Mallon & Associates to establish $100 million fund
NEW YORK-Investment banking firm Mallon & Associates is in the process of setting up a $100 million private equity fund that would invest in the security market, perhaps making it the first fund of its kind for this market.
The money would come from a number of private equity funds, with a private equity firm hired to disperse funds. Mallon & Associates is orchestrating the deal and would identify companies to invest in, handle the due diligence, structure the deal, oversee it and design the exit strategy.
The project could come together within the next few months, said Jack Mallon, a partner of Mallon & Associates. A variety of security companies could get money, from system integration firms and alarm installers to the biometrics sector and armored car companies to be used for buyouts, recapitalization, or growth financing.
"We expect to be looking at various security markets and targeting companies between $25 and $150 million in revenue," said Mallon.
Mallon & Associates is currently in the second round of discussions with a half dozen private equity funds and is beginning the first stage with a number of others.
"We have been getting a very positive reception in the marketplace and have discovered the private equity community is very interested in the security industry," said Mallon.
The interest now, said Mallon, is due to "the greater visibility that has come to the industry by virtue of the tragedy of 9/11 and that billions of dollars will be going into the industry through government programs and private industry capital expenditures."
David Scopelleti, a partner at Mallon & Associates, said there are many security companies that need growth capital or want to sell but there's currently not a private equity group for them to turn to.
"If we ultimately get done what we set out to do we will certainly be avant-garde in the industry and I think other private equity sources will follow," said Scopelleti. Other partners at the firm include Robert Rutkowski and Jon Mallon.
Mallon said that while $100 million is not an enormous sum when talking about a single private equity fund, it could be a plus for the industry.
"The fact is the more money that goes into an industry, the greater growth and opportunities," he said.