NMC President Woodie Andrawos Details Netwatch Merger Deal
Executives behind the deal that merged NMC with three other monitoring companies view the U.S. market ripe for its proactive video monitoring services. Andrawos explains how dealers will benefit and why more consolidation can be expected.
LAKE FOREST, Calif. — In a significant private equity play that took the industry by surprise yesterday, National Monitoring Center (NMC) would seem primed to capitalize on the rising video monitoring services market as part of a newly merged group of companies.
SSI spoke at length with NMC President and Managing Director Woodie Andrawos about the deal following the big announcement to learn more about the company’s path forward.
NMC was approached more than a year ago after Samir Samhouri, former chairman and CEO of Xtralis, a leader in early detection safety and security technologies, had the idea of forming a global monitoring company. Samhouri first began to woo Ireland’s Netwatch, a leading European provider of remote visual monitoring services, and then a few months later he started discussions with NMC.
“The concept is to bring the Netwatch proprietary technology into the NMC dealer channel. We have over 1,000 dealers. It sounded like a good match and it sure was,” Andrawos said.
The newly formed company joins Netwatch, which reportedly has contracted revenues in excess of $73 million, and NMC with British-owned Onwatch Multifire and CalAtlantic of Houston to become Netwatch Group. The combined company will reportedly be monitoring 300,000 customer sites across four continents.
The largest shareholder of Netwatch Group is Riverside Co. According to its website, the PE firm typically invests in growing businesses valued at up to $400 million. Founded in 1988, it has invested in more than 520 transactions and its current international portfolio includes more than 75 companies. Among its latest platform buys was data security software provider Spirion on April 17.
The Netwatch video monitoring platform has been developed for more than 15 years at the company’s R&D division in Carlow, Ireland. In all, the merger results in a network of six monitoring centers. Each will leverage the proprietary platform, marketed as CRATOS, which is said to be designed to streamline the flow of live incidents across thousands of sites, resulting in faster response and no nuisance alarms.
“[CRATOS] has a lot of algorithms and artificial intelligence written in it that filters a lot of these nuisance alarms by not having them presented to an intervention specialist and only notifying them when a real alarm event occurs,” Andrawos explained. “These are the real threats. That is huge; that is different. This technology allows our dealers to get into the proactive visual monitoring business. That is a big differentiator.”
Tapping New, Heftier RMR
NMC has long provided video monitoring services attached to intrusion alarms, such as video verification, and in some cases video guard tours. CRATOS will provide the company with proactive video monitoring services whereby analytics-equipped cameras are activated for early detection. Based on the detection of a threat, in many cases the goal is to prevent a crime before it happens, Andrawos said.
“These services are not easily available in our industry. It brings our dealers the opportunity to sell much higher RMR,” he said. “At the same time it is really a response to demand. The demand is there. Dealers are always looking for ways to increase their subscription fees. There is no better way than this commercial video monitoring.”
Andrawos envisions applications of the technology that in many cases involves replacing security guards.
“We are talking about the ability for our dealers to increase their monthly recurring revenue from the traditional $25 to $50 per account to hundreds of dollars per account per month, if not more,” he said. “In some cases, possibly thousands per account per month. The revenue that is associated with proactive video monitoring is substantially higher.”
While the business model for video monitoring services in Europe and other regions where Netwatch operates is direct to the end user, NMC will sell strictly through the dealer channel. Andrawos described bringing the platform in-house as an “add-on” and will not entail a large capital investment to upgrade existing infrastructure.
The company’s main challenge in rolling out the platform will be, “Education, education, education,” he said.
Many dealers do not properly understand how to implement an entire turnkey program, of which the CRATOS solution is built upon. The concept of going to market with an end-to-end solution will be communicated over the coming weeks, Andrawos said.
NMC, which will fully maintain its corporate branding in the marketplace as part of Netwatch Group, will conduct educational webinars at its Lake Forest, Calif., facility, among other training efforts. The company will also employ additional personnel from Netwatch to educate its dealers on the offering’s value proposition, as well as how to sell, service and apply the technology.
“We will take it even further and in some cases go with the dealer on site to the customer and help them with the sale,” Andrawos said.
NMC’s Lake Forest and Irving, Texas, locations will continue to operate as two hot redundant facilities. And while some consolidation with the other group member companies can be expected, it will not affect either of the NMC facilities, he said.
The focus of the newly formed group in the early going is twofold, Andrawos explained. First, consolidate the proactive visual monitoring industry, beginning with combining Netwatch, Onwatch Multifire and CalAtlantic. Secondly, bring these capabilities and managed services that have been developed and perfected by Netwatch to the hundreds of thousands of subscribers that NMC has through its dealer partners.
From there Netwatch Group has ambitious growth plans, Andrawos said, which it will aim to achieve through organic growth and further acquisitions in the U.S. market through the NMC brand.
“We are excited to bring our dealers this unrivaled opportunity to sell proactive video monitoring services to their subscribers,” he said. “But even beyond that this is really good for the industry. It is taking the industry in a direction that it should be headed.”
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