Industry Vet Buying Integrators For New Conglomerate (DFENDUS)

By: IPVM Team, Published on Dec 21, 2017

Industry veteran Dan Marston [link no longer available] has started a new company, DFENDUS [link no longer available], with the specific goal of buying up integrators to form an operating conglomerate.

IPVM spoke with Marston to understand his strategy, the kinds of integrators he is after, and plans to expand beyond Canada, where the company is based.

In this report we outline Dfendus' plan, and how their approach compares to Convergint's integrator buying spree.

Founder **********

******* *** * **** background ** ********, **** of ** **** *******, and **** **** ********* after *** ****** ******** the ******. *** ********** is ********* **** ***********, holding ********** ***** ******** sales *** **********-******* *********. He ***** ** *** this ********** ** **** his *** ******* ******** and ***** *********** **** look ** ********.

DFENDUS ********

*** ******* *** ****** backing ** **** ********* and ******* ** **** integrators ******** ** ******* under ***** ******** ******** after ***** ********, ****** "a ******* *******" ** their ******** *********.

*******'* **** ** ** get *** ******* ************ to * $**** ******* "as **** ** ********", as ** ******** ******* this ***** **** **** up ************* *** **** larger ************.

** ***** ** ****** the **** ** ***** to ******** ** ********** and ******** * ********, Marston *** ********* ** in-house ***** ****. ** stated **** ***** ****** the ******** ********** **** doing ************ *** ****** the ***** **** ** become ********** ** ***** due ********* *** ***** pre/post **** *********. ******* claims **** *** ***** deals ** ** ******* as ** ****.

Typical ********** ******

******* ** ********* ******* at *********** ** *** $1M-$5MCAD ******* *****, ****** will **** ** ********* as ***** ** $*** in *******. **** ****** of *** ** ***, with * ******* ***** around $**,***/**. ** ***** to **** ** ********** an ********** *********** ******. Integrators **** **** ******** software ********* ** ******** their ******** ********** ****** areas **** ******* ********, quoting *** ********* ** other ****-****** ******* *** of ********** ********.

******* ****** **** ******* has * ***** **** allows **** ** ******* integrator ********** ******* **** what ********** ** ***** large ******* ****** ********* might ******. ** ***** this ***** ****** ** these ********** ** ********** option ** **** ***** business **** **** ***** not ********* ****.

********* *** ******* ** acquiring ********-***** ***********, *** has ******* ********* **+ companies, *** ****** **** may ****** **** ** acquisitions ** **** **** businesses **** **** ****** RMR ** *** ********* a **** *********** ******.

Guard ********** ********

** ******** ** ***********, Dfendus ** **** ******* to ******* ***** *********. Here *** *** ** key ** *** ******** being * **** *** for ** ***********, ********** an ******** ** ********** that **** ****-**** ******** contracts *** *********.

Valuations ****

***** ********** *** ******** to **** *******, *********** should ****** * ******* 30x ******** *** ***, plus **** ********** ****** for ******** *** ********* or ***** *** ******.

What ** ****** ****-****

******** ****** *** ******** to **** ** *** 2-3 ***** **** ****, though ** **** ***** this *** ** **********. Marston ****** **** ******** owners *** ****** *** agreement ********** ** ** carried *** ** **** and **** **** ******* will *** ******* ** change *** ***** ***** the **** ** "**** back" ***** ****. ******* payout ****** **** ** acquisition ** *.* *****.

***** *** ******** **** operate ***** *** ******** brand, *** **** ******** management ********* ** *****, Dfendus **** **** ** achieve **** ***** ************ through ****-****** **********, ******* that **** ********-******* ********* may ** ************ ** Dfendus' ********* ******.

Future ******* ******** ********

***** *** ******* **** not **** ** ********* plan *** *** ******** companies ** ******* ****** under *** ******* **** and ********, ******* **** this *** ****** ** the ****** ** ** feels **** ***** ** beneficial *** *** ********** operation.

DFENDUS **** ********

** ******** ***** **** discussed *** * **** term **** ******** *** DFENDUS, ******* *** ******** backing ***** ******** *** company ***** **** ** IPO, ** **** ** a ****** ********/****** ********** or ******* ******** ** some ***** ** *** future.

Compared ** *********** ** **********

*******' ******* ************** ** that **** *** ***** to ******* ******* ***********, often **** ******** **** than **** ***** ** attract ** ********** ** other ****** *********. ** described ** *******, *********** acquired ** ******* ***** also ****** **** **** autonomy **** ***** ******** by **********, ** ******* does *** **** ********* plans ** ****** * national ***** ** ******** strategy *** *** ********** has.

Comments (12)

Jeremy Ellis

12/21/17 03:35pm

The hard part to me is keeping the “key” technicians onboard after a sale like they are targeting. Most often, those people are only one step below the owner in the long term importance category. Once again, it’s all about the RMR. 

