Emergency Response Systems makes backyard buy

The California company adds a new vertical to its mix when it acquires some new monitoring and servicing accounts
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Wednesday, August 13, 2014

RIVERSIDE, Calif.—In a move expected to enhance both companies, Emergency Response Systems, based here, has acquired the monitoring and servicing accounts of Corona, Calif.-based FSS ALARMS.

FSS ALARMS will continue to operate, design, install and service fire sprinkler systems as FSS Sprinkler, according to a news release from Long Grove, Ill.-based Davis Mergers and Acquisition Group, which represented FSS ALARMS in the deal, finalized Aug. 1.

“I view it to be a fantastic opportunity,” Paul Keast, president of Emergency Response Systems, told Security Systems News. Fire is currently the most robust part of the 14-year-old company’s business, accounting for about 50 percent of its income, he said.

Acquired from FSS were about 160 accounts that have monitoring, testing and inspection services, Keast said. He added that translates into a total of “about 420 buildings, or 420 inspection agreements. … It’s about $12,500 in reoccurring revenue.”

He said 90 percent of the accounts are apartment complexes, essentially a new vertical for his 14-year-old company, whose other customers include hotels, schools and colleges, shopping centers, car dealerships and Riverside City Hall. “We have a few [apartment complexes], but now it’s obviously a significant portion,” Keast said.

Also, he added, the accounts have “a lot of polishing potential. I always look where I can take it, not where it’s at.”

He explained that Emergency Response Systems can now introduce cellular technology to the new customers and “save the client money and increase our net worth. And we can increase extended equipment warranties, of which there are none. There are many opportunities.”

Keast said Corona is only about 20 minutes from Riverside, so FSS’ customers are right in Emergency Response Systems’ footprint. “It’s just a perfect glove over the top of what we’re doing,” Keast said.

Harold Rodgers, FSS president, did not respond to SSN’s request for comment on the deal. But Keast said FSS benefits because now it can focus on its sprinkler business.

He declined to reveal terms of the deal, in which the Davis Group’s Dorsie Mosher represented FSS. However, Keast added, “we established a $600,000 credit line and I certainly didn’t use it all on them, … so we can still play a little.” The credit line is through Alarm Financial Services of Corte Madera, Calif., he said.

Keast said he and a partner formerly were the owners of Emergency Alert Systems, but split up in 2000, after which Keast founded Emergency Response Systems. The company, whose geographic area is Ventura, Calif. to San Diego, is “small, lean and mean,” Keast said.

The company only has three employees. It subcontracts for technicians when it needs them and uses CMS for monitoring, he said.

Emergency Response Systems currently has about 1,000 accounts, “but with the level of services we have we probably have revenues in the area of what a company of 3,000 [accounts] would have,” Keast said. RMR currently is about $64,000, he said.

Maintenance is an important facet of the company’s business. “Most of our customers have service agreements,” he said.

And Emergency Response Systems’ “secret sauce” is the good service it offers, Keast said. “We take care of people and we respond quickly and we’re good detectives, and we stay on it until we figure out what the problem is,” he said. He added, “The majority of our growth in the last two years is reaping from those who don't take care of their client base.”

A new cloud-based billing system the company is about to implement will also enhance service, Keast said.

He said the company’s “next goal is to break $100,000 a month in reoccurring” within five years.

“I have a couple of projects right now that are going to bounce [RMR] up to $75,000, $76,000 if everything flows correctly, and in the next three to five years, … I’d like to pick it up,” Keast said.