ADT Eliminating Acquired Brands, Unifying Under 'Commercial' Brand

By John Honovich, Published Jun 14, 2019, 09:56am EDT

ADT is eliminating the brands of the many integrators it has acquired over the past few years, including Red Hawk, Aronson Security Group (ASG), Advanced Cabling, and Access Systems Integration as it moves to a unified 'ADT Commercial'.

In this note, based on interviews with 4 of the acquired companies (Red Hawk, ASG, Advanced Cabling, and Access Systems Integration), we examine:

  • The ADT Commercial rollout announcement
  • How acquired companies feel about the brand transition
  • How acquired companies feel about what is different since their acquisitions
  • How acquired companies feel about how have operations changed
  • How employees feel about the acquisition
  • Integrators' view of ADT
  • Outlook

The *** ********** ******* ************

*********** *** *** *** Commercial ********** ****'* *** **** show. *** ********* *********** video **** ** ****** the ******** ** *** West **** *** ** "taking ********** ******** *** fire ** *** **** level":

How ******** ********* **** ***** *** ***** **********

**** **********, *** **** **** and ********:

****** ******* ** *** the *** ********** ***** out ** *** ********. When *** **** ** the ******* ** ********, we **** ** **** to ******* ******** **** the **** ********** ***** in *** ******** ** really ******* * ********** story *** *** *********, employees *** ************.

**** *******, ******* ******** *****:

** **** ** **** fully ********** ** *** ADT ********** **** *** brand. *** ** ******* in *** ***** ** this** *** *** *** from *** *******, ****** ***** *** our ******** *****. *’* excited ***** *** *********** to ** **** ** building *** *** *** Commercial *****.

*** ************ *** *** ******* ** **** ** the ********** *****:

******* *******, ******** *******/*** ****:

** *** *** ****** than *** *****. *** brand ** ****** *** people, *** *** **** on *** **** ** the **** ** *** logo. ** *** ******** with *** *******, **** explaining *** **** ****** and *** **********, *** message *** **** **********.

*** ******* **** ****: "As **** ** * can ***** ******* ** same ***** **** ******, as **** ** *** person ********* *** ***** that ***** ** ** name ** *** ****, as **** ** ** PM ***** ***** **** of **, *** ** long ** *** ********** that ***** ** ******** is *** ****, * don’t ****** **** **** the **** ** *** logo **.

***** ********, ****** ******* ***********:

** ******** ********* **** July **** *** ******* was ******** ** ***. The ******** ** ******** was ******** ********. *** clients *** ********** * branding *** **** ******. They ***** ****** **** to ** ******** **********.

What ** ********* ** ***** *********

*** **** **** *** Security:

** ** *** ***** in *** ***** ****** of ******** *** ********** together *** *** **** that *** **** ****** are ** *******, *** changes *** *** ********* and ********* **** **** small *** ********* ************. Some ******** ***** ** increased ******** **** *** product ********, ****** ** new ********* *** *** ability ** *****-**** **** the ******** ******** **** of **** *******. **** resources ** ***** ** to ** **** **** nimble ** *** ******** to *** ********* ** well ** **** ********* in *** */* *********.

******* ******** *****:

*** ******** ** ** leverage *** *********. ** have **** **** ** the "******" *******.

** **** **** **** to ********** ************* *** ADT *********** **** *** Commercial ********** **** *** branding *** ********* ****.

** **** * ****** strategy *** ********* ******** for *** ******* **** leverages * ********** ******** suite ** ********: **** ESRM ******** *** ********, design *** ***********, *********** and **************, *** * fully ********** ******* ******** capability **** *** ******** fire *******.

*** *** ******** **** financial *** ********* *********** to *** *** **** of ******* ********* *** Hawk *** ***.

******** *******/*** ****:

*** ******* **** *** Advanced ******* ******* ****** with *** ****/*** **** all **** ********. *** merger *** ******* ** to *** **** ** front ** *** ******* to ******* *** ****** to ****, *** **** has **** * ***** opportunity ** ***** **** them ***** *** ****** and ***** ******** *** our ************.

*** ** *** ******* advantages ** *** ****** the ******* ** ******* services ** * ****** footprint. ** **** *** some ***** ****** ******* that ***** *** ***********, but ** *** ****, we **** ******* ** our ********* *** *** services. ** *** *** able ** ***** ** a ***** ***** **** our **** *******.

****** ******* ***********:

*** *** ********** **** is ******* ** ********* the ****** ** *** to ******** ****** *** company ******.

******* ****** ** ********* high **** ********* ******* there ** **** **** room *** *********** *** opportunity. *** ****** ***** makes ** **** **** competitive *** **********.

