Exacq Fires Rep Firms

By John Honovich, Published Jan 28, 2015, 12:00am EST

The Tyco-fication of Exacq is gaining stream.

Exacq has fired multiple manufacturer representative firms. In addition, Tyco has implemented a number of cross-selling / favoritism tactics for American Dynamic cameras.

In this note, we examine these moves and what they mean for Exacq's competitive position.

Background

Tyco acquired Exacq in 2013. Both Exacq and Tyco (specifically their American Dynamics CCTV division) use rep firms. As a result of the acquisition, Tyco now had two overlapping rep firms in most territories.

At the time of the acquisition, Exacq declared:

"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."

Firing Rep Firms

Exacq has started to fire rep firms. The most notable and biggest of them is Exacq's long term West Coast firm, CV Reps. There are other rep firms that have been fired and we anticipate more to be fired.

The motivation appears to be to reduce the overlap / multiple rep firms and to more strongly coordinate / cross sell sales of American Dynamics cameras and Exacq VMS / recorders.

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In a statement, Exacq explained to IPVM:

"There has been some consolidation of mfg. reps to eliminate confusion due to multiple representatives in a territory and to make it easier for our system integrators and distributors to do business with us."

In a statement, Tyco explained to IPVM:

"Since the Exacq acquisition, we have continually evaluated our performance in each territory to decide the best local-for-local strategy. In some territories we have stayed with a dual-rep approach, we have consolidated in others and we have gone direct in a single territory."

Tyco Cross Selling

Additionally, multiple sources say that Tyco has assigned incentives / quotas from cross-selling the weaker American Dynamics camera line with the strong Exacq VMS. Considering that the price of Exacq runs in the $50 to $300 per channel range while cameras cost from $300 to $800 range, the incremental revenue generation is significant.

Indeed, Tyco has been offering free licenses of Exacq as an inducement for buying American Dynamics cameras, according to sources. However, Tyco and Exacq say this is not a standard program / offering. Tyco noted:

"There is currently no program to give free Exacq licenses for AD cameras. We will look at ways of incentivizing a full portfolio sale, but not a formal program to give free licenses."

We believe that this is occurring on a specific project / opportunity basis.

Exacq's Positioning and Tyco's Future

Tyco owns it and it's their right to do what they want.

Nonetheless, the cross-selling incentives and the firing of long term rep firms who worked with the traditional Exacq channel are very bad moves for Exacq as an independent VMS offering.

On the positive side, Exacq's leadership has remained in place so far. However, it will soon be 2 years from the acquisition and we suspect that as their contractual obligations expire, that it is only a matter of time before they leave and Exacq becomes fully Tyco-fied.

[UPDATE: Tom Buckley [link no longer available] who was Exacq's head of sales and marketing is now Director of Digital Marketing across all of Tyco Security Products. Dan Rittman [link no longer available], who was Exacq's head of engineering is now Sr Director of Engineering at Tyco in charge of engineering at Exacq and access control line Kantech.]

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