Now Privately Held, GVI Security Makes Plans Public
I recently had the opportunity to speak with Steve Walin, chairman and CEO of Carrollton, Texas-based GVI Security Solutions, and Lloyd Trotter, a founder and managing partner of New York-based GenNx360 Capital Partners, about GVI being acquired and taken private. The deal, which was finalized earlier this month, reunites former GE Security executives in a business focused on providing Samsung and GVI branded video surveillance solutions for markets including government, retail, financial and education.
This is the first of two parts of my conversation with GVI Security’s new leadership and dwells on how the deal came together, what it means moving forward and hot new technologies such as AutoIP and the A1 camera chip. Be sure to check back soon for the second part, where Walin and Trotter spill the beans about Samsung’s unified rebranding plan for 2010 and address a host of industry issues from GE Security’s sale to United Technologies Corp. (UTC) to surveillance growth projections and much more.
Can you tell me how this deal got going and what was the appeal on both sides?
Lloyd Trotter: Let me start with GenNx360 Capital Partners is a new private equity firm launched with $600 million of capital. Three of the founding general partners are from General Electric, and I ran the $38 billion portfolio of industrial businesses with 100,000 employees on a global basis. I was vice chairman when I left. But more importantly, I ran the industrial business that started General Electric down the track for security. So, it’s a space that I believe is important. It’s a space that I like and it’s a space that our company, GenNx360 Capital Partners has committed to explore and invest in. I total, we’ll probably have seven platform companies that we will grow and try and make them better than when we found them, and we’re pretty excited about all of it. With that in mind, we’ve had our teams looking at where we enter as far as security is concerned. We’re going to a lot of conferences; we’re studying the market. Some of the folks on my team ran into GVI at one of the conferences.
Steve Walin: Scott, from our perspective, as you know we were a publicly held company, traded on the over-the-counter bulletin board. With that $50 million in sales, it really didn’t make a lot of sense, especially in the current economic environment to be a public company because of the cost, and resource diversification that you have as a small public company having to comply with all the SEC filings and deal with a whole range of investors. So, when the opportunity to connect up with GenNx Capital Partners, it just made some sense to us to team up with a private equity firm with a group of people who understood the space and had the resources, contacts and business knowledge to be able to help us grow more quickly and more efficiently than we could on our own as a publicly held company. And I had worked at GE Security for several years and in Lloyd’s organization and knew Lloyd from those days. It was kind of a familiarity there on both of our parts, so it just made a lot of sense to pursue the discussions, which we did over time. The deal consummated on Dec. 9.
What advantages does this now give you in the marketplace?
Trotter: Let me do a GenNx spin on it, and then Steve, why don’t you jump in. In my mind, a public company, particularly in this environment, is sort of a trap because as a small public company you really can’t get the resources in order to play offense. You’re pretty much playing a defensive game because of the liquidity and everything else that’s going around you, there aren’t resources that you’re going to be able to pull forward, which is really important. The other thing is that a public company, when you think about where a CEO spends his time, it’s really about explaining to the market where you are, where you’re going, and where you’ve been as opposed to working on how to take the next steps forward. In a private environment, which is where Steve is now, that effort will be concentrated on how I can grow this business faster, and I think that’s very important.
Walin: I agree. That really says it all. I couldn’t add very much to that in terms of what the clear benefits are in addition to having the business expertise of Lloyd and the partners in the firm, who, as I mentioned earlier, they know a lot of people. They have deep Rolodexes, wide Rolodexes, both not only on the customer side, but also throughout the whole value chain. That kind of experience and knowledge and the doors that it could open for us and things we can learn from them are invaluable for a medium-sized company like GVI.
Trotter: Right. And I think that’s important, the fact that we do — or I — know a lot about the space. I do know a lot about the security industry. We’re starting off with knowledge. We’re not starting off by goofing around and saying, “What is it that we do, and where should we do it?” It’s “Who should we attack, and where should we attack?” Where should we double down on investments in order to get the right resources spun up so we can grow faster, and how do we make<
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