Safeguard expands with two firms

The residential firms give Safeguard exposure with builders
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Friday, February 1, 2002

SCOTTSDALE, Ariz.-A regional player in the central Arizona market has expanded both its account base and geographic reach with the acquisition of two security firms in the Southwest.

With the acquisition of Santa Fe, N.M.-based Tech 2 and Phoenix-based Regal Electronics, Safeguard Security gained about 3,600 accounts. The company now monitors about 11,000 of its own accounts in a central station in Scottsdale. The bulk of accounts came from low-voltage security and communication company Royal, about 3,500, while integrator Tech 2 had about 100 accounts to add to Safeguard's fold.

The two companies brought two distinct and different offerings to Safeguard's primarily residential offering, said Mike Bradley, president of Safeguard. While Regal contributed most of the new accounts, a location in Phoenix and at least 10 relationships with major Southwestern building companies, the acquisition also gave Safeguard exposure to a part of the new construction market that it hadn't previously been a part of, Bradley said.

"With the type of builders and community that we go after, there is definitely a price point and a tier of customers you get at that price point that sometimes fit our price point and sometimes they don't," Bradley said. "We're looking for long-term relationships with customers and the lower the price of homes the less likely that is to occur."

Many of the relationships Regal had formed were of the lower-end, lower-priced category, and the company will have to make a decision whether that strategy fits into its philosophy, he said.

Higher-end Tech 2's greatest contribution was its office and reach in the Santa Fe area, said John Jennings, Safeguard's chief executive officer.

"We feel we have a real nice opportunity to build and grow that market in Santa Fe," Jennings said. This is the company's first location in that state.

The two acquisitions, the company's third and fourth in its history, will put Safeguard on track to produce revenues of between $20 million and $22 million for 2002. The company has already closed Regal's Phoenix location and took on only about a third of that company's installation and office staff, about 18 out of 35 employees. Safeguard absorbed all 10 of Tech 2's staff, Bradley said.