Undisclosed #1

12/21/17 05:32pm

"The company has equity backing to fund purchases and intends to have integrators continue to operate under their previous branding after being acquired, adding "a DFENDUS company" to their branding materials."

Any indication of who the 'equity backing to fund purchases' group is comprised of?

Undisclosed

12/21/17 06:26pm

These roll-up stunts seem to have plenty of appetite for unstellar integrators.  They talk investorBabble and RMR and stuff but there's generally not any sign the new entity will be any more competent at handling modern problems.  A nationwide integrator brand that sucks just like the local firm used to suck does not add value for the customer. (remember the customer?  you're living on their money....)

Undisclosed Integrator #2

12/21/17 06:30pm

  Integrators that have deployed software platforms to optimize their business operations around areas like vehicle tracking, quoting and invoicing or other back-office systems are of particular interest.

Yes, that indicates they are well organized. But if part of the goal is to have common platforms all the "branches" use to leverage the value, then it will become a question of if a prospective acquisition is already using the same platform as the conglomerate.

Lee Jones

Support Services Group
12/21/17 08:31pm

(Comments from an outside observer)

Another subtle, but big difference, between the business models of Convergint and Dfendus …. doing business without on-demand police response. Major Canadian communities have already adopted full disclosure VR-Verified Response, and private security has responded accordingly with compatible business models. Good example is AlarmForce (recently sold to Canadian telco). Law enforcement in the US is moving fast in the same direction, but alarm companies are moving slowly with millions of their imbedded base… could be a decade behind, with lots of in-compatible business models. We believe Convergint will be looking at some clumsy “integration” issues.

Source: Lee Jones; Support Services Group; leessg@att.net

Avatar

Michael Silva

Silva Consultants
12/21/17 10:09pm

The value in most smaller integration companies is their people. Period.

In most cases, the best people will leave after the company after an acquisition occurs, if not immediately, then within the next year or two. The acquirer is then left with a shell of a business where most of the remaining employees are just hanging on for a paycheck and could care less about the company or its customers.

I have seen this play out time and time again over the last 30 years with very few exceptions.

Chad Rohde

In reply to Michael Silva | 12/22/17 12:12am

I agree. Probably close to 100% of the time. And not much different results in large acquisitions.  I am always amazed when I hear of big acquisitions like Charter buying Time Warner. And can't imagine the amount of headaches involved it that. I don't usually talk good about any companies that size because they are too big to provide good customer service. But I will let them win the acquisition award every time and would never attempt that feat.

Chad Rohde

12/22/17 12:01am

Marston stated that business owners can expect the agreement negotiated to be carried out in full and that they company will not attempt to change the terms after the sale or "claw back" money paid.

 

 

I've never heard of Marston or Dfendus. But this statement alone would keep me from trusting them. But I have stereotyped wrong plenty of times.

 

Avatar

Brian Karas

IPVM | In reply to Chad Rohde | 12/22/17 12:13am

He was referring to cases where integrators come to an agreement with a purchaser and the agreement sets terms like "We will pay $X, provided the business meets growth projections of at least X% for the next two years". In some of those cases "X" is not practical, or other factors prevent that growth and the selling owner winds up with less than the agreed upon amount.  Marston/Dfendus are saying "if we agree to pay $X, you will get $X".

 

Chad Rohde

In reply to Brian Karas | 12/22/17 01:18am

I was pretty sure of what he meant and understand your interpretation. I just don't like the idea of defending yourself before any wrongdoing for something that should be an unspoken rule. 

I'm probably not explaining it correct, but my too favorite comments I can compare to are when somebody starts out by saying:

"To be completely honest with you, I .........."

or

"I'm not gonna lie, I ....." 

These comments shouldn't need to be spoken. Going into a business deal you abide by the contract regardless of the outcome. The other company telling me that doesn't reassure me. It makes me think that the contract is worthless and at the end of the day they have the power to pay or not. 

Like I said, they are probably very good people. I tend to over think little stuff like this. If I was having this conversation with my wife, now is about the time she punches me and says quit talking to me. :) 

Jeremy Ellis

In reply to Chad Rohde | 12/22/17 04:53am

The Clawback is a common angle when buying a company. The goal is to agree to a 30x - 40x RMR sale price, then (In the words of one really respected industry person I dealt with) you shake that RMR tree as hard as you can after the deal closes. You seperate all of the non-payers, late payers, and overall Accounting Dept time suckers from the "good" accounts that are worth the 30x - 40x acquisition price. In the end, you end up picking up the weak accounts for pennies on the dollar and not paying top price.  The RMR Clawback. The RMR industry is brutal.  

