Fired: All But One Exacq Rep Firm Now Out

Author: John Honovich, Published on Mar 23, 2015

And then there was one.

After firing multiple rep firms in January, Tyco has fired 3 more rep firms to nearly complete the removal of Exacq's rep firms.

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****** ***** **** *** ******* **** ***** **** ********* *****, we ** ****** ** ** ********** ****** ** ******** *******.

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**** **** ****** ****, ******, *** *** ******** ***** ** Tyco/Exacq, ******** ** *********. ** ** ***** ** **** ****, ***** **** *** a ****** *** *********, **** **** *** / ******** ************* looking ** **** **** **, ***** ***** ******** ************* **** mid-size ******** ******* *** *** ****** ** **********, **** ** Milestone, ** ******** ***** ******** / *** *****.

Comments (28)

I seem to remember both Exaq and Tyco saying they expected no changes even though everyone knew there would be.

Darn shame really. Those are some good people that have served Exaq well and have been loyal.

This was what Exacq said at the time of the acquisition in 2013:

"They bought us for us, and did not have any built-in reductions in staff nor do they expect any consolidation of the sales channel."

Given they use the qualifying word 'expect' there, I am sure they could explain it that they did not 'expect' it, but things have changed over the last 18 months.

Either way, when companies get bought by conglomerates, we all know this is the textbook game plan.

I appreciate everyone's input on this and understand the emotions it has elicited. With the acquisition of Exacq, we ended up with two great rep firms in every territory. Along the way, we have looked for ways to increase sales of our full video portfolio, create efficiencies in our team and simplify our customer engagement. We tried this with two rep firms in each territory with limited success. Moving to a single rep firm in these territories creates efficiencies but, more importantly, it allows us a single sales force selling our entire portfolio and ultimately will make it a simpler process for our customers to do business with us. None of these were easy decisions to make; every rep firm for Exacq and AD were A-list firms.

As to what Tyco has said versus what we have done, it has been 21 months since this acquisition. Certainly, all of you have had to change your strategies in the past 21 months, to meet changing business environments. Virtually all of the other components of Excaq have been left intact; in fact, we have added to the regional sales and R&D teams. There has been far more Exacqtification of Tyco, versus the other way around. -John Becker, Tyco Security Products - Video Portfolio

Then they are the only ones who did not expect it. They surely knew it as well. The rest of that was lip service to the end users.

Not trying to defend it by any means, but isn't this a case where Tyco/AD had different rep firms than Exacq had, and they are trying to consolidate? For example, IMI has been the rep for AD in the SE and now they are also the rep for Exacq. If so, it would seem to make sense and not sure why this is big news. Manufacturers turn over rep firms from time to time, see Milestone and Sony for examples.

The problem is that these Rep firms were essentially their sales team in those areas since the begining. Other Manufacturers turn over rep firms all the time, but not Exacq. REPMS has had Exacq since it became a Rep Firm, and has been a consistant top 3 revenue generator for them every year. Murphy & Cota has been the #1 or #2 Rep firm EVERY year until this last year. OCOM is another one that has been a solid firm.

This is a huge boon to the other VMS companies as Exacq just lost essentially what was the top 1/3rd of their sales team.

Exacq just lost essentially what was the top 1/3rd of their sales team.

This is true only if you believe these firms were essentially driving the top-line pipeline, which is unlikely. This is more like Tyco/Exacq just switched out 1/3 of their sales team with a different group with more synergy.

It would seem reality is somewhere in the middle, no?

Take CVReps. They obviously are not going to flip all, or anywhere near all, of the Exacq dealers in their territory to Milestone. The key question is how many of those dealers? 2%? 20%? More?

In my experience, having worked with, hired, and fired various rep firms they are very interchangable at a base level.

Different firms have particular strenghts or weaknesses. Some are really good with advanced products, some work more with mainstream stuff, some specialize in esoteric or niche products.

