Up until the fourth quarter of last year, Devcon Security, Hollywood, Fla. operated nine branches, seven of them in Florida and two in New York. Fast forward to the end of June, and the company has built out its regional business into a nationwide platform with 52 branches and more than 900 employees.
Robert Farenhem, president and chief executive officer at Devcon, comments that the expansion started out in the Southeast United States and grew in scope as a direct result of the availability of talent resulting from recent changes in the industry. Notwithstanding a difficult economy, the company saw an opening that could not be missed. “There was a unique opportunity to do it now,” Farenhem relates. “We had become very aware that towards the end of last year there was talent becoming available. We felt after meeting with some of those folks that the culture we had as a company was very consistent with what we were finding.
“That opportunity driven by the availability of talent was not going to be around forever. So in spite of more macro economic environments, this was an opportunity we had to take advantage of. We do fundamentally believe that business is built around people. So if you have an opportunity to bring on very high quality people, you need to look long and hard at that.”
There has been some speculation within the industry that the acquisition of the second largest security company might leave an empty space in the industry and whether other companies would try to fill those shoes. “Underlying this, we thought that with the merger between Broadview and ADT, that there may have been opportunity, defined by being a quality service provider, for us to step into that void if it presented itself,” Farenhem comments. “That is how we define ourselves. We are now a national company but we do emphasize the customer care environment that we create and maintain for our customer base as the thing that distinguishes us from the competition.”
The process of expansion has been underway for the past six months, Farenhem says, and in that time, the company has built out its branch network to include California, Washington state, Arizona, Texas, the Mid-Atlantic, the Northeast and the Midwest. “It’s really a comprehensive coverage model for the U.S. with physical branches to grow our customer base,” Farenhem explains.
“In addition to building out a branch network, we’ve also significantly enhanced a whole lot of our support functions to not only support the business but also to drive the sales process and put us in a position to be one of the quality service providers in the industry,” Farenhem continues. “That is where the establishment of our national operations center in Dallas has been key.”
The centralized location is a new resource to support Devcon’s national branch footprint. At the time of writing, the center is staffed by 120 new employees, with predictions for a total of 190 support people by October of this year.
These support functions are part of a focus on customer care that Farenhem says has always been a key facet of the company’s mission. “[The expansion] is only going to have a positive effect on our existing customers. It allows us to have better resources. It allows us to make investments into our customer care environment, which is very important to us. We define our health as a business by the longevity of our customer base and having more resources to invest into our care environment, we believe allows us to deliver better services, more consistently to our existing customer base.”
In fact, these major changes to the company’s infrastructure have had little effect on the core of the company, Farenhem believes. “What’s interesting is the personality of our company has not changed. We found a very unique opportunity to add complimentary pieces to what our culture was. The thing that is different today versus a year ago is that based on the new infusion of talent and the entry into new markets, our growth prospects as a company are quite different.”
The challenges that have arisen during the fast-paced expansions are anything you might expect when starting up a business, Farenhem says. “We’ve embarked on what is effectively a very large start-up operation that has dwarfed what our historical business in Florida and New York was.” In addition to managing growth, the company has worked hard on seamlessly and quickly assimilating new talent, opening new businesses and acquiring licenses, building facilities at what Farenhem calls “price-sensitive levels,” and hiring and training a sales force. “Those are all very daunting challenges if you deal with them one at a time, let alone if you do them all at the same time and in 43 new markets,” Farenhem says. “It’s been a lot of work over the last six months. But at this point we have 49 out of 52 branches selling and expect the last three operational by the end of June. Then we’ll be able to look back with a great sense of accomplishment that we’ve gotten all of these businesses up and running and on their way to being highly productive.”
At these early stages of expansion, one key marker of success is Devcon’s sales force, Farenhem notes. “Right now, on a month over month basis, we are ramping up sales by about 50 percent.”
As far as what this means for the company’s technology model, the current focus is on expanding its footprint, but Farenhem added, “This does give us better options to approach the market and take advantage of whatever technologies come forth. Now, we are focused on this expansion phase. We’re focused on a residential and light commercial sales model. That doesn’t preclude us from — once the new branches are established — back-selling with the commercial capabilities that we have in Florida and New York into these new markets and all the technology that comes with that. So technology is not a barrier to us, it never has been but particularly now, it will not be. Our platform right now for our residential and light commercial business is a GE, alarm.com platform, which we believe is as good as you can get in the marketplace today.”
Devcon is owned by Golden Gate Capital, which according to Farenhem, has been a strong supporter for this venture along the way. “Golden Gate’s ambition when they entered the security industry initially was to build out a national brand, and their acquisitions of Pinnacle and then Devcon were steps along that road. Golden Gate is still focused on building out a national full-service security platform and this is all part of that greater strategy.”