Alarm Capital Alliance Pursues Accelerated Growth Strategies with New Partner
Alarm Capital Alliance (ACA), a nationwide security company ranked No. 11 in the SDM 100, partnered with Norwest Venture Partners (NVP), a global investment firm with $3.7 billion in capital under management. ACA provides capital return and valuable operational resources to alarm companies via its dealer and portfolio acquisition programs as well as residential security services and home automation technologies to households across the United States.
Amy Kothari, chief executive officer of ACA, told SDM, “We’ve with NVP with a desire to grow Alarm Capital more aggressively than we’ve been growing it over the years. We’ve grown this business ten-fold since I’ve taken over running it. We’ve had phenomenal growth over the years and want to capitalize on that and take it to another level.”
Kothari explained that the partnership with NVP, which works with a number of other growth companies outside of the security industry, will give ACA resources and the ability to leverage best practices from the equity firm’s other success stories. Kothari added that NVP provides valuable expertise and relationships in addition to the capital to support acquisitions, which is the primary source of new accounts for ACA. “It really puts us in a good position to capture a significant amount of market share going forward,” Kothari continued.
There are three avenues of growth that NVP will help ACA pursue, Kothari explained. The first, bulk acquisitions, has been ACA’s “bread and butter” for the past 12 years. “Those opportunities are changing for us because we’re now in a position, given our infrastructure and our new partner, to be able to do larger transactions,” Kothari commented. “That avenue of growth — doing the portfolio acquisitions — focuses on traditional small to middle market sized alarm companies where the seller wants to sell some or all of their accounts, may want to stay in business or want to get out of business. Our model is flexible enough that we can handle all of those different types of bulk acquisitions.”
The second avenue of growth is ACA’s dealer program, which Kothari explained as traditionally being in place to support dealers whom the company did bulk acquisitions with and then wanted to sell to ACA on an on-going basis. The program was launched in March, 2011 and has a very regional focus. With NVP, ACA aims to develop this program much more.
The third avenue is organic growth, which Kothari observed is happening naturally in several of the markets the company is in. Here, the company will increasing an already significant brand awareness for its business-to-consumer name, My Alarm Center. “What’s happening in many of the markets that we’re in is we are becoming an installer. We’re creating our own organic growth and we’re trying to capitalize on that sort-of grassroots effort.”
The security alarm industry is expected to grow into a $43 billion dollar market by 2015, as reported by Global Industry Analysts. NVP stated it was drawn to ACA because of this significant market opportunity, an exceptionally strong leadership team and the company’s unique, multi-channel approach, including offerings to a traditionally underserved segment of the security alarm market (small-to-medium-sized independent security alarm companies), direct sales to consumers as well as a dealer program.
“[ACA’s] leadership team not only understands how to create a satisfied customer network, but it has also identified key growth strategies, such as leveraging the rapidly increasing adoption of interactive and home automation solutions, that will significantly differentiate the company in the years to come,” said Sonya Brown, partner, Norwest Venture Partners.
“Our business has always been centered on providing exceptional service to our residential and small commercial customers and partners. The strategic guidance and deep network of technology, marketing and recruiting relationships that NVP brings to the table will help us pursue multiple strategic growth initiatives and continue to offer superior customer service,” said Kothari.
Sonya Brown and Rob Arditi of NVP will join ACA’s board of directors.
Morgan Keegan & Company served as financial advisor to ACA in this transaction.