Blackstone buys up Allied Barton

Interesting news hitting my email box this morning:

AlliedBarton Security Services and The Blackstone Group today announced a definitive agreement under which the private equity fund, managed by The Blackstone Group, will acquire AlliedBarton.

Bill Whitmore, Chairman, President and CEO of AlliedBarton Security Services, the industry’s premier provider of highly trained security personnel, said, “This transaction is a tremendous opportunity to fuel our continued growth. We have transformed ourselves into the country’s leading physical security company in a few short years and our relationship with The Blackstone Group demonstrates our management-led commitment to continued dynamic growth which will energize our investment in our people, technology and training.”

I love this kind of grandstanding. "The industry's premier provider"; "The country's leading physical security company." What do those modifiers even mean? I'd like to live in a world where such modifiers are dispensed with.

Chinh Chu, Senior Managing Director with The Blackstone Group said, “Blackstone is attracted to AlliedBarton’s leading market position and the strong fundamentals of the sector. We look forward to working with AlliedBarton’s outstanding management team to help them pursue their exciting growth strategy both organically and via acquisitions.”

I'm a little surprised by the "strong fundamentals" comment (well, not surprised that they said it; surprised if they really think it). It seems like the margins on guarding are just razor thin. With the prices of labor, health care and energy all rising, the guarding market does not seem like a VC's dream come true to me, but I haven't studied AB's financials, obviously.

Peter Wallace, Managing Director with The Blackstone Group, added, “AlliedBarton has a tremendous franchise and sets the industry standard for professionalism. We look forward to supporting the strong management team during the next phase of the Company’s evolution.”

The transaction is expected to close in August subject to certain government approvals and other customary conditions.

We'll get you some more on this deal.

Edit:

Here's what Allied's been up to recently:

Their buy of Initial's guarding operations in North America

Their buy of a little residential guarding firm, the Fox Group

Museum heist update

Remember those crack security guys who ignored alarms while invaluable national treasures were being thieved from the University of British Columbia's Anthropology Museum? Well, it wasn't their fault. Someone called up and told them to ignore the alarms. Clearly, this was heist impossible to prevent.

Four hours before the break-in on May 23, two or three key surveillance cameras at the Museum of Anthropology mysteriously went off-line.

Around the same time, a caller claiming to be from the alarm company phoned campus security, telling them there was a problem with the system and to ignore any alarms that might go off.

Campus security fell for the ruse and ignored an automated computer alert sent to them, police sources told CBC News.

Meanwhile surveillance cameras that were still operating captured poor pictures of what was going on inside the museum because of a policy to turn the lights off at night.

Wow. That's really all I've got. Wow.

All the technology in the world...

...can't make a place secure.

I've been following this story out of British Columbia where the University of British Columbia's Museum of Anthropology reported a "mysterious" art heist that targeted pieces by native Canadian artist Bill Reid because I think art thefts are some of the most interesting crimes. One of my favorite early stories working here was with MAC Systems and the Gardner Museum - where one of the greatest unsolved art heists took place.

Make no mistake, this theft of Bill Reid works is big time:

Four of his works are featured prominently on the [Canadian] $20 bill, including The Spirit of the Haida Gwaii, a mesmerizing sculpture of a traditional canoe whose passengers represent various aspects of Haida culture.



So, how did this happen? Well, details are emerging:

The museum's Dr. Anthony Shelton told the CBC two or three surveillance cameras went off-line before the Friday night robbery. Campus security didn't respond to an automated computer alert, and the security guard went on a break.

I'm no expert, but that sounds a little like an inside job, no? Regardless, it's clear that the right technology was in place, but the right people weren't.

There's a good nugget in this story:

Wearing gas masks, they filled the space with powerful bear spray in case anyone responded to the audible and silent alarms, which, according to records, went off but no one responded.

The guard returned but the break-in wasn't discovered until the shift change the next morning.

A: What's "bear spray"?

B: Clearly, that's a top-drawer staff they've got there at the museum

Edit: Friend of the blog, Mike Jagger, who runs Provident Security in Vancouver, has some great points to make about this on his blog. Check out the videos - the mainstream press are using him as a resource on this, something that should happen with more security company owners and managers when these kinds of incidents happen in general.

United Protection to buy mystery firm

United Protection is a guarding/integration firm trying to make some noise in western Canada and has been slowly moving toward the U.S. market, apparently by starting with the guarding business. They hired former CEO of Rentokil Initial Canada Don Allan in 2006, struck a deal with Convergint for some high-level integration work last year, and now are making their big play:

They've signed a purchase agreement for a company in the southern United States doing more than $100 million annually. Which one? They're not saying yet. It's a mystery.