How **** ********** *******

*** **** **** *** Security:

** ****** ** **** point ** ********** ** either *******. ** ** bring *** ********** ******** one ******* *********** *** the ******** *** **** customers **** ** *** ability ** ** **** transparent ***** *** *********** for **** ********.

******* ******** *****:

*** ********** ** *** able ** ******** *** our ********* ********** ***** America. ***** *** *********** and *** *** ****-*** managed ******** ************** **** give ** * ****** differentiated ********* *********. **** will ***** *** ******* increasing **** *** *********** management ** ***** ****** risk, ********** *** ******** program.

******** *******/*** ****:

********** ****** *** ************ are *********** *** **** as ****** *** ******. Our **** ***** **** members *** ******* ** our *******, *** ******* managers *** ********** *** service **** *** ***** taking **** ** *** clients, *** *** **** technicians *** ****** **** of *** **** *******. The ******* *** ********* are *********, *** ** has ******* ** ** have ****** ********** **** our ******** **** ** have *** ** *** past.

****** ******* ***********:

************* ** **** *** seen **** ******. **** we ********* ***** **** ADT’s ********** ********, * see ** ********** **** operational ********* **** *** entire *******.

Transition ********

**** ***** ********* *** acquired ** ***** *********, there *** ***** ******** about *** ********** *** the ******* **** ******. An ******* ** **** is ************ ******* ** ***, **** ********* ****** concerns ** *** ****** over:

******* ******** ***** **** they "***** ******* *** ASG" **** *** ****** them ***, ** **** below:

* ***** ****** **** the "********* ******* *** excellent ***** ** ***" as **** *****:

Positive ***** ****** ** ***

*** ***** ******** ** ADT's ***** ** **** it ** *** ****** known ** *** ******* public **** *** ** the ********* ********, ** probably ** ****** ***** than *** ** *** companies **** ********, ** far.

***** ** * **** recognition **** ****** ** matched *** **** ***'* perspective, ** ***** ******* sense ** *** **** one, ****** ***** *****, rather **** * ********** of *******, ******** ******.

Negative ***** ****** ** ***

*******, ** ** **** to *** **** ***'* brand ****** *** ********** security ***** ** *****, to *** *** *****. The ******* ***** ********** mocked ** '****** **** Twice' ** '******* **** Technician' *** ** * residential ***** *** ** is *** ************ **** known *** *** ********** work. *** *******, *** 2017********* ******* *** ******, ** ***** **** integrators **** **** **** not ****** ** ********* with *** ******* ** they **** *** *** a ***** ** ***********, low-quality *************, *** **** customer *******.

Acquired ********* ****** *** ***********

*** **** **** *** ADT ** **** ***** acquired ********* ****** ***, that **** *** ******** the **********, ******, *********** on *** ********** **** that ***** ******* *********** have *******.

** **** *** ** easy, ** ***** *** various *******, ********, *** groups ********, ********* ****** executives ******* *** **** of ***** ******* **** have **** ******** *********** payouts *** ******* ***** business.

** ** ********. ** far, ********** *** **** together ******* ** ********** ************. ***** ** * chance **** **** ** these ********* *** ***** all ***** ********* ********* into ******* *********** ******* the ********** ****** ** enterprise ********.

*******

** *** ********* ** it ** **** ** scale *********** ** ******** of ******** ** ******* in ****** *******, ** in ***'* **** ****,******* **** ******* ** commercial *********** *******. *******, ** *** can *******, **** *** find **** **** ****** from *** ******* ************** and ********** ** *** residential ******** ******.

Poll / ****

Comments (24)

I guess it was only a matter of time. I wonder how much longer all those folks you interviews will be with ADT? Whether as part of the sell off plan or otherwise.

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Daniel, I am curious as well. You have executives ~60 years old, getting a payout of millions or tens of millions, how much more incentive do they have to stay in a huge organization whose stock has so much downward pressure:

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I'd be curious to see the impact of the DIY and into the Ring Alarm style systems have had on their bottom line. What's the attrition on residential look like? I would think those numbers combined with new players building up market share in commercial would hint at a good time to refresh the C-level internally before a large effort is started.

