Former Security Networks CEO Rich Perry mulls next move

WEST PALM BEACH, Fla.—With the Aug. 16 close of the Monitronics-Security Networks deal behind him, former Security Networks CEO Rich Perry is taking some time off, but he's spending some of that time thinking about his next venture in the security industry.

“There are a couple of key areas that I want to look at—one is doing another acquisition in partnership with private equity [possibly] with Oak Hill Capital,” he told Security Systems News.

Security Networks was acquired by Oak Hill in 2010. It was a good working relationship “and we have a mutual interest in [possibly] finding the right situation and growing another business,” Perry said.

Larger opportunities for platform acquisitions come on the market frequently, particularly in the past couple of years. Perry said he's not interested in any particular geography and isn't focused yet on any specific technical expertise. On a basic level, an attractive platform is one that “has enough scale and enough growth potential,” he said.

“What's neat about the industry is that there are a number of business models out there, a number of ways to attack the market.” One avenue he won't pursue is recreating a Security Networks alarm monitoring dealer program-type company. One reason is a non-compete agreement, but he said, “I wouldn't do it anyway, I respect Monitronics and think it [Security Networks] was a great acquisition for them.”

Plus Perry's 27 years' in the security industry includes stints on the manufacturing side, as an operator in residential and commercial security, and in finance. In 1991 he founded Digital Detection Systems, a licensee for Sears' security systems. He started in Orlando and moved into multiple markets. DDS became the largest Sears licensee, he said.

In the late 90s, DDS merged with SLP Capital. Perry became a managing partner and director, along with Bill Polk (now of Capital One) and Henry Edmonds (now of The Edmonds Group). SLP became the largest lender to the industry in the late 1990s, Perry said. SLP sold DDS to ADT in 2000.

That year, Perry launched Security Networks, with the intention of making it a large commercial fire alarm company. He was successful, but changed the focus of the company around 2005.

“In the early history, we did become a large commercial fire business, but we quickly realized that [fire] is lumpy, you're very dependent on electrical contractors, large, new construction. My interest was in the RMR side,” Perry said. “There was a huge opportunity in the residential space based on the fall out from ADT. We partnered up with private equity and launched the affiliate program … it took off in 2005 and went well.”

"It's an excellent time to look at starting a business with a clean slate,” he said. “ The industry is changing and morphing … with the advances in broadband technology and Wi-Fi and the ability to transmit information and data, we can now open up a whole new world.”

The new players—cable and telecoms—will affect the market landscape, Perry said, but he believes that security is an entrepreneurs' business. “For those who can be nimble, there's a lot of opportunity.”

Being nimble requires more than entrepreneurial skills, however. Security is capital intensive, Perry said. “It requires a good source of capital and a good understanding of what it takes [to grow a security business]. And, whatever capital you think it's going to take, it's probably going to take four times that.”