By most accounts, 2016 was a transitional year for our country – but the beat goes on in the security industry, with so many security service provider companies posting phenomenal year-over-year gains. From the rise of the smart home to the increasing popularity of cloud-based systems in the commercial security sector, our industry continues to prove its imperviousness to traditional market forces.
This year’s Fast50 – SD&I’s annual market research and rankings program for the fastest-growing security dealers and integrators – seemed to reflect that sentiment, with very few companies posting a negative revenue growth number in 2016. However, the winds of change are apparent, as five of the top 10 Fast50 companies make their debut in the rankings.
The fastest-growing security dealer/integrator companies of 2016 run the gamut from new to well-established. And while the biggest newsmaker among integrators when it came to growth last year – Johnson Controls – chose not to submit for these rankings, it is not guaranteed that a single, gigantic acquisition is enough to counter-balance three consecutive years of sustained growth.
Take a look at the trends, technologies, numbers, and of course, best practices, that are driving growth among security dealers and integrators:
The Top 10
For complete profiles of 2017’s top five Fast50 companies, see the rest of this issue of SD&I: No. 1 NextGen Security; No. 2 SafeStreets USA; No. 3 Star Asset Security; No. 4 Beacon Protection; and No. 5 GC&E Systems Group.
Here’s a closer look at the companies that rounded out the top 10:
No. 6, NorthStar Home: Last year’s top-ranked Fast50 company, NorthStar Home of Orem, Utah, completed its move to a new corporate facility in 2016, becoming the first company to move into the University Place development in Orem. Its rise to the top of the Fast50 can be credited in large part to the Honeywell dealer’s quick move to embrace emerging smart home technologies and services – in fact, NorthStar was one of the first Honeywell Lyric dealers in the country. According to CEO Jason Christensen, NorthStar focuses on providing its customers with “the complete NorthStar Home” – which includes home security, access control, video, energy management and lifestyle technologies. The company has also taken an active role on social media as a means of marketing and connecting to its customer base. “In our industry today, change is the only thing that is constant,” Christensen says. “Companies that are embracing this can succeed with the opportunities that this provides.”
No. 7, A3 Communications: A3 is no stranger to the Fast50; in fact, the company has been a fixture in the top 10 for the past three years. Company president Brian Thomas says Irmo, S.C.-based A3 is unique in the systems integration world, because the company goes beyond security integration to offer full networking and electrical service, audio-video solutions, virtualization services and unified communications solutions. In 2016, A3 expanded its operations by opening its sixth and seventh new offices – one in Raleigh, N.C., and another in Milledgeville, Ga. “With our record growth, it is crucial that we meet our clients’ demands in a way that is convenient and accessible for them,” Thomas says. In addition to the Fast50, the company was recognized as a 2016 Inc. magazine 500|5000 Fastest Growing Company for the fourth consecutive year; along with the fourth-fastest growing large company in South Carolina.
No. 8, Imperial Surveillance: Imperial Surveillance Inc., a family-owned security company based in Arlington Heights, Ill., makes its debut in the Fast50 rankings in the top 10, thanks to a nearly 42-percent three-year growth rate that included a 2016 that saw the company more than double its gross revenue. The company specializes in commercial security installation and service, including video surveillance, access control and security/fire alarm systems for corporate, industrial and municipal facilities in the Chicagoland area. “Do what the competition is not doing and never take customers or employees for granted,” says Daniel Burress, Imperial’s president. “Challenge yourself to go outside your comfort zone, because that is where the true growth is obtained.”
No. 9, Strategic Security Solutions: Under the direction of managing partner Jay Slaughterbeck, Strategic Security Solutions of Raleigh, N.C., also breaks into the top 10 in its Fast50 debut, thanks to its best-ever year in 2016 and a three-year string of growth that has seen the company more than double its revenue. The company’s primary focus is integrating video, access control, alarm, intercom and other security systems and then moving clients into cloud-based options. “Focus is key for us,” Slaughterbeck says. “When products or technologies are added, it is because it is required to remain cutting edge or makes good business sense. We feel strongly that the more products being offered, the more diluted the competency level from all fronts. While difficult at times, we try hard to keep our offerings limited.”