Among the ones that have a line card that is some format of "Popular VMS", "Popular Camera", "Popular Access Control", etc. you find that in a given region that firm has 6 or 8 integrators AND end-uders that would practically follow them off a cliff. Within reason, any product that rep frims pitches is going to be widely accepted by that core group.

The thing is, this is true for every one of these firms. So, you also have a big chunk of integrators or end users that follow a different firm, and you're all but locked out of those accounts, due to those people having a different loyalty.

For any given firm then, you have some solid ins, some solid outs, and then a big swath of market that you have to influence. Generally speaking, that influence is driven by the manufacturer in some way. It might be the rep employee showing up and giving the pitch, but in effect ANYONE could give the pitch just as well (with some basic training and product familiarity beforehand of course).

Rep firms might do a couple of regional mini-shows, or a lunch and learn type of event, but for the most part they are not generating a large number of total leads, they are responding to leads. What you find though as a manufacturer is that you are sort of pooling leads with the other manufacturers that rep firm represents. Take the Exacq/Arecont example. Exacq might get a lead they pass off to a rep firm, that firm is also going to try to pitch Arecont, and any of their other products. If the lead becomes a qualified opportunity the rep firm claims to Arecont that they "brought them a lead", but in reality Exacq is the core source of that lead because without the initial meeting setup via Exacq the rep firm might not have ever gotten in there in the first place.

In evaluating rep firms I would often look at what other lines they carried, and their ability to document back time spent on my specific product, and similar things. I never really expected a rep firm to be responsible for hunting, but moreso for farming.

IMO, many of the existing firms like to deny this fact or spin it differently, but they are really first and foremost a reduced cost or "comission only" outside sales team. They are not a marketing organization (as many of them claim) or particularly unique from their next competitor when you look at the larger picture of how they fit in.

A, we are primarily covering this because it shows Tyco's changing strategy for making Exacq part of an end to end Tyco solution.

We wouldn't cover this if it was just one or two underperforming reps because, as you say, rep turnover happens regularly.

B, also has good color on the individual firms involved and their meaning / ties to Exacq.

Tyco is CRAZY to get rid of those Rep Firms. Those 3 firms were probably close to 60% of their revenue. ASR is the only rep firm left, and it will take a lot to shake them off. If I recall, they actually signed up and repped Exacq before they even had a product.

My biggest problem with all of it is that it demonstrates cold-bloodedness and a measure of disloyalty. Not unexpected to see it, in fact I am surprised it took them this long, but still dissapointed in it every time. I know I am both old and old school, "but you dance with the one that brung yah".

To play devil's advocate, why didn't the Exacq reps drop Arecont?

Tyco seems clear that they want to sell an end to end Tyco solution. Arecont is not a part of Tyco and competes with Tyco Illustra.

I am not saying the Exacq reps were wrong to keep Arecont but if the Exacq reps really wanted to keep Exacq, there seems to have been a clear path.

It is my understanding that the Reps were told that they did not need to drop Arecont as Tyco told them it was not a competing solution. They were also given a quota of selling Illustra cameras.

I am sure if they had received a call saying its either Arecont or Exacq, they would have dropped Arecont in a heart-beat.

It does beg the question - did they meet their quota of selling Illustra cameras? :)

The reps certainly know that Arecont and Illustra are competing products, right?

Actually I was mistaken. They were judged on attach rate for Illustra cameras, and did not sell them. But they certainly did get told that Tyco was ok with them keeping Arecont.

So Tyco is ok with reps selling other cameras as long as they sell all the Tyco cameras they are required to sell, correct? :)

And since Tyco Illustra and Arecont are competitors, this interfered with the reps ability to hit their Tyco camera number. Ergo, the Exacq reps essentially needed to stop selling Arecont and switch those customers over to Illustra to hit the Tyco number but didn't.

the reps were not given full commissions, only partial commissions. Why sell something if you will not be paid full commissions??

This was always going to end this way no matter what the Exaq reps did or did not do.

"This was always going to end this way no matter what the Exaq reps did or did not do."

