Avigilon Admits Contacting 70 Bidders

By: John Honovich, Published on Mar 01, 2018

A new Avigilon financial disclosure shows that Avigilon, via its banker, had contacted 70 bidders in a formal 'sales process' conducted in late 2016 and early 2017, confirming IPVM's report of Avigilon acquisition negotiations during that time.

In this note, we examine this financial disclosure, what this means for Avigilon and what industry participants can learn from this process.

Bidding ******* **** ** ** ** ** * ** ****

******-**** ******** '**** ** Arrangement'******** *** **** **** happened *** *** *** Board ******** ********. *** net/net ** **** ***** approaching ** *******, ****** meetings **** **, *********** with *, * **** could *** ** ******* with ***, ** *** screencaps ***** ****:

From **** ** ********

***** ** **** ***** be ******* ** *** initial ***** *******, ***** on ** ****, ******** approached ******** ** *** screencap ***** *****:

From ***** *** ** *** **** ** $** ***** ***********

*** ******* ** **** understand *** ******* *** that ******** *** ** a *****-**** *** ** the ***** ** *** October **** ***** *******, more **** ******** *** stock ***** **** ******** reached *** ** ******** in ******* ****. *** stock ***** ****** ***** illustrates ****:

**** ******* ***** ** the ******** *********** (** well ** ****** *****), Avigilon *** ******* *** a **** ****** ******** price **** *** **** low ** $* *** share. **** ****** *********** to ** **** ***** consummated ** ***** ****. In *** ********, ******** aggressively ******* *****, *********** freezing ***** *********, ********* reported *******. **** ******* helped ***** *** ******* a ****** *********** *****.

** *** ***** ****, Avigilon *** ******** ** $7 **** *** ***** than ***** **** ****, 4 ***** ***, ******* some ********* ** ** unsatisifed ** ****** *** more.

Lessons - ** *** ******* **** ***********

*** ** *** ******** dealers ********* ********* ** the **** / **** time ***** *** **** they **** *** ******* their *********** *** **** their *********** ***** **** them ** * **** was *********. *********, ***.

** ** *****, **** is *** * ********* of ******* ***********. ***, Avigilon ** * ******** traded ******* ** ************* such ***-****** *********** ***** likely ***** ***** ****. Moreover, **** ** **** were *** ******, *********** salespeople *** ******* **** the **** *** ***** of ** ******* *********** are *********.

Lesson - ***** ***** **** ****

**** **** ******** ********* bidders ** ********** * deal **** ****** * year *** * ****. Selling * *****-******* ******* dollar ******* ***** ****, especially ****** ** **** as **** ** ********.

********* ***** ** * tendency ** ***** ***** happen ***** ****, *** normally ***** ** * long ****** ****** *** scenes.

Lesson - **** *** ******* *****

**** ********* ****** **** aggressive ****** ** ********** cutting *****, *** ******** was ********* ***** ** for **** **** * year (*.*.,******** ****** ******** ** Maximizing ************* (** **** Results),******** **** ***** ******** Team,******** *** *** ***** Henderson *******), **** ** ***** a ****** ** * company ********* ****** *** sale.

******* *****, *** ****** equal, *** ********** ** the ***** ****, ********* profits. ******* *** **** to ******* ****** **********, as **** ******* *****:

******* ********'* **** - 2017 **** ******* ** sustainable ** **** **** term ******** ** ********* debtable *** ***** ** no ***** ***** ***** helped ******** *** ***** price *** ***** * higher ********* ****.

Update - ********* ** *** ***** *** ***** **** *******

*** ****** ******** ** disclosing **** ** ***** is * ***** **** meeting ** **** ** the **** *** *** board ****** **** **** / ******** **% ** the ******. **** **** to **** **** **** get ****** ***** ** approve *** ****.

** **** ******* *** the *****, ** ***** be ******** **** ***** disclose **** *******, ***** the ********* *********** ********. But ********** *** ** to ** ** * to **** ** ******** path ****** **** **** shareholders ** **** ********* this ** *** **** deal **** *** ***** to ***.

Comments (29)

John Honovich

IPVM | 03/01/18 06:32pm

On a related note, to clarify, many times I cannot come out and say "Listen I spoke to 3 executives in the last week who all said the same thing confirming X" without risk of causing problems for them, etc. But I will say 'sources' or other such language. When I do say that, I generally only do so if I am very confident that the person has direct knowledge of the matter and I assess the person as highly likely to be truthful. And I certainly can be wrong but I am typically getting information from high up in management.