No. 10, Convergint Technologies: While all of the companies mentioned so far have experienced phenomenal organic growth, Convergint – a fixture in the Fast50 for years – has taken organic a step further by adding substantial merger activity to the mix. In 2016, Convergint acquired two perennial Fast50 companies in their own right, Go Security Systems and Dakota Security Systems – last year’s No. 9 and No. 44 ranked Fast50 companies, respectively. In all, Convergint added seven integration companies from around the globe to its mix last year (Dakota, Go, Corporate Security Systems, Total Recall, TACanada, H&E Comfort Controls and Enion AG). Convergint continued the trend by acquiring Post Browning, an integrator providing consultation, installation, and maintenance for the retail banking industry, in February 2017. “Since its founding in 2001, Convergint Technologies has established a successful track record of both organic growth and growth through acquisitions,” says VP of Security Tony Varco. “Completing seven acquisitions in 2016, one thus far in 2017, and more to come, Convergint treats each acquisition uniquely and leverages the value it can add to its service-based culture.”
The Full List
1. NextGen Security, Exton, PA
2. SafeStreets USA, Garner, NC
3. Star Asset Security LLC, Orlando, FL
4. Beacon Protection, Totowa, NJ
5. GC&E Systems Group Inc., Norcross, GA
6. NorthStar Home, Orem, UT
7. A3 Communications Inc., Irmo, SC
8. Imperial Surveillance, Arlington Heights, IL
9. Strategic Security Solutions, Raleigh, NC
10. Convergint Technologies, Schaumburg, IL
11. DynaFire Inc., Casselberry, FL
12. Stone Security, Salt Lake City, UT
13. Skynet Security Systems, Chicago, IL
14. Continental Computers / WLANmall, El Segundo, CA
15. QPCS LLC, Modesto, CA
16. Intertech Ci, Pittsburgh, PA
17. Low Voltage Contractors Inc. (LVC), Minneapolis, MN
18. A2 Systems, Woburn, MA
19. Security 101- Hampton Roads, Hampton Roads, VA
20. Tri-State Fire & Security LLC, Oklahoma City, OK
21. iS3 Tech Services LLC, Norcross, GA
22. Virsig LLC, Queens, NY
23. Genesis Security Systems LLC, Germantown, MD
24. Vermillion Systems Inc., Walkerton, IN
25. Netronix Integration Inc., San Jose, CA
26. Surveillance Systems Inc., Rocklin, CA
27. B Safe Security, Wilmington, DE
28. Clear Protection Technologies, Mesa, AZ
29. Synergy Florida, Tampa, FL
30. Homeland Safety Systems Inc., Shreveport, LA
31. Vision Technologies Inc., Glen Burnie, MD
32. Advanced Cabling Systems, North Little Rock, AR
33. My Alarm Center, Newtown Square, PA
34. Dowley Security Systems Inc., Houston, TX
35. Pro-Vigil Surveillance Solutions, San Antonio, TX
36. Central Jersey Security Cameras, Freehold, NJ
37. ATTYWON (All The Technology You Want Or Need), Great Neck, NY
38. Electric Guard Dog, Columbia, SC
39. Fortress Security, Arlington, TX
40. TIC Security, Gaithersburg, MD
41. Ackerman Security Systems, Atlanta, GA
42. BK Connected Solutions, Winchester, VA
43. Minuteman Security Technologies Inc., Andover, MA
44. United Alarm Services Inc., Brookfield, CT
45. Red Hawk Fire and Security, Boca Raton, FL
46. The Wire Guys LLC, Emmaus, PA
47. Select Security, Lancaster, PA
48. Brady Integrated Security, Greensboro, NC
49. ADS Security, Nashville, TN
50. Epix Technologies Inc., Grayson, GA
Fast-Growing Technologies
It turns out that Strategic Security Solutions is not alone when it comes to steering clients toward cloud-based solutions. Nearly half (49 percent) of Fast50 dealers and integrators cited cloud-based or hosted video/access control as a cutting-edge technology they are most interested in adding (or have already added) to their portfolio of offerings; and 51 percent called it a top technology trend – making it the most popular technology on the market for dealers and integrators.
Of course, rushing to adopt a new technology or service like cloud services is probably not a good idea. According to Michael McWilliams, President and CEO of Red Hawk Fire & Security (No. 45), it is paramount to make sure a new product or service will actually solve a current customer problem – not be just the next shiny new thing. “We owe it to our customers to make sure the products, the manufacturer, and the underlying technology will be around for the long-term,” McWilliams says. “We also need to ensure there is thorough training for all departments affected by the new technology. Sales, installation and service operations must be in lockstep with the new changes.”
