Behind the Scenes of the ipDatatel, Resolution Products Merger
ipDatatel and Resolution Products actually underwent simultaneous recapitalization with private equity backing and are now majority owned by an investment group.
HOUSTON — Resolution Products and ipDatatel — each considered to be a fast-rising, disruptive player in the security and home automation space — will merge to become a provider of low-cost, Internet-based interactive alarm and connected premises products and services.
Imperial Capital served as the financial advisor to the two companies on the transaction. While terms of the merger were not disclosed, both companies underwent simultaneous recapitalization with private equity backing.
The newly combined company is majority owned by an investment group led by ABS Capital Partners. The two companies’ shareholders and management still own a significant percentage of the minority component of the business.
Resolution Products provides a wide range of wireless technologies that enable installing security contractors to improve their business operations. Its flagship platform is Helix, a full range, wireless security system that connects to monitoring centers and the Cloud over IP or cellular links.
ipDatatel manufactures solutions that upgrade existing, out-of-date alarm communications systems. The solutions leverage a broad range of IP and cellular communicators coupled with network architecture used for central station reporting and interactive services.
“The two companies are very complementary when you look at them put together. We have that robust network that transports home controls, a sunset-proof network, and then you have Resolution Products that built bulletproof wireless technology that is really robust in a hub-type solution,” Russell Vail, CEO of ipDatatel, tells SSI.
Prior to the merger, the companies jointly sold a complete security, alarm, access control and automation solution for smart homes and commercial installations using the Helix alarm panel and ipDatatel’s universal alarm communicators and Cloud services.
The firms also sell universal translator modules, allowing dealers to take over accounts without replacing sensors, and deliver a line of wireless sensors that are said to be compatible with a vast majority of professionally installed security systems.
“We can lower the cost of customer acquisition, lower the monthly recurring for these customers because you don’t have to buy a cellular card,” Vail explains. “You don’t have to buy any of the other items or pay for a higher monthly bill because you have to rely on cellular. Most of these other technologies you must have cellular to make it work correctly. Ours was designed the other direction. That is why we are going to win in this market.”
John Mack, executive vice president and co-head of investment banking at Imperial Capital, tells SSI both companies have designed their technology in the past five years against the backdrop of a whole new vision of how an alarm panel/smart home system should work.
“Fundamentally, Resolution’s Helix product and ipDatatel’s network infrastructure for communications are designed from a fresh perspective looking at the nature of the marketplace and communications infrastructure today,” says Mack. “You have this newer-platform thinking and then you have this obvious rationale for integrating the communications software component with the hardware to create an integrated, end-to-end solution.”
The private equity investment will be used to fund R&D and build out the necessary infrastructure to support growth of the combined company, among other vital initiatives, Vail explains. Of course, the path forward is not without significant challenges, Mack says: “They need to build very good customer service infrastructure, and that is not necessarily easy. Both companies have had a good track record for very successful technology innovation with a smaller budget, but they must continue to execute on R&D, sales and product development.”
Dave Mayne, vice president of marketing for Resolution Products, explains that over the short term the two companies will continue to operate as separate brands prior to going through tighter integration processes.
“This is not about consolidation in any way,” he says. “We are looking to invest and grow so there are no expected cuts.” Mayne says both ipDatatel’s Houston headquarters and Resolution’s Hudson, Wis., headquarters are expected to be expanded.
Also, Resolution Products CEO Brian Seemann and Vail will continue on in co-CEO roles. As part of the transaction, veteran technology industry executive Robin Pederson will become chairman of the combined company.
In August, Alarm.com filed for a temporary restraining order to quash the merger because it was backed by former Alarm.com Chairman Ralph Terkowitz, a general partner at ABS Capital Partners. ABS launched Alarm.com in 2009 following the acquisition of MicroStrategy, and at one point owned 80% of the company and controlled three of its five board seats.
In its complaint, Alarm.com argued Terkowitz and team had a “front-row seat” in the Alarm.com organization and would use their inside knowledge to compete unfairly against their former property, according to Law360. The Delaware Chancery Court disagreed and let the merger go forward.
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