John Honovich

IPVM | 06/14/18 05:45pm

Update: DFENDUS notified us that they have acquired Actron Security Systems of Woodbridge, Ontario.

Read this IPVM report for free.

This article is part of IPVM's 6,538 reports, 881 tests and is only available to members. To get a one-time preview of our work, enter your work email to access the full article.

Already a member? Login here | Join now

Related Reports

Integrator Acquisitions 'A Good Market' During COVID-19, Says Greybeards on Jul 28, 2020
Industry broker Ron Davis of the "Greybeards" says that the integrator and...
Hikvision Buys Baltics' Largest Distributor (BK Group) on Aug 20, 2020
While Hikvision faces global scrutiny over its connections to the PRC...
Verkada Speaks On Disrupting Security Sales Channel on Aug 28, 2020
Verkada's fast growth has taken the industry by storm and their enterprise...
Asylon Presents All-Weather Automated Security Drones on Jun 18, 2020
Asylon presented its All-Weather Automated Security Drone, the DroneCore, at...
Defendry Presents AI Active Shooter Security System on Jul 14, 2020
Defendry presented its Active Shooter security system at the May 2020 IPVM...
Deep Sentinel Presents Crime Response For Business on Jun 11, 2020
Deep Sentinel presented its anti-intrusion and live response for home and...
SafeZone Tech Presents AI Gunfire Detection on Jun 15, 2020
Safe Zone presented its AI gunfire sensor the May 2020 IPVM Startups...
Qumulex Presents Unified VMS and Access Control on Jun 08, 2020
Qumulex presented its unified video management and access control system at...
Sequr Presents HID based Cloud Access Control on Jun 04, 2020
Sequr presented HID based Cloud Access Control at the May 2020 IPVM Startups...
HID Releases VertX Replacement Aero on Aug 10, 2020
HID is replacing two established and broadly supported types of access...
Milestone Hires New CEO From IT Integrator on Aug 18, 2020
For the first time in 20 years, Milestone Systems has a new CEO and, notably,...
OnTech Smart Services Partners With Google and Amazon To Compete With Integrators on Sep 25, 2020
A pain point for many homeowners to use consumer security and surveillance is...
Motorola Solutions Acquires Pelco on Aug 03, 2020
Motorola Solutions has acquired Pelco, pledging to bring blue back and make...
Verkada Access Control Tested on Sep 09, 2020
Verkada raised $80 million earlier in 2020, expanding from video into access...
AndroVideo Presents Edge AI Face Recognition Cameras on Jun 26, 2020
AndroVideo presented its AI at the edge face recognition cameras at the May...

Recent Reports

Hanwha AI Object Detection Tested on Sep 28, 2020
Hanwha has added detection and classification of people, cars, clothing...
Favorite Access Control Manufacturers 2020 on Sep 28, 2020
200+ Integrators told IPVM "What is your favorite access control management...
New Products Show Fall 2020 Starts Tomorrow! on Sep 27, 2020
Tomorrow, IPVM's sixth online show will feature New Products from over 25...
OnTech Smart Services Partners With Google and Amazon To Compete With Integrators on Sep 25, 2020
A pain point for many homeowners to use consumer security and surveillance is...
The Future of Metalens For Video Surveillance Cameras - MIT / UMass / Immervision on Sep 25, 2020
Panoramic cameras using 'fisheye' lens have become commonplace in video...
Hikvision Sues Over Brazilian Airport Loss on Sep 24, 2020
Hikvision was excluded from a Brazilian airport project because it is owned...
China General Chamber of Commerce Calls Out US Politics on Sep 24, 2020
While US-China relations are at an all-time low, optimism about relations...
Verkada Disruptive Embedded Live Help on Sep 24, 2020
Call up your integrator? Have someone come by the next day? Verkada is...
IP Networking Course Fall 2020 - Last Chance - Register Now on Sep 23, 2020
Today is the last chance to register for the only IP networking course...
Drain Wire For Access Control Reader Tutorial on Sep 23, 2020
An easy-to-miss cabling specification plays a key role in access control, yet...
Norway Council of Ethics Finds Hikvision Human Rights Abuses "Ongoing" on Sep 23, 2020
Hikvision's involvement in "serious human rights abuse" in Xinjiang is...
IPVM Camera Calculator User Manual / Guide on Sep 23, 2020
Learn how to use the IPVM Camera Calculator (updated for Version 3.1). The...
Installation Course Fall 2020 - Save $50 - Last Chance on Sep 22, 2020
This is a unique installation course in a market where little practical...
SimpliSafe Business Security Launched Examined on Sep 22, 2020
SimpliSafe has launched "SimpliSafe Business Security" that the company...
FLIR CEO: Many New Fever Entrants "Making Claims That The Science Just Won't Support" on Sep 22, 2020
FLIR's CEO joins a growing number calling out risks with fever / screening...