No wonder people aren't in love with the guarding business here in the States, though. Look at the financials on this deal:

[T]he Company has entered into a share purchase agreement to acquire a 75% interest in a private security services company based in the Southern United States (the "Target"). The consideration to be paid for the interest in the Target will consist of: approximately USD $15.6 million to be paid in cash; approximately USD $3.1 million in the form of a convertible vendor financing note; the assumption of approximately USD $7.2 million in indebtedness; and other liabilities which amounts will be confirmed prior to closing. Under the terms of the agreement, United Protection also has a five-year option to acquire the remaining 25% interest at a defined valuation multiple. The acquisition, which is anticipated to close on or before May 30, 2008, is expected to be funded through a new equity financing by United Protection.

During the 2007 fiscal year, United Protection had revenues of approximately $22.5 million, net income of $0.6 million and earnings before interest, taxes, depreciation and amortization ("EBITDA") of $1.2 million. During the same period, the Target had revenues of approximately $98.7 million, net income of $4.8 million and an EBITDA of $9.0 million. United Protection is currently in the process of conducting due diligence on the Target's financials.

So, you can get 75 percent of $100 million in guarding revenue for less than $20 million and the assumption of $7 million in debt? There's something I'm missing. Net income of $4.8 million should cost more than that, it seems to me, but I'm new to the world of guarding acquisitions.

More sleeping guards

I'm busy-busy getting our paper out today (not that you care), but wanted to post yet another sleeping guards story. You guys dishing video analytics have yet another sales piece.

(EDIT: That link is fixed now - sorry.)

These guys weren't just lazy, they tried hard at being lazy:

NRC investigators determined that, on multiple occasions during that time, securtity officers at Turkey Point were inattentive to duty or served as lookouts so other officers could sleep on duty.

Though it's the power plant getting fined...

American Idol featured a security guard, and I didn't know it?

I'm blown away by a throwaway line in this story about not-very-good American Idol contestant Chikezie getting sent home last night.

As in, the 22-year-old airport security inspector from Inglewood, Calif.

What? I totally would have been rooting much harder for the big man if I had known this. How did this get by me? And what a great opportunity missed for the security industry (I'm assuming, perhaps wrongly, that he's working for a private guard firm contracted with the TSA). This guy should be in PSAs for the TSA, for sure.

"Hey kids, this is Chikezie. Remember how I was the tenth best American Idol contestant this year? Well, it's okay that I lost, because now I can get back to making sure everyone who flies through LAX is flying safely and securely."

Then he could start covering that Men Without Hats tune, "Security (Everybody Feels Better With)," and then the commercial fades out with Chikezie carefully inspecting somebody's bag with a big ol' smile on his face. Really, I think somebody needs to make that happen. Perhaps GE Security could sponsor it, or Clear, since the two of them are teaming to make some big bucks off aviation security and screening.

By the way, has anybody put much thought into the chorus of that Men Without Hats song? I was just thinking about it:

If something in the world seems right then it is what I know
This is where I want to be, so this is where I go
Everybody feels better look inside and see a radio, a radio
Everybody feels better with security

If anybody can explain the radio reference to me, I'd be appreciative. Do they mean, like, a walkie-talkie kind of radio, that security guards used in the 1980s? I'm confused.

Also, in that article about Chikezie, there's something about two straight bluegrass songs. Huh? Just cuz he got a little country with a Beatles tune doesn't mean they were jamming on mandolins and banjos back there. Bluegrass isn't just a cool word for country, people.

Maybe there's hope for the guard industry. Maybe not.

In the past, I've been critical of the security guard industry, saying guards are, for the large part, underpaid, under-trained, and unlikely to be particularly helpful in times of crisis. This opinion was sharpened by my time in Israel, where guards are a more highly valued piece of society's machine.

However, some news coming out of USProtect's bankruptcy gives me hope. Well, a little hope. Basically, it's impressive to me that security guards, after having their paychecks bounce, didn't just walk off the job. I would have understood that inclination, certainly. But they kept their posts, which are theoretically important to the safety of others. That's the good. If they see their jobs as valuable and important, that's a great thing and proves true the argument that guards would be more dedicated and professional if they were just given some more training and made to feel like professionals.

However, some of this article troubles me. As in, we don't actually have a security officer quoted saying her job is valuable and important. Instead, it's a financial thing, which, again, is understandable, but maybe disappointing.

