ACA has new PE partner
MEDIA, Pa.—Alarm Capital Alliance, a national alarm company with $3.7 million in RMR, has a new financial partner, Norwest Venture Partners, which manages $3.7 billion in capital, Amy Kothari, CEO of Alarm Capital Alliance, told Security Systems News.
While ACA has grown tenfold since Kothari took over as CEO in 2004, having NVP as a financial partner will mean “more focus on growth,” she said. “Partnering with NVP will make us stronger from an acquisition standpoint.”
The company has 125 employees and more than 114,000 customer accounts.
ACA has a unique business model. It has a small dealer program, but 80 percent of its business comes from acquiring books of accounts or entire companies. In some cases, the seller stays in business and services the accounts it sells to ACA, or sometimes it gets out of the business altogether. ACA has its own technicians in the field in some markets and partners with neighboring alarm companies for service in other markets.
“We take a number of different approaches to the acquisition model,” Kothari said. “Other companies do cookie-cutter [deals]. We do not.” Some companies sell ACA accounts every week, some sell accounts every two years. “We are not only flexible, we’re incredibly creative,” she said.
ACA will purchase very small books, and as the result of infrastructure investments is able to make very large bulk purchases. “If a company with $1 million in RMR came on the market we’d be looking at it, whereas two to three years ago, we would not have been,” Kothari said.
The key, she said, is ACA’s ability to very quickly integrate accounts into its system. “We can do due diligence and integrate accounts—whether it’s 1,000 accounts or 20,000 accounts—we take over the billing and customer service within five days,” she said.
ACA has its own proprietary due diligence and account integration system that combines the two steps—whether acquired accounts are on an industry software package, paper or even ledger cards—and feeds the information directly into ACA’s proprietary CRM system.
“Billing is never an issue for us,” she said. “Our system is flawless.”
The system was developed in house by ACA IT staff and some outside contractors. Has Kothari considered licensing this system to other alarm companies? Not at this point, she said.
“We’re in an incredible position to capture significant market share,” Kothari said. “We have a flexible business model, a strong reputation and a team that knows what it’s doing and is very focused on leveraging interactive services and home automation. We’re definitely a company that stays on top of technology … [and Norwest] is a strong partner.”
Terms of the deal were not announced.