International security solutions provider G4S has signed a sale and purchase agreement to acquire systems integrator firm Adesta from the McCarthy Group and a group of senior managers for $66 million. Adesta earned $92 million in revenue in 2008.
The deal may be a bargain for G4S, according to one industry expert, which had been increasingly relying on Adesta for larger-scale integration work on ports, petro-chemical sites and power facilities.
“They were sold for what seems like a big discount,” Jeff Kessler, Imperial Capital’s managing director, tells SSI. “If there’s a lesson to be learned here, it’s how a great company like Adesta probably should have gone at a high price but didn’t because they didn’t have a lot of recurring revenue.”
Kessler defines low recurring revenue – from equipment fixes, customer-support desks and monitoring – as less than 20 percent of total revenue. A typical installation company would derive at least 25 percent of its revenue from recurring income, Kessler says.
The deal should complement G4S, which primarily provides manned guarding to larger governmental and industrial facilities.
“The Adesta acquisition is an important strategic step to deliver advanced secure solutions combining G4S manpower and technology to U.S. seaports, where Adesta has an impressive market penetration, and extend this to chemical/petrochemical site security and other critical infrastructure,” according to Keith Whitelock, president with G4S Technology North America.
When the deal is finalized, the management team of Adesta, which is based in Omaha, Neb., will remain in place. Bob Sommerfeld, Adesta’s president, is looking forward to expanding its scope of providing infrastructure.
“We are very excited and pleased with the acquisitions by G4S,” says Sommerfeld. “The combination of innovative technologies and single-source total security solutions will provide customers with ground-breaking services and alternatives. We also look forward to continuing growing our broadband business.”
As part of the deal, Adesta gains access to Touchcom’s OneFacility Web portal and software (acquired by G4S in 2008) that the company says will enhance its ability to grow its security-related business.
At its core, the deal gives G4S a reliable integrator for larger projects, says Kessler.
“Over time, G4 realized that as they got into larger and larger jobs, smaller integrators were not going to get the job done for them,” he says. “Clearly Adesta fills that bill.”