ADT to Acquire ‘Respected Competitor,' Devcon Security, for $148.5 Million in Cash
ADT announced it will acquire Devcon Security for $148.5 million in cash. The transaction is expected to close sometime this month. The acquisition includes approximately 117,000 customer sites with total recurring monthly revenue of approximately $3.6 million. Devcon Security, headquartered in Hollywood, Fla., is currently ranked No. 20 in the SDM 100. The company recently went through a period of accelerated growth, followed by quick changes in leadership. Rumors that Devcon was up for sale began gathering steam earlier this year as its owner since 2009, Golden Gate Capital, began to monetize its other security industry investment, Pinnacle Security.
SDM spoke with Don Boerema, chief corporate development officer at ADT Security Services to learn more about what attracted ADT to Devcon and what its plans are for the company.
“If you look at our business and their business, they’re very much aligned,” Boerema said. “They have residential business, they have a small and medium sized business focus in the commercial area and they have homeowner’s association business. And it’s a security business that sells similar products so there is a lot of alignment from an overall business standpoint. The thing about Devcon that really attracted us is we’ve always respected them as a competitor in the marketplace. But they have a great quality customer base and they have great quality people. And they have a good philosophy having to do with ensuring a great customer experience that’s very much aligned with ADT’s philosophy of really delighting our customers and focus on customers for life. That makes it a great marriage. I think we can learn from each other and we’re looking forward to that.”
Boerema added that in the coming months, as ADT begins to integrate the Devcon business, it will take a hard look at best practices that can be adopted to better serve its customers. Both Devcon and ADT customers will see good things from this acquisition, Boerema said. For example, ADT is farther down the home automation path than Devcon is, with significant and constant investment and development of its Pulse offerings. The company is looking forward to being able to offer this type of product to its new customer base.
“One thing we’re further ahead in than Devcon is the home security and automation platforms as well as the business productivity platforms we have,” Boerema said. “They’ve started in that area but it’s a very small piece of their business overall. With our ADT Pulse we have all kinds of things we can do on the home automation side where you have lifes
tyle capabilities in addition to security that allow you to unlock your doors, turn on and off lights, review video and do a lot of automation things from any kind of device that has a browser and can connect. On top of that in the business world we have a lot of business productivity tools which you can build on top of that and allow you to improve your business because we still give that connectivity. So you can see what backdoors or safes are open. You can have people counters at the front door. You can check video at the cash register and make sure that you’re treating customers properly and that the employees are safe. And there are all kinds of things we can do overall from an automation standpoint. Overlay that with some of things we’re working on that we’ve announced such as entertainment areas where you can manage your smart TV or actually integrating some of your media and content from your iTunes library. We’re starting to do things in the healthcare side that will be integrated and things on the energy side which can help you reduce your energy costs.”
Regarding recent changes at Devcon, Boerema commented, “If you look at the business before we made this acquisition, they expanded in 40 to 50 markets and didn’t have the scale in some of those markets. That’s a tough exercise for anybody to go through.” He added that from ADT’s perspective, the focus and success that Devcon had in developing its N.Y. and Fla. is a great asset. He also said that the customer experience and even employee satisfaction that Devcon excelled at recently by keeping its employees focused through a period of heavy change are investments ADT is excited about. “They’ve done a lot of great things to get the company really focused and performing well and we’re happy to roll that in based on all of the hard work that went on before this acquisition.”
Naren Gursahaney, ADT’s chief executive officer, said, “We are … very pleased to announce the acquisition of Devcon Security, a quality company that we’ve admired as a competitor. In addition to the solid characteristics of the Devcon customer base, we are excited to add Devcon Security’s seasoned sales force and distribution capabilities as well as their highly competent management and operating teams. We operate in a highly fragmented industry and over time expect to see additional M&A opportunities, like Devcon, that could represe”nt value added enhancements to our organic growth.”
Devcon stated, “We are excited to share the news that Devcon Security has entered into a definitive agreement to be acquired by ADT. We are thrilled to join the ADT family — one of the most well-known and trusted brands in the security industry today.”