Monitoring companies foresee benefits from ADT/Protection 1 merger

YARMOUTH, Maine—Monitoring companies have an opportunity to attract new business, new dealers and new employees in the wake of the planned ADT/Protection 1 merger, according to five leading monitoring companies who spoke to Security Systems News.

“There's going to be a lot of really good people in this combined company that are not going to have a home in the long run or are going to find that they're not as happy as they might have been in the past,” John Cerasuolo, ADS Security president and CEO, told SSN. “That's going to give ADS and other competitors the chance to attract some real talent.”

Mike Bodnar, president of third party central station Security Partners, said the ADT/Protection 1 merger presents an opportunity. “As mergers happen, dealers who are used to a more customized offering from their monitoring center or their wholesale center may be looking once again at options and alternatives because of the sheer size of some of the biggest players,” he said.

The integration of ADT and Protection 1 is “no small task,” Cerasuolo said. When combining such large companies “your attention is going to be, for some period of time, very much focused internally instead of externally. That can't help but be somewhat of a distraction in their efforts to support their existing customers and go out and earn new ones, ” he said.

Steve Dixon, Vivint's SVP of customer experience and operations, said he couldn't comment on how this merger would go, but said, “Any time two large companies come together, there are plenty of operational challenges, just figuring out who is going to do what.”

Integrating the monitoring centers among ADT, Protection 1 will be a large task as well, according to Cerasuolo.

ADS has experience acquiring and folding-in companies, lately at a rate of five or six per year since 2014. “No matter what the scale, whether it's one customer or a hundred thousand customers, any time you change the monitoring center, you run the risk of disrupting something that that customer has become used to … and there's a premium on making sure that's a non-event for the customer,” he said.

“Their objective, as ours is when we do a small transfer, is making sure it is totally transparent and a non-event for the customer,” Cerasuolo said.

Cerasuolo also said that he did not expect this deal to be a deciding factor for ADS or similar companies. “Our success or failure is going to be determined wholly and completely by our ability to serve well our existing customers and earn the business of new ones,” he said.

Dixon said that Vivint isn't expecting any change as a result of the merger. “For us, it's really business as usual. We will continue to focus on providing the best service we possibly can.”

Continued focus on their business is the best course of action, some said. “These big guys come and they go, and they split up and they come back together, all the while, people who are focused on their geographic territory or their market niche are able to grow and expand and cater to their customers,” Daniel Oppenheim, VP for Affiliated Monitoring, told SSN.

Bodnar said that the deal represents opportunities for local or regional alarm companies, “There's an opportunity for them to differentiate [themselves] from such a large operation.”

The deal may make ADT a more formidable competitor, according to Cerasuolo. “When private equity invests that much money in a company, they're expecting to be able to improve their performance, and an improved competitor is something all of us will have to face in the future,” he said.

From a high level, Cerasuolo views the deal as a “big positive” for the industry. “It points to the strengths and attraction of our industry, which I think is a wonderful thing—that private equity is in general so willing to invest significant sums of money is a great vote of confidence.”

“It's really nice to see outside investors view our industry as being attractive,” John Doyle, president and CEO of Doyle Security Systems, said.

Bodnar shared a similar thought. “Clearly, the financial folks and the larger players continue to find traction in our industry, both retail and wholesale,” he said.