How ADS Security Mastered M&A
ADS Security notched record growth in 2016 and has acquired 16 companies in the past three years.
Members of ADS Security's leadership team (clockwise from front center): President/CEO John Cerasuolo; VP Acquisitions Paul Dyson; SVP Tenn./Ky. Domenic Cipollone; SVP Sales & Marketing Craig Leyers; EVP/CFO Ernie McDaniel; and SVP/Controller Patrick Ritter.
As ADS Security’s geographic footprint expands, what are some of the unique challenges that comes along with that?
CERASUOLO: We’re not a huge company and some of our now 22 locations are relatively small. It’s a massive challenge to try to standardize on things and deliver consistent service to customers across that large geography.
That’s why we invest aggressively in technology that can basically shrink that distance through the use of tools and processes.
We use software and hardware that allows us to see the performance of those branches, so we can identify when things aren’t on track and help our employees be productive to deliver a consistent experience for customers.
LEYERS: I couldn’t agree more that those locations spread over distance is very challenging, but I also believe there are some advantages.
Many of the markets we support today are more rural in nature and our company culture has positioned us to become very woven into those communities. Our associates are part of those communities.
In many instances, they grew up there. Having those longstanding, community-founded relationships with the markets we support, and subsequently with the customers that we earn, it really helps us to drive referral opportunities and expand in those spaces.
Employees are trained on new technologies, and all new sales associates participate in a kickoff curriculum known as ADS University (left). ADS handles all aspects of the security solutions chain, including fire systems design (right). Photo by Kristina Krug
Do you ever find if it’s a smaller operation, maybe they’ve been struggling to hold their own against the larger regionals and nationals, and ADS Security can swoop in like the cavalry to rescue them? Maybe you can help their business thrive in the face of larger players muscling in on their turf?
CERASUOLO: No doubt, you’re dead-on about that. Some of these very capable small business owners are at an inflection point.
They either have to invest a lot more in their business and bring in more talent, doubling down on their business, or partnering with us to become part of our team and allow us to leverage all those resources.
We’ve had many instances where the owner sold the company to ADS, continued to run that location and grew exponentially faster because of the tools, training, resources and technology we put in their hands.
Where else are you looking to expand? Going to move beyond the Southeast?
CERASUOLO: We definitely plan to increase the density of the locations and size of the locations in our Florida, Georgia, the Carolinas, Kentucky, Mississippi, Tennessee and Alabama footprint.
We’re looking in adjacent states as well, but there is still plenty of whitespace within the states we’re in to grow. It’s not unlikely we would move into additional states, but it’s way more likely we find more opportunities within those states.
Do you find any states are quicker on take rates for additional services or offerings than the others? Which of those states are more fertile for selling connected services, for example?
LEYERS: I’m not convinced we see a difference across all the markets we support. It used to be I would travel to different locations to propagate this message of what we could do with advanced services, and I would be met by folks who would say, “This isn’t Nashville,” a higher tech city.
This is a smaller city like Gadsden or Cullman, Ala., or some of these smaller markets where we have a great presence. What you realize very quickly, and our organization realized, is this technology has become a way of life for most consumers in most geographies.
I will never forget walking into a barbecue restaurant in Gadsden, watching what had to have been a 75-year-old or older man walking around one of the tables with an iPad filming a video of his family eating lunch.
That was after I had had a conversation with folks at one of our locations that professed technology wasn’t prevalent in Gadsden.
To me, that really painted the whole picture that I don’t think technology and the service we provide is limited by geography or socioeconomic class. I believe today it’s pervasive everywhere.
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What do you see as the top two or three technology-oriented opportunities now with a really big upside?
LEYERS: Certainly video and video surveillance as a s
ervice. There’s incredible demand there.
Also it’s more and more cloud services, managed access control, hosted access control, all the way through to more foundational technologies such as burglary systems and remote arming and disarming that has a bit of a cloud element to it.
Beyond that I look at the exciting things that continue to happen in the automation space. That has brought a whole new set of creativity to this industry and gotten our consumers more engaged with these solutions.
In a lot of cases, those offerings lend themselves to potential cybersecurity vulnerabilities. How do you keep things secure and assure customers same?
LEYERS: We have a document out there covering standard installation practices. It is a standard practice within our organization to configure and reset passwords, as a fundamental example.
We study relevant incidents that have happened in the market to use as an opportunity to learn and reinforce with our folks how important cybersecurity and electronic vulnerabilities can be, not only to us as a company but to our customers.
We also have a good relationship with the FBI and periodically engage with them to make sure we understand the latest developments and trends as it pertains to cybersecurity.
CERASUOLO: Those risks make selecting the right vendor partners an even more important decision. Some vendors do a better job of addressing those issues and preparing for those issues than others.
That’s why price is not the only factor for us in deciding on vendors. We want vendor partners that understand and appreciate those risks, and do their best to design products that help us mitigate them.
ADS technicians are shown restocking their trucks. Technicians, equipped with technological resources such as customized iPad applications, always show up to customer sites in a clearly marked, professional and colorful ADS vehicle. (Photo by Kristina Krug)
How does ADS Security differentiate common offerings and itself from competitors?
LEYERS: The expression I like to use is “ADS is one throat to choke.”
The associates that design a system, install and service it, folks that guide a customer through technical support, the monitoring, our alarm response folks, everybody within that spectrum of support has a business card that reads ADS.
I believe there’s an awful lot of power in that. A lot of folks we compete with offer comparable services, but they typically do so through subcontracted relationships. I’m very proud of the deep vertical integration we have.
CERASUOLO: We do well in positioning our employees to succeed when they’re at that moment of truth where they’re engaging a customer by giving them the training, technology, tools, resources, uniforms, equipment, all the stuff they could possibly need.
It’s all about positioning them for success in that interaction with the customer. That’s one thing we do very well.
What gives you pause or concern more, competition from local, regional, national players, allied fields, telecoms?
CERASUOLO: We try hard to be respectful of all our competitors, but never fear the challenge of competing with anybody. Everybody brings something different to the table.
The national competitors have strengths that others don’t. The local competitors certainly have a profile that provides customers some perceived advantages. Our job is to find ways to overcome those things, so we can succeed with every customer we meet.
If you asked our salespeople, I think they would say across all of our markets that our most challenging competitor is the best local company in town; we are more often going to be competing with the local companies.
Conversely, every competitor – large or small – brings something to the table to make this a challenging market, which is what it should be. This competition pushes all of us to continuously strive to get better.
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About the Author
Scott Goldfine
Scott Goldfine is the marketing director for Elite Interactive Solutions. He is the former editor-in-chief and associate publisher of Security Sales & Integration. He can be reached at [email protected].
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