The next most popular technologies and trends are focused on the video surveillance space. HD, megapixel and 4K technologies topped the list, with video analytics, 360 and panoramic, and mobile video surveillance apps coming in close behind. Wireless options for both video and access control were also cited as important technologies to follow and stock among Fast50 companies.
“Training is always one of the most crucial components of a new technology,” says Jerrod Smith, president of Texas-based Fortress Security (No. 39). “We have to manage this appropriately as well measure that against the long-term viability of that technology, which is sometimes an educated guess.”
“We feel that it is vital to develop a proactive business development plan for each new partner and (technology) solution,” adds Convergint’s Varco. “It is also important to ensure that the technology and its business development plan is well-supported in different geographies, so that we can leverage it to service clients wherever they may be.”
The Impact of M&A
One of the most disruptive trends in our industry is the fast-growing M&A activity across all levels of the partner ecosystem. Vendors, distributors, software providers, dealers, integrators – nobody is immune. SD&I outlined the massive amount of M&A activity in our January cover story (www.securityinfowatch.com/12292632), and the 2017 Fast50 dealers and integrators saw their fair share of impact.
Beyond Convergint’s flurry of activity, several other Fast50 companies contributed to their growth via merger/acquisition. Our No. 2-ranked company, SafeStreets USA, became the largest ADT dealer thanks to its merger with Gaylord Security Systems and ACE Security Systems in 2016.
In all, 15 Fast50 companies completed at least one acquisition since 2014. “You must be vigilant in what’s happening with mergers and acquisitions and prepare for additional competition within the changing landscape of our industry,” says Bert Bongard, president of Low Voltage Contractors (LVC, No. 17), which purchased J.N. Johnson Fire & Safety in May 2016. “Preparation and then timely action is the key to keep your company moving forward.”
“One of our main competitors was purchased by a larger company that did not compete directly in our market,” says Mark Cernese, EVP and CFO of The Wire Guys LLC (No. 46) of Pennsylvania. “The integration process has distracted them from effectively competing in the area.”
“M&A activity – especially for small and midsize businesses – picked up considerably at the end of 2016, which was a great opportunity for us to quickly add quality customers through tuck-in acquisitions in some of our key markets,” says Amy Kothari, CEO of Pennsylvania-based My Alarm Center (No. 33). “In 2016 there was a lot of economic and political uncertainty combined with small business owners feeling the pressure of rapidly evolving smart home technology. These factors seemed to drive a number of independent security alarm company owners to pull the trigger and cash out or, in some cases, partner with us to take some risk out of the future.”
Here are the most active dealer/integrators in the mergers/acquisitions area in the past three years (as reported in our Fast50 surveys):
- Convergint Technologies (No. 10): 13
- ADS Security (No. 49): 11
- Select Security (No. 47): 6
- Red Hawk Fire & Security (No. 45): 3
- SafeStreets USA (No. 2): 2
- Advanced Cabling Systems (No. 32): 2
The impact of vendor and distributor M&A/consolidation was also felt among the Fast50 – both positive and negative. “We believe vendor consolidation and M&A activity will benefit us in the long run,” says Dan O’Sullivan, CEO of Georgia-based GC&E Systems Group (No. 5). “It will likely result in improved quality, better use of evolving technologies, faster response to changing market conditions, and greater manufacturing capability and availability of product in a shorter period of time.”
“M&A makes it hard for us to get legacy equipment for customers that cannot afford to purchase an entire system,” says Tony Marquis, president and CEO of Louisiana-based Homeland Safety Systems (No. 30). “Many manufacturers consider their products end of life during these mergers.”
“It is interesting when you wake up one morning and realize that two of your vendors – once fierce competitors – are now one and the same,” says Brian Valenza, CEO of New York’s Virsig LLC. “Some complain that mergers remove vendors from the pool, but there are so many vendors that there will always be multiple merchants to make purchases from. Change is inevitable, but dealing with that change is critical.”
Says David Troost, director of sales for Synergy Florida (No. 29): “We have noticed some vendors purchasing niche, industry-specific products to keep clients from moving purchases away from their catalog/portfolio of brands. As of now we have not been affected, but in the future we could be.”