Undisclosed #2

In reply to John Honovich | 03/01/18 08:13pm

No need to justify.  The subscribers know your source is not a security guard sleeping at the front desk.

There was a lot of smoke before the fire on this one.

Undisclosed Integrator #1

03/01/18 08:12pm

Great Topic. Great insight. I for one, am not planning to cancel my subscription any time. Keep up the good work. 

John Honovich

IPVM | 03/02/18 03:31pm

One other thing to mention since it may not be clear why they are disclosing this now.

The reason is there is a March 22nd meeting to vote on the deal and the board itself only owns / controls 12% of the shares. They need to make sure they get enough votes to approve the deal.

If they already had the votes, it would be unlikely they would disclose such details, given the sensitive information revealed. But explaining the 70 to 11 to 2 to none to Motorola path should help some shareholders be more confident this is the best deal they are going to get.

 

John Honovich

IPVM | 03/02/18 03:40pm

Financial details on Avigilon's founder's retirement:

So $5.4 million one time payment plus $5,000 per half day in consulting payments when needed. 2-year non-compete and non-solicitation.

Undisclosed Integrator #6

In reply to John Honovich | 03/02/18 06:04pm

Man, like Forbes said years ago in their article "The Fleecing of America", becoming a CEO of a big company is like hitting the lottery.

John Honovich

IPVM | In reply to Undisclosed Integrator #6 | 03/02/18 07:03pm

#6, Fernandes is due credit. He founded the company which is different and much riskier than the average Fortune 500 company CEO who gets paid tens of millions regardless of what happens to the company.

And in Fernandes case, he bet on megapixel when most other people were betting on analytics, and not only was he right his strategy and execution were a lot better than his peers at IQinVision and Arecont Vision.

As for the one-time $5.4 million payment, I don't totally understand what that is for, so I cannot opine on its fairness or appropriateness.

Undisclosed Integrator #6

In reply to John Honovich | 03/02/18 07:41pm

You're right, sometimes it's a matter of perspective. It is far from the worst we've seen in the news. At least it was and still is a successful company.

Undisclosed Integrator #3

03/02/18 04:10pm

   We have been talking with the Avigilon Sales Rep for our area after getting pulled into a bid for their system nearby. We were very close on our number but the client chose another experienced Avigilon firm to install the system, the same who did their other facilities in North America. I'm neither surprised or upset. I don't think the time wasted.

   We have had another conversation with him since the story was reported elsewhere and he says they are still interested in us as are we in them. I am attempting to remain optimistic. We as a company do not have much experience with larger IVMS installs but we're learning and have several large opportunities as well as potential vendors.

   My subscription will remain active as long as I continue to gain insight and advantages as we move forward with our agenda to increase RMR and offer state of the art video and access control with quality partners. IPVM is worth the investment.

Undisclosed #2

In reply to Undisclosed Integrator #3 | 03/02/18 09:00pm

My subscription will remain active as long as I continue to gain insight and advantages as we move forward with our agenda to increase RMR and offer state of the art video and access control with quality partners. IPVM is worth the investment.

Can we please not make the IPVM membership stance in your footer a thing*?

 

*I will keep my IPVM membership active as long as my employers don't realize I am on here.

Undisclosed Integrator #3

In reply to Undisclosed #2 | 03/05/18 03:48pm

My employers know I am here. I am the sales manager. I am using all available industry data to move us forward in the right and profitable direction. I am undisclosed for other reasons involving competitors, not the owner, who is my boss and hired me to bring better ideas and strategy to move us FORWARD!

Undisclosed #4

IPVMU Certified | 03/02/18 04:29pm

One of the Avigilon dealers strongest pushbacks in the 2016 / 2017 time frame was that they knew and trusted their salespeople and that their salespeople would tell them if a sale was happening. Obviously, not.

One wonders what Avigilon would have said if they were asked officially...

Related: Milestone Admits IPO Plan Lie

 

Undisclosed #5

In reply to Undisclosed #4 | 03/02/18 04:35pm

I don't think there is much wonder. They would have denied any acquisition in the works. Given that they could not find a buyer until Motorola approached them, they would not have been lying either.

