in the coming months.
“We are investors that have a perspective on how to grow companies both top line and bottom line, so there should be a lot of changes and we will be working together here in Fresno (at Pelco headquarters) all week to determine what that program is going to look like,” he says. “We’ll start making changes and rolling things out over the course of the next 90 days.”
While Transom sees great potential in Pelco, Roenick says the firm does not currently have any plans to acquire any other companies in the security market.
“(This acquisition) was more about our fit with Jean-Marc and the key members of his leadership team as well as the needs the business had in order to grow and those lined up really well with our core competencies as an investor to be successful,” he says.
About the Author:
Joel Griffin is the Editor of SecurityInfoWatch.com and a veteran security journalist. You can reach him at [email protected].