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Too much focus on the “ADT brand” when focus should be on the ADT customer.
What most of us already know… even investors:
~ Brand does not create revenue, customers create revenue.
~ Take care of the customer and the brand will strengthen.
~ When attrition increases, brand is weakened.
We are being distracted away from their several million residential customers where customer unit attrition probably exceeds 15%, and growing. Note ADT keeps the “customer attrition” a secret with their definition of “gross revenue attrition”.
As John noted, their stock price is down about 50%. The other big public alarm security firm, Monitronics, is now bankrupt, Chapter 11 (see IPVM discussion). How much lower for ADT stock… maybe penny stock level? How/Why so low? Customers are told the cops will come when the alarm is tripped, instead they get a phone call, from ADT, saying the alarm was tripped. Expensive security systems have eroded into low value deterrent systems. Customers are discovering that ADT and hundreds of their counterparts have lost credibility with law enforcement due to decades of unnecessary police response, aka near 100% error/false alarms. Now, in most jurisdictions, if they want on-demand police response, they need to upgrade into a “defensive” system that provides interactive remote-witness with video or audio. We believe they can save the brand by spinning off their residential customers, their legacy liability.
Source: Lee Jones; Support Services Group

 

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We believe they can save the brand by spinning off their residential customers, their legacy liability.

Spin them off, again?

Tyco / ADT Split Examined

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ADT is the oldest company with the strongest brand in the industry. If they convince their stock holders that taking care of the customer means fortune for them in the long run, they will do very well.

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If they convince their stock holders

Have you seen their stock chart? Posted in previous comment exchange above.

In all seriousness, it does not seem investors are that excited about this pivot or return to commercial (or at least not excited enough to compensation for the risks on the residential side).

I find it so weird that, for years, all the financials guys accurately trumpeted how residential was a better business (in terms of profits and valuation) than commercial (and they were right - contracts, RMR, locked in customers, etc.). Large commercial integrators always had modest profits and poor valuations. And now the solution is commercial? I genuinely would like someone to explain this to me. Surely there is some logic but it is not as if commercial integration has become this super fast growing or highly profitable business.

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The only possible way I could see this move being justified is (and it may have already been stated here) the emergence of the DIY alarms, door bells and cameras taking a chunk out of the residential market.

I personally have not seen a real difference yet, except in the case of residential IP cameras. This could just be a bonehead mistake made by a company that believes they are too big to fail. At any rate, smaller integrators are bound to see some differences in the market, good or bad.. there will be a few ripples.

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Alarm accounts and the RESI model is scalable nationally very easily from a marketing standpoint, employee training, and branch roll up. It’s a lot more fragmented manufacturer, product, and solution wise in the commercial space. Take fire alarm for example— bidding and pricing a job can be completely different 30 miles down the road with a different AHJ.

Adt for years was really a consumer debt play more than an alarm company play.

Commercial isn’t suddenly a hot market— and you are correct that the valuations are/were lower in commercial— but they are also more in line with reality. IIRC Barnes Buchanan/Cap1 pegs companies around the bottom/mid part of SDM 100 at 4.5xebitda for where deals happen. Lower middle market average hovers around 5x.

The problem right now and the hangover really revolves around multiple older companies hanging around with old owners that want to exit based on RMR multiple but the ROI/EBITDA doesn’t support the valuation. With ADT not buying the revenue anymore and doing commercial acquisitions a lot of alarm company owners are looking at a huge haircut to their nest egg.

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they are also more in line with reality. IIRC Barnes Buchanan/Cap1 pegs companies around the bottom/mid part of SDM 100 at 4.5xebitda for where deals happen. Lower middle market average hovers around 5x.

Given that type of range or even somewhat higher, I don't see much upside for ADT, unless they really think their residential alarm business is going to become worthless.

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Possibly the most farcical post of the year....

The rot set in years ago with the Dennis Kozlowski debacle.

Lets just remind ourselves of Dan Ackmans comments from the trial:

"It's fair to say that Kozlowski and Swartz abused many corporate prerogatives and that they invented new ones just so they could abuse them. They acted like pigs, as a lot of CEOs act like pigs."

We all know that this was the culture at the time and that rather than being isolated, this actually represented top down rotten culture that didn't stop with two "pigs".

I've worked for Tyco - so I know what a truly awful company it is. I've also sold to the former TEPG and know how rotten the procurement process is from the core. ADT is NOT a sum of it's staff and acquisitions - the vast majority are good people, coerced into a rotten culture that is despised within the sectors it works in.

Also consider the reputation of ADT outside of the US is somewhat worse than it is in the US - indeed, you may be surprised just how bad. The article does touch on this, but the regional nuance is profound to the point where it is quite possibly the most hated security company in the region - a crown it's worn for many years.

Articles like THIS litter the internet. Yes, companies make mistakes but this is what we hear day in and day out from ADT victims customers. Its the abject lack of common sense, connection with the client and astonishing level of arrogance that is filtered down from the top.

