Security Sales & Integration May 2021 - 59

EXECUTIVE DECISIONS

Big Idea by Ron Davis

Change Brings New
Look to Industry
IDEA OF
THE MONTH
Is the industry changing?

" You bet it is
changing, and I'm
not referring just
to the influx of DIY
sales installations
but rather, top
to bottom, all
segments of the
industry. New
products and
services are
changing the
landscape of the
industry. "
- Brian Duffy

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.

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SS2105 pp58-59 Legal-Big Idea.indd 59

▶ WHEN I WROTE A COLUMN about Brian
Duffy in May 2017, I felt it was a good read,
and sent it off to my bosses back in Massachusetts. I never gave any conscious thoughts for a
follow-up interview until about six months ago,
when he was upgraded from a midlevel manager
to CEO of his company, Per Mar Security Services. At the time, we were negotiating with the
Per Mar people for the purchase of Floyd Security of Minneapolis.
Although I didn't know it at the time, this was
to be Per Mar's largest acquisition ever. Our client
had a sterling reputation, great records and was
really a buyer's greatest dream acquisition. And
the seller, Michael Karch, is one of the most successful and professional players in the industry.
All that being said, the transaction had all
the makings of being problematic. There was an
RMR division that provided residential and light
commercial security to the smaller clients. There
was a large integrator portion that looked after
the commercial segment, and there was a very
successful lock and key division that had been
the foundation of the business from the very beginning. For those of you who have been active
in M&A, you might recognize a transaction with
the potential to get off track and go south.
When it came time to do due diligence, everybody took a look at all of the components of
each of the divisions and came to the conclusion
this was going to be a lengthy, time-consuming
exercise. When we looked at the valuations that
have been done for the seller, and then examined
the inventories, it seemed as though the numbers were pretty close to being the same. In other
words, the value each of the divisions had been
laid out ahead of time by Karch and his team.
I initiated a conference call and we talked about
the fact that Duffy could either go through a protracted interview with due diligence people, or,
look at a package price based on the valuations by
the seller for all of the inventory.
Both the buyer and seller agreed to that and
instead of spending days or weeks doing an inventory, everybody was comfortable with the

rdavis@graybeardsrus.com

price that we came up with. Within a very short
time the deal closed, Karch got a handsome, well
deserved purchase price and Duffy found that his
team probably saved tens of thousands of dollars
to come up with pretty much the same answer.
The point of bringing this all out is that sometimes it's easier looking for what you were looking
for. In this case it sure worked, and what started
out as potentially a tough deal to put together
was actually one of the simplest (but not necessarily easy) we had encountered. That brings me
to the subject of this column, Brian Duffy, CEO.
I asked Duffy: Is the industry changing? His
immediate response, " You bet it is changing, and
I'm not referring just to the influx of DIY sales
installations but rather, top to bottom, all segments of the industry. New products and services
are changing the landscape of the industry. "
All you have to do is look at Allied Universal's
rapid acquisition program and the fact that they
are now the single largest security company in the
world to understand some of the changes that have
taken place. Prior to COVID interrupting our
lives, it seemed the industry was certainly growing,
but not nearly what I think it's going to be in the
next few years. Before COVID, DIY was an annoying presence for many traditional alarm companies. Today, it is hardly mentioned when practitioners in the industry talk about future trends.
Manufacturing in the commercial sector
changed, and if you look at that sector today
you will see a lot of new faces. A good percentage of them are young people, and a rapidly increasing segment includes women, engineers and
executives from other industries. Then, look at
the people and companies that more than likely
will be exhibiting at future tradeshows and you
start to see a picture of an industry that is rapidly
evolving, and some would say changing.
" The biggest challenge the industry will face
during the next decade will be finding the right
people to handle the growth, change and opportunities, and then helping to manage the expectations of those changes by today's senior management. Wonderful future? You bet, " Duffy added.
I agree with him. On the other hand, his family
business is considered one of the real success stories
about our industry, that has created both an environment of success and promoted the right people
to manage the existing business. Just look at Duffy
and you will have little doubt that Per Mar is doing
the right things to prepare for the future.
MAY 2021 Security Sales & Integration

4/16/21 3:49 PM

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Security Sales & Integration May 2021

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