Editorial

Oct. 27, 2008
Large regionals are back...it's where the money is

Dear Readers:
A healthy sign for the security industry is the return of large regional dealers. Was a time not too long ago where they near but disappeared. Companies were all bought up or sold out. Now that middle tier between huge security firms and the small independent is back on the radar. Plus, those regionals who have managed to weather this time period are doing better than ever.

There are many advantages to being a large regional player. Obviously, you can bid on bigger jobs and get volume discounts on equipment. Your monitoring base increases and, with it, the recurring monthly revenues. As you are growing, however, you are, ironically enough, also becoming more attractive as a financial investment. There is the potential for making a nice sum of cash for selling at some point. Frankly, that's what makes the industry go round. I just learned about a big acquisition in the works. Devcon International Corp., Deerfield Beach, FL, signed a purchase agreement to acquire electronic security services assets from Adelphia Communications Corporation.

In pursuit of its strategy to expand its security services division, Devcon Security Services Corp. (DSS) was the successful bidder for certain net assets of Adelphia's electronic security services operation.

Stephen J. Ruzika, president of Devcon and DSS, states, "The acquisition of Adelphia's security services operation would make DSS a leader in the Florida electronic security services market."

The estimated purchase price for the acquired net operating assets is approximately $42.8 million in cash, based substantially upon estimated contractually recurring monthly revenue of approximately $1.2 million. The purchase price is subject to adjustment, based primarily on the final contractual recurring monthly revenue calculation. DSS will be funding the transaction through available cash and a senior secured long-term debt facility. The transaction is subject to United States Bankruptcy Court approval.

Adelphia's electronic security services operation has sales and services offices in Boca Raton, Bonita Springs, Miami, Naples, Orlando, and Tampa, as well as in Buffalo, NY. The assets to be acquired include a modern, full- service monitoring center located in Naples, FL, from which more than 57,000 subscribers' homes and businesses are monitored. After taking into consideration the planned acquisition and DSS' existing security services business of 5,000 accounts, DSS would be providing security services to more than 62,000 customers.

Business deals like this one underway go to show that a breath of fresh air is invigorating this industry once again. Get set for some smooth sailing.