Security Sales & Integration April 2021 - 58

EXECUTIVE DECISIONS

Big Idea by Ron Davis

Understanding
Your Real Costs
IDEA OF
THE MONTH
What would you tell
alarm companies were
the most important
lessons you've learned in
your present position?

" First, use resources that are available
to you. Second,
identify all the people you know who
are experts in what
it is you're doing. "
- David Carter, NetOne

Ron Davis is an SSI
Industry Hall of Fame
inductee and President of
Davis Mergers and
Acquisitions Group Inc.
Also known as The Graybeards, the company is
active in acquisitions and
mergers exclusively in the
alarm business.

▶ THE TIMING was somewhere in the late
1990s. There we were, walking down one of the
main streets in Tel Aviv. I was with an old acquaintance who was rapidly becoming a good
friend. His name is David Carter, an SSI Industry Hall of Famer who's the managing director
of NetOne, an alarm dealer cooperative with a
combined valuation of all member companies of
in excess of $1 billion.
These are some of the largest alarm companies
in the industry, and NetOne provides buying power, training, support and executive symposiums
for the member companies. It is highly regarded,
and I had just received an invitation to conduct
an M&A symposium for its members. However,
back to walking on the streets of Tel Aviv.
Israel was, as often the case, under attack. It
was not at all unusual to hear a warning siren,
followed by a sound that sounded like a whoosh,
and ending with an explosion somewhere close
to where we were. Carter and I were at the invitation of a technology company in Israel, which
was looking to expand operations into the United States. We were the consultants, but on that
day, I sure felt that I was in the middle of a war.
It showed on my face. And while I busily scanned
the surrounding rooftops for enemy snipers,
I glanced over at Carter who was trying to figure out how to dial a telephone number back in
the U.S. Frankly, I felt like I was walking with
somebody who had come out of the James Bond
genre, and was at the height of being " Mr. Cool. "
For just a moment, I felt a little safer, until reality
grabbed me and I realized that Carter was probably undergoing the same anxieties that I was.
After we got back to the states, I started what is
now Davis Mergers and Acquisitions Group, and
Carter became the head of the predecessor group
that became NetOne.
I got around to asking David one of my signature questions, " Let's assume you were giving
a seminar to just your member companies, but
that included all of the alarm companies in the industry. What would you tell them were the most
important lessons you learned when you stepped

Security Sales & Integration APRIL 2021

SS2104 pp58-59 Big Idea-Essentials.indd 58

rdavis@graybeardsrus.com

into your present position? " He thought for a few
seconds, and then in rapid-fire said, " First, use resources that are available to you. Second, identify
all the people you know who are experts in what it
is you're doing, i.e. bankers, lawyers, accountants,
etc. And finally, listen to the experts when they
tell you something about what is important. " It
seems to me that is a pretty good education in and
of itself. And then, he topped it off with, " Surround yourself with people who use the common
denominator of success. That is, simply, you do
the things that failures don't like to do. "
And then, seemingly on a roll, Carter said, " I
have a few more ideas. First, understand your true
labor costs, loaded. Don't think of one of your installers costing you $18 an hour, but rather know
what the real costs are, i.e. training, uniforms,
vehicle costs, etc. And second, know what your
creative costs are in acquiring new sales. For example, if I say to you, 'what is your creative costs
to create a new customer?' Your answer, should
be all of the costs associated with bringing that
customer on board. Advertising, sales costs, cost
of goods sold, and whatever other costs you could
find that would apply to your creative costs. "
We wrapped up the interview with me asking
Carter his view of the industry as it appeared
that we were starting to come out of the COVID
crisis. He felt that demand for security products
and services remains strong and that attrition for
traditional alarm systems has remained relatively
constant in spite of the crisis we have just gone
through. He felt that residential alarm companies
will have some learning curves in getting back to
business, but that the real uptick in valuations
would be for commercial companies, and particularly commercial integrators. My feelings are
pretty much the same, particularly with regard to
the commercial sector.
While some of the experiences Carter and I had
in Israel might have been considered a little bit
hairy, I was sure glad to be home, and back to the
world that I knew and loved. That changed the
day Congress was asked to confirm the amount
of votes Joe Biden received was enough to propel him into the presidency. Some demonstrators
in Washington changed the whole concept of
an orderly transition of presidents. I'm not sure
what the consequences of that will be, however,
I am sure there will be some. Unfortunately, that
means I have a whole new set of questions I can
be asking future interviewees.
securitysales.com

3/22/21 10:47 AM

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Security Sales & Integration April 2021

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