The Hunt for Talent Continues
It has become a common refrain in our annual Fast50 – recruiting and retention of good employees is a major challenge for the security industry. This year, 76 percent of respondents cited employee recruitment and retention as a top threat/challenge to their business – far and away surpassing the second threat on the list, equipment commoditization and/or price wars (39 percent). Recruiting was also cited as a business’ top concern (52 percent) when it comes to growth.
“Our industry has done a terrible job of attracting new people to our trade,” says Robert Rossman, president of United Alarm Services (No. 44), Brookfield, Conn. “We have found that you really have to start with an apprentice and teach them the right way to not only install the product but also service customers.”
When drilling down for best practices and strategies among security dealers and integrators, here were the top responses (in order of popularity):
- Word-of-mouth referrals
- Online ads and social media
- Employee referral programs
- Outside recruiting firms
- Strong compensation/bonus plans
- Education/scholarship programs and partnerships
- Internal recruiters
“Our goal is to develop recruiting strategies that tie directly into our company goals and to establish a course of action that optimizes employee profitability and reduces cost per employee,” explains Matthew Zucker, president of sales for New Jersey-based Beacon Protection (No. 4). “To attract talent to your organization, you must highlight your company brand, compensation, benefits, training, as well as presenting an avenue for continued career growth. It is important to show the sustainability of our industry through our cutting-edge technological products and the overall health of your company.”
“Be relentless in finding, attracting, motivating, rewarding and celebrating exceptional talent,” adds John Cerasuolo, president and CEO of ADS Security. “There is nothing more important.”
Best Advice
What advice do Fast50 business owners and managers have for their colleagues hoping to duplicate the same kind of success they have enjoyed? Here are some of their responses:
Mario Campos, President, QPCS LLC (No. 15): “Focus on IoT (Internet of Things)-related products, and develop new opportunities that involve IoT.”
Alan Kruglak, SVP, Genesis Security Systems (No. 23): “Standardize your product lines, and do not be a jack-of-all-trades and a master of none.”
Joseph Gallagher, VP, B Safe Security (No. 27): “Your staff has to provide better customer service through improved communication and faster response to customer issues – regardless of the issue or regardless of the customer. Our motto: ‘Mrs. Jones is just as important as ABC liquors with five stores.’”
Richard Stuart, VP, Vision Technologies Inc. (No. 31): “Promote a culture that encourages all team members to understand the role that they play in the company’s success. Strive to maintain relationships across all levels of the company and teach corporate culture on a regular basis.”
Mark S. Davis, president and CEO, Dowley Security Systems (No. 34): “Company growth is driven by sales. Without sales, nothing else truly matters. You can develop the best widget in the world, but if you can’t sell it, it doesn’t matter. No sales = no invoicing, no revenue, no cash, no employees, no clients. Everyone in the company needs to be a sales champion.”
Jeremy White, CEO, Pro-Vigil Surveillance Solutions (No. 35): “A number of companies are on a race to the bottom with uncontrolled discounting. Now is the time to revisit your value prop and start a new campaign to educate your customers and opportunities.”
Nathan Leaphart, CFO, Electric Guard Dog (No. 38): “Create the systems to gather the data that will help you run the business later. You get what you measure – if you put the systems in place early, you will thank yourself later.”
Allison Dillow, marketing, BK Connected Solutions (No. 42): “Understand your financials and what they mean. Have a very strong relationship with your accountant and speak to them a minimum of monthly. Above all, remember you are a CEO – you know how to run, manage and grow companies. You cannot do everything and you need to know when to involve professionals to manage certain aspects of your company.”
Aaron Hughes, GM, Brady Integrated Security (No. 48): “Invest in a Net Promoter Score system that can quickly measure what customers really think of your performance. It comes down to one answer: would they recommend doing business with you to a family or a friend. Make sure you get this data and find out what customers really care about.”
SD&I’s Fast50 is an annual ranking and market research program honoring the fastest-growing security dealers and integrators in North America. To learn more about the program, access archived results, and to enter next year (survey opens in Dec. 2017), please visit www.securityinfowatch.com/sdifast50.
Paul Rothman is Editor in Chief of Security Dealer & Integrator (SD&I) magazine. Access the current issue, along with full archives and subscribe link at www.secdealer.com.