Again, devil's advocate, but if that is correct, why did they keep ASR?

What about SVC Marketing? I see no mention of them.

SVC Marketing did get fired, which is suprising considering they were the reps for both Tyco lines of American Dynamics & Kantech as well as Exacq.

The Tyco mindset has always been leverage the good products to sell the so so. They did this with Intellex after the Sensormatic acquisition and are doing it again now. They also want to get as much of the integration $$$ as possible, at least on the national accounts level and will squeeze dealers competing with their NA teams on large projects.

Is this type of turnover and consolidation becoming more common in the industry or am I just more aware of it due to my IPVM membership? The security industry always seemed fairly stagnant locally with rep firms sitting on brands for a long time. However, this seems to have changed locally in recent years with a Pelco/Panasonic rep firm swap out and Bosch dropping rep firms. Is this the way of the future with brand consolidation occurring everywhere? Are rep firms just a dying breed?

The amount of chaos in the industry has risen dramatically lately. You have companies being bought out, you have manufacturers firing reps and then hiring new ones, and then you have companies firing all their reps and going with different ones from the parent company.

I have seen that typically, the turnover of the low end reps is fairly frequent and common as they don't perform, and then get fired. But these reps that got fired from Exacq/Tyco are in the upper echelon. In fact, these reps typically brought in $1-3$ million a month in software and hardware sales. And on a good month, they can have a $6-$10 million month.

Thats why it is news, Exacq is going to have a sharp drop in representation and sales in the field as the older analog Tyco reps try to learn how to sell Exacq, and some manufacturer is going to pick up these guys and have a huge spike in sales.

"as the older analog Tyco reps try to learn how to sell Exacq"

Tyco's American Dynamics HDVR was selling faster than Exacq product for a number of years. Worst secret in the industry.... it was an Exacq OEM product. The Tyco reps have sold Exacq through that product for 3-4 years. They should be okay.

I can guarentee you that the HDVR was not selling faster than the Exacq product. In fact, most of the time it was just used to poach Exacq sales, as I am sure any of the old Exacq reps could tell you.

Here are the MAJOR differences:

1) HDVR was more expensive for same hardware

2) HDVR had MUCH older hardware than the Exacq servers

3) HDVR was usually a couple versions behind and did not have access to all of the features such as Enterprise and the Web Server.

4) You also could not sell software only.

The Tyco reps primarily have sold Intellex crap. They only switched to HDVR when they had to because Exacq beat them on price and performance.

Good question.

Yes, some rep changes always happen and IPVM certainly brings more publicity to it than any other media source would.

That said, the bigger issue is that there is no clear 'way of the future' right now. By that, I mean a big growth driver that lets everyone expand happily. In the past 15 years, DVRs, anti-terrorism and MP IP cameras all allowed the whole market to grow robustly. Now, we finally face a future where there is no big growth driver (analog HD is new and valuable to users but bad to most producers given the low, low prices and the rise of the Chinese manufacturers).

The pain, the cuts, the sell-offs of the last year or so are, unfortunately, likely to continue for some time.

I appreciate everyone's input on this and understand the emotions it has elicited. With the acquisition of Exacq, we ended up with two great rep firms in every territory. Along the way, we have looked for ways to increase sales of our full video portfolio, create efficiencies in our team and simplify our customer engagement. We tried this with two rep firms in each territory with limited success. Moving to a single rep firm in these territories creates efficiencies but, more importantly, it allows us a single sales force selling our entire portfolio and ultimately will make it a simpler process for our customers to do business with us. None of these were easy decisions to make; every rep firm for Exacq and AD were A-list firms.

As to what Tyco has said versus what we have done, it has been 21 months since this acquisition. Certainly, all of you have had to change your strategies in the past 21 months, to meet changing business environments. Virtually all of the other components of Excaq have been left intact; in fact, we have added to the regional sales and R&D teams. There has been far more Exacqtification of Tyco, versus the other way around. -John Becker, Tyco Security Products, Video Portfolio

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