From one spin-off, two new companies emerge

Monday, March 1, 2004

TOLEDO, Ohio - Kim Klewer is returning to his roots in more ways than one.

Earlier this year, Klewer reclaimed the systems integration side of the business he sold to diversified media company Block Communications in 1998. After six years of running a security company, the family-owned media firm decided to focus solely on the residential side of its alarm business, Corporate Protection Services, a company with 6,000 monitored security customers.

The result was a spin-off of a commercial security business with between $5 million and $10 million in sales, which Klewer picked up in a uniquely structured transaction.

Klewer bought the fixed assets of the systems integration business, buying vans, tools and furniture for an undisclosed price to create Asset Protection Corp. But Klewer did not have to purchase goodwill or the right to service integrated security customers that has numbered more than 12,000 customers since its founding in 1986.

“The Block family is very concerned about maintaining customers and not leaving them high and dry,” said Klewer. “It doesn’t surprise me that they structured the deal this way.”

Block Communications, on the other hand, retained the residential business and the central station. Company officials did not have numbers on how many people the residential business employs.

By spinning off the commercial business, it enabled Block Communications to focus on bundled services to the residential customer, said David Huey, president of Block Communications. “We really feel the synergies between our cable, our telephone and security operations in creating a bundle of service for our residential customers is our focus,” said Huey.

Klewer and Huey began talking about the spin-off last summer. Working with Klew-er made sense, said Huey, especially given Klewer’s extensive background in the commercial security market and an already proven working relationship.

As part of the transaction, Klewer retained key employees from Corporate Protection Services’ commercial business, bringing Asset Protection Corp.’s employee base to nearly 35 people.

“It’s a friendly relationship and it’s a friendly deal,” said Klewer. “Every client we’ve that we’ve talked to loves the concept.”