 

 

 

 

 

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ADT is a dead horse. Why do they keep trying to revive it? Time for back to basics....treat the customer right.

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Decide how you wish to earn income.

-Work for the large branded corporation

-Work for the mid-sized company

-Work for the small group

Each have the potential to pay equally with minimal sacrifice. If you cannot decide, keep making comparisons.

I personally choose to use my talents to support the smaller technical group, work gets done together with no obscure over cooked processes or managers citing useless industry standards they only have read about. I have a lot more time to myself and since I have not family to hold me down I take this time to take on learning new tasks, software and technology out of self interest and also with investing in a better me. When I worked for the big guys it was a rat race that started at 3am and ended at 11pm at night (dealing with global accounts/time-zones). I found myself glued to email, updates and reports while I ate dinner, washed the car or should have been sleeping. No reward at all, I never expected one or was promised however when I realized I gave all my free time away there was no time left to reward myself. 

Once again new ADT brand will have business flowing in and out of there corporate offices, databases, multiple invoice systems and hourly field employees all subjected to a streaming process they have no control over. Sure there will be the few that rise and gain over others in the corporation but that margin is slim. The old men must be so happy right now.

If you are one of the few that holds it all together I encourage you to seek out and join forces with an integrator that matters or build your own. Don't fall into all the corporate BS and let those that are stuck there stay there.

 

 

 

 

(Tough times to see ASG go down like this).

 

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I think the better question is how do the large end user commercial CUSTOMERS, formerly sold and serviced by RedHawk, ASG, CPS, etc., view the service and support post acquisition? 

If ADT has a specific strategy to differentiate the new company to those customers and it's received as positive, these acquisitions could work, however, if ADT corporate is reliant on the acquired integrator and their local team to keep it "business as usual" then the negative impact noted in this article could be felt by the end user on a number of levels and likely cause customer attrition.  

(Regarding the residential side of ADT's business, I personally do not see the true value of a high priced central station alarm system anymore, because it's ineffective in terms of a police response.  Most of the burglars are long gone before police arrive, so capture what you can on DIY video and put up a little siren to alert your neighbors.  Nest, Ring, Arlo have all made it too simple for the average consumer.)

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Perhaps the newly branded ADT will place a marketing strategy for each individual, large end user commercial customer to tailor the change impact with a positive outlook. If the previous value and performance is met or exceeded without disruption the customer base should not withdraw into panic over any new changes. It will definitely be worth hearing from and about the internal moral statistics over time on how ADT can or cannot stimulate the current employee work forces gained thru acquisition that they have now and what it will look like in 5 years. Just how many of ASG/RED HAWK/AC/ASI adapted and weathered the storm? ADT will lose some to the change, most will employ elsewhere and carry on while a few may be the next to build out a new model with young mindful ambition, not regret of the retracted angry employee that just jumped to another company do to fear of the unknown. How will the new ADT build a future ADT without just recycling all these smaller companies into familiar name, model or process. It is curious how the report has the photos of the acquisitioned with statements rather than quotes. Assume the same, carry and march on. Know that nothing is new under the sun, irregardless how they drums are beat. Why would someone just take a 40 year company shirt off and go FULL (enthusiastically) ADT? 

/$$$$

 

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What about Protection One?

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They have already been cloned.....

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Where's the synergy.  Is it going to be 2700 individual offices that all work separately?    Are the only points of commonality going to be the paint job on the truck?

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Hey Chris,

Since the merger in 2016, the combined companies have been operating primarily under the ADT brand, according to the official ADT press release. That being the case, it is my belief that the ADT Commercial brand will continue to dominate.

Having said that, I've reached out to ADT to inquire specifically about the fate of the Protection 1 brand and will follow up as more information is received.

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Thanks Dan. The P1 website is still going and lots of P1 branding. In fact, other than a co-logo there isn't any ADT branding anywhere unless you click on About the Company link. Seems they are happy with the branding. Just curious about how it rolls up under the leadership. 

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Hey Chris,

Just wanted to follow-up. I heard back from ADT: "Nothing to share at this point."

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ADT commercial execs pitch to SSI, emphasizes quality of employees and ability to do any project. Later in the video, talks about looking at more acquisitions:

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Interesting next step - now ADT is segmenting ADT residential from 'ADT Commercial' boasting in this LinkedIn video how they have the 'privilege of focus' on commercial customers:

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Update: James Hennessy, cited in this post as one of the acquired integrators has now retired, ADT has announced:

IPVM Image

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