Jones said her co-workers have been professional and continued to work in the chance that they can keep their jobs and get paid for the work they did for USProtect.

Imagine a quote from a firefighter, working, say, for a town that didn't get the tax receipts it expected and had to declare bankruptcy. Imagine her check bounced. Wouldn't you hope for a quote along the lines of, "Hey, we're going to keep working because someone's house might catch fire tonight, and I couldn't bear death or destruction I could have protected"?

Maybe Jones said something like that and the reporter just didn't feel it was part of the story, but I would have liked to have heard it.

On guarding, security, and keeping it local

Though this story is largely about manned guarding and doesn't have much to do with what my readers encounter on a daily basis, there are some issues to ponder here that I think resonate throughout the security industry.

The gist is that the town of Flint has chosen Securitas as the guarding firm for its transportation authority over a local firm that's already been providing services, based solely on the lowest-bid criteria imposed upon it by federal mandates (but which the town actually ignored when it awarded the contract two years ago - we'll get to that).

First of all: This is security we're talking about! Is this really an area where lowest-bid should rule? I'm thinking perceived competence should reign supreme here.

But, we're told:

Both companies ranked similarly in an MTA analysis of their abilities and experience, but Securitas had the lower costs. It submitted a bid for services set at about $415,000 compared to Teachout's $449,000 bid.

So, assuming it's true that these companies would do equally well protecting the citizens of Flint, we're talking about $34,000 a year in difference. I agree that's significant (half a city clerk, say). But how is that savings realized? Well, through Securitas paying its workers less. Here's the breakdown:

Securitas: $14.76 an hour for on-site supervisors, $11.91 for guards.

Teachout Security Services: $16.14 an hour for on-site supervisors and $12.66 for guards in the first year with a 3 percent pay raise in the second year.

The Securitas supervisor pulls down $30,700, Teachout's supervisor gets $33,571 annually. That seems a little low to me, but I guess I can see why someone would want that job. The standard guard for Securitas, however, would garner just $24,772 annually, vs. $26,332 for the local guy. Those are barely above the federal government's family-of-four poverty guidelines for 2008.

The important thing to remember here is that all of these guards will be living in Flint (or surrounding areas). So when I hear a quote like this:

"We can't do this based just on the fact that this is a local firm," Foy said. "It all comes down to trying to get the absolute most for the people of this community with the money we have available." Because MTA receives government dollars, it must follow federal guidelines for awarding contracts by hiring the lowest qualified bidder, Foy said.

I wonder, Isn't it possible that the way to get the most for the people of Flint is to get them better paying jobs? Isn't it possible that security guards who aren't wondering quite as much where their next meal is coming from might be better at protecting people? Add those two motivators together, and I think a $34,000 difference is pretty negligible.

Quite simply, I think there are many more factors that need to be considered here beyond price, but it's easy to understand why so many security vendors and installers compete on price. It's obviously a reality for government work.

Maybe some lobbying needs to be done to exempt security specification from some federal guidelines? I understand protecting the taxpayer from graft and fraud, but shouldn't we also consider actually protecting the taxpayer from bodily harm?

Or, maybe city officials should just ignore federal mandates in the first place:

But in 2006, MTA handed the security contract to Teachout after four other companies, including Securitas, submitted lower bids.

Security guards

After going out for dinner on my own last night for the first time, I wanted to post quickly about the role of security guards here. See the people in the bright yellow/green vests here, standing outside the bus station?



They're security guards, and they're everywhere here, posted at the door to almost every restaurant, outside every major gathering place, etc. They're working for private security firms, mostly, and they're almost universally about 22-24 years old. Why? Because most of them are students, recently discharged from the military. The theory here is that students are wasted as baristas and waitstaff, since they have the cognitive ability to profile people and question them correctly, and they have a dedication and regimen stemming from their military service.

They're also often immigrants, looking to show their patriotism and dedication to the country.

This is possible because security guards are valued members of society here, not "rent-a-cops." Though I guess they're not necessarily paid well, but that's less of an issue because the cost of higher education is less and they have universal health care. Can you imagine military men in the United States returning from Iraq and working as mall security? I can't, but they'd be perfect for it, right?

The other major difference between security guards here and at home is that security guards here receive an enormous amount of training, and are constantly "red-teaming," which is what they call testing vulnerabilities. On as often as a daily basis, higher ups will try to smuggle something in, or lie to a guard, or surveil an area, checking to see whether security will catch them. This is something almost never done in the United States, and it's partly because of the fear of failure, I think.

