Chicagoland installation firm grows with tuck-in account buys

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Wednesday, January 1, 2003

WOOD DALE, Ill. -With its largest acquisition to date, a low-voltage systems contracting firm based here is working toward its strategy of becoming a dominant player in the Midwest by concentrating on acquiring small scale companies and blocks of accounts.

ComStar Inc., a firm active in residential and commercial security, communications, sound, voice, data and automation installations, earlier this fall purchased Versatile Security Systems, a Glenview-based company whose business mirrored closely that of ComStar’s, said Tim Greco, president of ComStar. In keeping with ComStar’s strategy of basing operations from a single hub location, Versatile’s headquarters will eventually be closed.

With its customer base of between 1,500 to 2,000 accounts, Versatile was ComStar’s largest acquisition of 2002 and has added six new employees to the company, including Versatile President Neil Bodzin, who is ComStar’s regional sales engineer. ComStar also made three other acquisitions of small blocks of accounts, which totaled about two hundred accounts, said James Greco, chief executive officer. The company employs about 25 people.

The company’s strategy, which was formed in late 2001 and implemented in early 2002 was to grow its footprint in suburban Chicago and to provide a place where small dealers can turn to leverage small blocks of accounts.

“We are attempting to create a market for the smaller dealer so if they need to have leverage, if they are looking to covert some accounts or monitoring contracts into cash to do different types of things in their business, we want to be a magnet for those small dealers to have some place to go,” James Greco said. “At the same time it gives us a greater opportunity to build our customer base and provide our services and additional products to new subscribers.”

ComStar’s approach also includes the opportunity for larger acquisitions, but smaller purchases are more readily available, easier to absorb and can be done on a daily basis as part of the company’s operating plan, James Greco said.

Company officials project that the company will see 50 percent growth each year over the next five years, when the number of monitored accounts will have reached between 12,000 to 15,000. ComStar uses Emergency 24 and Security Associates International for its alarm monitoring.

Another area of revenue for the company is its service side, which brings in about 30 percent of ComStar’s revenues. The third party service contracts are for companies such as Universal Alarms, Pinkerton, and Security Alarm Financing Enterprises. The company is now servicing between 8,000 and 12,000 customers in the company’s 45-mile coverage, a number that is expected to jump to 20,000 to 25,000 accounts over the next five years.

SLP Capital and Ron Davis of David Marketing Group assisted ComStar in the acquisition of Versatile Security.