Will Securadyne be the next Convergint?
That’s a possibility, according to Bill Bozeman, CEO of PSA Security. Bozeman has experience building a systems integration firm and knows both of the players in the Securadyne/Intelligent Access Systems deal that was announced yesterday.
In case you missed it, Securadyne, a start-up integrator founded by Carey Boethel and Pamlico Capital in early 2012, yesterday announced that it has acquired Ron Oetjen’s company, Intelligent Access Systems, one of the most successful and fastest growing regional integrators in the country. Here’s the a link to the story.
I talked to Bozeman today about the deal. He offered his opinion of the union and also discussed the stages of growth for integration companies—and the new challenges that come along with those different stages.
“I know both guys [Carey and Ron] well very well. They’re both PSA Security equity partners and owners. The consolidation, from our perspective, appears to be a good solid one. Carey is building a hell of a company with Securadyne; it looks to be the next Convergint, [and] congratulations to him [for that],” Bozeman said. Convergint is not a member of the PSA Security flock, but Bozeman praised [Convergint Technologies' CEO Dan Moceri] for building a very solid company.
Bozeman identified three growth-stage milestones for integration companies and the specific challenges that arise when companies grow past a certain stage. Those milestones occur when a company reaches: A.) $3 to $5 million in revenue; B.) $10 - $15 million in revenue, and C.) $50 million in revenue.
To get to $3 to $5 million in revenues you need to be a strong, entrepreneurial company, but to become a larger company, “You can no longer do everything yourself. You have to have a management team to help you with sales, technical and finance decisions,” he said. “This is a stage that a lot of companies can’t or don’t want to get past,” he said. The reason? They may be happy making a nice living and being the entrepreneur in charge, Bozeman said.
The next stage of growth hits when a company is doing $10 to $15 million in revenue. “They normally have more than one office and they need infrastructure. To get to the next level you need to hire well paid management people, and that can put a strain on profits of a company unless they’re well financed, which is unusual for most integration companies, or if they have a solid RMR model,” Bozeman explained. He also noted that Ron Oetjen had already successfully moved IAS past this stage.
The third stage of growth is at around $50 million. “That’s when you really start to need a CEO and a senior management team made up of VPs that are experienced and are well paid,” Bozeman said.
“Carey has already been president of Netversant and Siemens. He’s the ideal guy [to shepherd this company along] because he already knows what it’s like to run a company that’s $70 to $100 million or $200 million and beyond [in revenues],” Bozeman said.
“Carey’s a polished, senior level business guy who’s experienced on the large corporate side as well as on the entrepreneurial side. … And with Ron he’s got a super field general [who brings with him] a strong middle-management team. Put that with Carey’s existing team and you have a nice equation for further success.”
Bozeman said it’s very important that Securadyne has a financial partner that knows the security business. “That’s an advantage,” he said. Pamlico Capital is a $2 billion Charlotte, N.C.-based middle-market private equity group. Pamlico was an investor in Sonitrol, but exited when that company was sold to Stanley Works in 2008.
Not all capital partners understand the security integration business, Bozeman noted.
Of course, Bozeman said, growing a national integration company is not an easy thing to do. “The proof will be in the pudding.”