from the ground up & back again - annex business media · from the ground up & back again...
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From the Ground Up & Back Again �������� ����������������������
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What should I talk about today?
1 Who am I, what is Avante Logixx?
2 Where is the Industry going?
3 Why now, why come back?
Growth, Structure, Threats and Values
Passion and Vision
Then and Now
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3
Craig Campbell
• Began in the Security Industry at the age of 17
• Grew from Security Guard, to Manager, to Sales
Executive, to Entrepreneur
• Passionate, experienced and entrepreneurial CEO
• Founder of Total Security Management (TSM) in 2000
• TSM Canada provided services to numerous Fortune
500 clients and grew organically at a 36.4% CAGR to
become Canada’s largest privately held security
services firm
• TSM sold its guard division to Garda World Security
• Upon selling its guard division, TSM was rebranded as
Resilience Capital and converted to an investment
holding company
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We are the leading provider of technology enabled security services. We acquire, manage and build industry leading businesses which provide specialized, mission-critical solutions that address the security risks of our customers.
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Avante Security Inc.High-End Residential Security
Veridin Systems CanadaEnterprise Security Systems
Intelligarde International Inc.Guard Services
Citywide Locksmiths Ltd.Locksmith Services
ADH Fine HardwareHigh-End Decorative Hardware
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INTO ElectronicsHigh-Rise Security ExpertsClosed August 2014
LVS Inc.Commercial and Residential SecurityClosed April 2015
Architronics Ltd.Smart Home AutomationClosed July 2018
Watermark Security Inc.Security Services | Muskoka RegionClosed August 2018
P L AT F O R M S
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1 Proprietary Deal Origination
6
Investment Strategy 2 Accelerate Growth
3 Support Management
4 Investment Structuring
People
ServicesTech Enabled
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Why The Security Industry?
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Opportunities
Everywhere
Everydayü Cameras
ü Access Controls
ü Intrusion Systems
ü Guards
ü Patrols
ü Video Analytics
ü Employee Background Screenings
ü Corporate Investigations
ü High Security Locks
ü Secure Transport
ü Internet Monitoring
ü Insider Risk Programs
ü Safe & Vault Services
You see a streetscape.
We see infinite potential.
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Security is a Megatrend
• Driven by global tension, widening
gap in socioeconomic drivers,
urbanization and digitization.
• Cost of manpower is going up, cost
of technology is going down.
1.Ibisworld Industry Report – “Security Services in Canada” – Nov 20172.Ibisworld Industry Report – “Security Alarm Services in Canada” – April 2017
• Highly fragmented market, ripe for further consolidation
Fragmentated & Active Market
• Active M&A marketplace• Large strategic and PE
participation providing multiple exit opportunities
Active M&A Market
• Proven value-add for clients• Improved service and
reducing costs
Established Value Prop
• Outsourced security services are highly cash generative
• Low capex and working capital requirements
• Average conversion rate of EBITDA to FCF > 85%
Consistent FCF
• Diversified client base• Increased security concerns
supports consistent security spend
Recession Resilient
• Security services industry is a large, stable market
• Revenues of 3.7 billion CAD in 2017
• Security services industry 0.6% CAGR 2017 to 20221
• Security alarm services 2.1% CAGR 2017 to 20222
Macro Trends
M A N P O W E R
T E C H N O L O G Y
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“New Players, new technologies have increased risk, raised capital cost and lowered market values”
Market Narrative
But I am not so sure this is entirely correct….
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1 Alarm Systems WorkFundamental Growth Drivers Remain Strong
2 Underlying Technologies Improving (at lower cost)
3 Penetration Rates Remain Relatively Low
4 Industry Remains “Of Interest” to a Wide Audience
5 Insurance Industry and Regulators Support Use
6 New Technologies Broadening the Market
7 Increased Industry Sophistication, and Improved Marketing
Source/Credit: Barnes Associates
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Total Revenue - 20 Year View
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue
8 % C A G R
6 % C A G R
Source/Credit: Barnes Associates
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Threats—Real or Perceived
ADT & BrinksValuation
Google & Amazon
Impact on Pricing Margins Attrition Growth!
Evolving Technology
DIY
Alarmist Clock
Source/Credit: Barnes Associates
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In Closing
• The industry exhibits significant
fragmentation
• Forecasts establish strong macro trends
• Proven recession resilient business model
• Active M&A market place with large strategic
and PE sponsor participation
• Established value proposition driving long term
clientele and consistent FCF
It’s a great time to be in this business• Growth remains strong
• New technologies and applications expanding
the market
• Key performance metrics remain strong
If you can:• Handle the increasing operating complexity
• Be nimble and adaptable to change
• Raise Capital
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RELENTLESSLY SECURING PEACE OF MIND