John Honovich

IPVM | In reply to Undisclosed #5 | 03/02/18 04:40pm

They would have denied any acquisition in the works. Given that they could not find a buyer until Motorola approached them, they would not have been lying either.

The trickier part would have been denying that negotiations were occurring. The disclosure does show it was a formal 'sales process' and not just simply responding to inbound requests.

Undisclosed #4

IPVMU Certified | In reply to John Honovich | 03/02/18 07:09pm

The trickier part would have been denying that negotiations were occurring.

That’s where the non-denial denial can really show its worth ;)

In the realm of ethical choices, being evasive about selling ones company is a relatively easy decision to make, since:

1) Admitting to it could adversly affect the outcome

2) If the deal falls thru, typically no one knows because of NDA’s

3) If it succeeds, its payday, so...

 

Undisclosed Manufacturer #7

In reply to Undisclosed #4 | 03/05/18 05:17pm

Who knows/knew if AVIGILON Sales people had that knowledge? I for one think they didn't know until such time the announcement was made re Motorola.

Undisclosed Integrator #1

In reply to Undisclosed Manufacturer #7 | 03/05/18 05:30pm

Of course Avigilon Sales people had NO idea of any transaction. They’d be “ the 10th man on the deal team and the last ones to know”. 

Undisclosed #5

In reply to Undisclosed Manufacturer #7 | 03/05/18 06:53pm

That would be par for the course for Avigilon. The company has a strong culture of keeping information compartmentalized, and in general does not share a lot with the sales team well ahead of the data being generally available.

Undisclosed Integrator #1

In reply to Undisclosed #5 | 03/05/18 07:50pm

I am certain that in all organizations involved with a transaction such as Avigilon is currently engaged in, the personnel who are not on a "need to know basis" don't know. End of discussion.  

John Honovich

IPVM | In reply to Undisclosed Integrator #1 | 03/06/18 12:13am

End of discussion.

Case closed with prejudice ;)

But, yes, 'need to know' is definitely applicable here.

John Honovich

IPVM | 03/04/18 04:42pm

Btw, evidently the internal code name for the deal was 'Project Magnum' as the title of the report and a second reference indicates:

Undisclosed #5

In reply to John Honovich | 03/04/18 05:17pm

Considering how they struggled to inflate the stock price and trim some surrounding items to make it look bigger, Operation Blue Pill would have been more appropriate.

Avatar

Paul Grefenstette

03/04/18 05:38pm

I'm curious who the other 2 were before Moto came in.

John Honovich

IPVM | In reply to Paul Grefenstette | 03/04/18 07:50pm

I am not certain of that. I am positive a number of the major industry manufacturers were in the round of 11 but not sure who the final 2 were.

Avatar

David Coughlin

Protection One / ADT
03/05/18 02:26pm

At first, I was thinking this was a story about how many integrators Avigilon contacts to show up at at bid walkthroughs.

That noted, great article with some rare insights into the acquisition process.

Undisclosed #5

In reply to David Coughlin | 03/05/18 02:49pm

At first, I was thinking this was a story about how many integrators Avigilon contacts to show up at at bid walkthroughs.

Me too, mostly because I did not think there could possibly be 70 eligible bidders when it came to selling the company.  Some of those 70 must have really been scraping the bottom of the barrel.  I wonder what Longse bid?

John Honovich

IPVM | In reply to Undisclosed #5 | 03/05/18 02:53pm

Some of those 70 must have really been scraping the bottom of the barrel. I wonder what Longse bid?

Ouch. I know you are joking but I suspect it was the opposite. Morgan Stanely probably reached out to lots of huge companies just in the hope that one would bite - Google, IBM, Oracle, Facebook, Fujitsu, Konica Minolta, Canon :) etc....

Undisclosed Integrator #6

In reply to John Honovich | 03/05/18 03:45pm

...HP, Dell, Goldman Sachs...

Undisclosed #4

IPVMU Certified | In reply to John Honovich | 03/05/18 05:15pm

Morgan Stanely probably reached out to lots of huge companies just in the hope that one would bite - Google, IBM, Oracle, Facebook, Fujitsu, Konica Minolta, Canon...

Canon: So this is an “all-in-one” camera and VMS company? Smart...

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