Oh no, if my boss gets something by me, I'll be fired! That's not the intent here. It's simply to check vulnerabilities. If someone fails, they're given more training. If the system fails, they fix the system. It's all to a common purpose.

One other thing. Notice that security here is always outside the building they want to protect. They don't let people in, then check to see if they have a bomb. Think about that.

Remote monitoring marketing materials

Stories like this one about the nuclear industry's new panic about sleeping guards just couldn't be better marketing fodder for those of you out there peddling remote monitoring and video analytics.

Perhaps the most shocking part is the ridiculously hypocritical nature of the operators of the power plants themselves. While they protest that they're very (VERY) concerned about security, it takes a borderline heroic security guard to embarrass them on local television before they take his claims about sleeping guards seriously.

Check it out:


I admire, actually, Wackenhut's realism here. The author paraphrases it this way:

Wackenhut says that the entire nuclear industry needs to rethink security measures if it hopes to meet the tougher standards the NRC has tried to impose since the Sept. 11, 2001, terrorist attacks on the United States.

As in, "Dudes, you were fine with the sleeping guards for the past 50 years. Did you think they'd all of a sudden get much more attentive?"

Everyone knows guarding a nuclear power station is some seriously boring work. Unfortunately, the one time guards are needed to act every 10 years or so is a pretty important situation. Thus, it makes sense that the guards need to be patrolling (i.e., moving) and video analytics and central monitoring stations need to be taking care of the surveillance.

This is why analytics seem so attractive

Wondering why analytics seem like such a good idea? See this story. The big question is whether alarm events can programmed to produce small electronic charges.

Just 11 days later...

Once you start looking into this kind of thing, you see it everywhere. I've been harping on guards (especially those employed by alarm companies for the purpose of pre-police response) being armed, and the possibility for mistaken killings that could lead to tragedy along with public relations disasters.

This doesn't appear to be one of those cases, but it's indicative of the type of situation that would be better handled by the police, for a variety of reasons.

Basically, a guard noticed something fishy, entered a vacant apartment, encountered two thieves hiding in a closet, got attacked with a power saw, and killed one of the thieves, allowing the second to escape.

That's all well and good, and I'm pretty confident that the guard was justified in defending himself against what was probably a drug addict desperate enough to do just about anything to escape, but these paragraphs give me pause:

Indianapolis-based Trinity Security had given a security guard who shot and killed a power-saw-wielding intruder at an Eastside apartment this week about four hours of general guard training and at least another two hours of specialized firearms training.

That is more training than required by the state.

Wow. Six whole hours of training? I'm not sure which is more scary, that a guy is working with a concealed weapon with only two hours of weapons training or that the state of Indiana doesn't require more training than that. And I'm not really scared for the potential thieves the guard might encounter, rather for the guard himself. Poor aim, poor handling and cleaning of the weapon, any number of factors could lead him to real harm in a future confrontation.

Maybe in this situation the thieves were a total surprise and there wasn't opportunity to call in police who would have had second and maybe third officers ready for backup, to possibly both disarm without deadly force and catch the fleeing second man, but I'd much rather have representatives of the people killing criminals than private security guards. Dying for copper just seems so sad and pathetic and police officers have extensive training on when and where to use deadly force. It's possible a death in this case could have been avoided.

In the case of a vacant apartment, there are definitely portable and temporary cellular-based intrusion systems that could be used to set off an alarm when the thieves enter and send a signal back to a central station, which could then dispatch police to the scene. I doubt that would be much more expensive than a contract guard, and it would certainly avoid situations such as this one, where a young guard making less than $12 an hour, and still enrolled in school, now has a death on his conscience.

No tall tales here

Okay, so It's going to seem like I'm harping on this armed-guards thing, but the thing that fascinates me today is the combination of video surveillance and manpower.

Read this story about a 71-year-old veteran of the Cuban army who thwarted some would-be-robbers from a late-night burglary.

Ok. Read it?

Does it strike you that if the cops had simply come upon a 71-year-old guard in the middle of the night, with a couple of shots fired from his pistol, that maybe they would have thought he had a case of the night haunts? Especially with the black slippers.

"Sure, sure, Papi. You were attacked by a pair of would-be robbers wearing black slippers and you fought them off single-handedly ... Is there someone who could take you home?"

But, thanks to the world of video surveillance, you can actually see him kick one guy in the leg and then chase him off, gun drawn. And how psyched is the TV station for that footage? I love technology.