BELTSVILLE, Md. — ASG Security closed out 2012 by acquiring four alarm companies in December, totaling $155,000 in recurring monthly revenue (RMR).
The purchases, including Cypress, Texas-based Sembera Security Systems and Rockville, Md.-based Sentry Installation, help ASG to expand its footprint in the Washington, D.C. metropolitan area and Texas. Combined, the deals bring in 5,400 accounts with an 86% residential, 14% commercial split. Additionally, ASG will add 20 new employees to its team. The other two transactions, which ASG asked to go unnamed, were accounts-only acquisitions in Dallas and Washington, D.C..
“We’ve always looked for companies that have had really solid attributes, such as long-term customers, low attrition and really good dedicated employees that fit well into our ASG family,” ASG President and CEO Joe Nuccio tells SSI.
ASG approached Sembera Security Systems owner Fred Sembera, after a mutual friend introduced them. Sembera, a former Houston police officer who started the security company in 1984, was looking to exit the industry and focus on other business plans, according to Nuccio. While it helped that Sembera Security Systems is a traditional security company like ASG, what really appealed to Nuccio and his team was the connection Sembera had with its local builders associations.
“Although we have kind of toned down on a lot of builder groups because of the economics of building, Sembera has some really long-term, unique relationships with builders,” Nuccio says. “That will provide us with some really good opportunities that will fit really nicely into our existing Houston portfolio.”
Similar to Sembera, Sentry Installation owner Robert Lintz was also seeking to exit the alarm industry when he approached ASG. Having known Lintz through the years, ASG executives recognized that Sentry’s mix of residential, commercial and small business accounts would fit nicely into its existing Washington/Baltimore operations. Ultimately, Lintz decided to stay on and join the ASG team.
Last year, ASG brought in $530,000 in RMR from acquisitions, helping the company to grow from $7 million in to $7.9 million in annual recurring revenue. Roughly 75% of the transactions, totaling $400,000 in RMR, took place in the fourth quarter, with the largest being the purchase of New Orleans-based USA Fire & Burglar Alarm in November. ASG has no plans of slowing down either. In 2013, the company plans to add more than $1 million of RMR — 70% coming from organic sales and the remaining 30% from acquisitions — ASG Security CFO Ralph Masino tells SSI.
With such a lofty goal, ASG Security will launch an internal phone sales business unit and will separate its residential, commercial and small business sales forces into their own units. Each division will have its own sales manager.
“There are nuances and market characteristics that are very unique to residential, small business and commercial,” ASG Security Senior Vice President of Sales & Marketing Bob Ryan tells SSI. “We have people who are very adept in selling, consulting and working with homeowners and then we’ve got others that really love the commercial mindset. [By breaking up the groups] it helps us to develop sales training, tactics and personnel development in each of those categories.”
Another way the firm plans to grow organically is reduce customer attrition by building stronger relationships with its clients and offering interactive services that its competitors have yet to sell.
“We’ve always tried to be an early adopter in terms of technology in the security industry,” Ryan says. “We’ve had a service offering in hosted video for almost 12 months now, while other similar sized companies are still trying to figure that out. We’re very aggressive with these enhanced services to drive higher than average RMRs in every single category.”
That’s a wise decision considering that more cable companies and telecoms, like Time Warner and AT&T, are trying to break into the industry. But the ASG team is not worried about that competition; in fact, they welcome it, noting that as market penetration goes up, so does the opportunity to gain more clientele.
“The real trick is with the existing customers that you have and making sure you’re doing the right thing retaining them,” Nuccio says. “That’s what we spend a lot of time focusing on — making sure that we’re taking care of our existing customer base and then drafting off on all the larger companies in terms of opportunity and marketing spend.”