Alarm.com, a $2 billion leader in SHaaS (smart home as a service), filed for a temporary restraining order last month to halt the deal because it was being backed by former Alarm.com chairman Ralph Terkowitz and his private equity firm ABS Capital Partners Inc.
ABS created Alarm.com in 2009 with the acquisition of MicroStrategy, and at one point owned 80% of the company and controlled three of its five board seats.
In its complaint, Alarm.com argued Terkowitz and team had a “front-row seat” in the Alarm.com theater and would use their inside knowledge to compete unfairly against their former property, according to Law360.
The Delaware Chancery Court disagreed, and allowed the deal to go forward.
While the press release for the ipDatatel/Resolution merger makes no mention of ABS, a spokesperson confirms that the group in fact made an investment in the combined company, and details will be disclosed at a later date.
Resolution Products makes a line of professionally installed security systems and peripherals such as wireless sensors. As such, it doesn’t really compete directly with Alarm.com.
Read the Press Release
ipDatatel, on the other hand, provides services similar to Alarm.com’s – taking security and home-automation signals from the household, parsing them in the cloud, and dispatching emergency services as necessary.
If not for the involvement of ABS, the merger of ipDatatel and Resolution Products merger might go largely unnoticed outside of the smart-home niche.
While ipDatatel might be an up-and-comer in the SHaaS business, they are miniscule compared to Alarm.com and competitor Icontrol, which was acquired by both Alarm.com and Comcast earlier this year.
ABS, however, makes this deal particularly interesting, given its track record with Alarm.com, as well as the big gaping hole in the SHaaS market left by Icontrol’s dissolution.
We have asked the question many times over: Who will be the next Icontrol?
There’s one other thing that makes this deal seem especially promising. Alarm.com and Icontrol own a huge chunk of the intellectual property associated with cloud-based integration of security and home control. Virtually every respectable competitor, including ipDatatel (as of last month), has been sued for patent infringement.
When asked about the lawsuit yesterday, ipDatatel CEO Russell Vail told me he believes his technology does not infringe.
Indeed, it would seem unwise for ABS – which knows a thing or two about Alarm.com IP – to green-light the investment if it thought ipDatatel infringed.
How ipDatatel Does SHaaS Different
In the realm of security monitoring and SHaaS, ipDatatel has one big thing going for it: It was late to the party.
Launched just three years ago, the company makes IP-based communication systems (“alarm communicators”) that bridge security systems with central monitoring stations. ipDatatel entered the business when competitors were still making communicators based on POTs (telephone lines) and 2G cellular communications.
The sun was setting on 2G when ipDatatel came to the industry with an “IP first” mentality — transmit alarms over IP first, and then use cellular as back-up if necessary.
Some security and SHaaS providers such as Alarm.com only communicate with security systems via cellular.
The problems with cellular are (at least) two-fold, according to Vail. First, consumers have to pay for it.
“Why not use the communication channels that consumers are already paying for?” he asks.
Second, cellular services will keep on changing. Just like the sun set on 2G, it will set on 3G, forcing the change-out of radios on millions of security systems.
“There's no sunset for the Internet or IoT,” Vail says. “Alarm dealers don't have to worry about the sunset loop as long as IP is primary.”
Resolution CEO Brian Seemann adds that IP makes sense as a primary communication method with the security provider because it's the primary protocol inside the home.
“The common fabric is IP connectivity,” he says. “It makes sense to connect directly to the internet, not from cell to Internet.”
Resolution Products built its Helix security/automation system from the ground up as an IP-communicating device, Seemann notes: “It's a security system that looks like a router.”
While other SHaaS providers offer IP-based communications, ipDatatel says its build-out is unique, with at least five network operating centers distributed throughout the country for redundancy and speed.
Vail says the average alarm-system message is delivered in 38ms over the ipDatatel network: “It's blindingly fast.”
ipDatatel will continue to partner with third-party alarm-system manufacturers; Resolution will continue to support other SHaaS providers including its launch partner SecureNet.
Together, the companies will market their systems to traditional security dealers, as well as mass-market providers such as ISPs.
Stay tuned for more details on the merger and ABS's involvement.
IPDATATEL AND RESOLUTION PRODUCTS ANNOUNCE MERGER AND NEW CHAIRMAN
Combined products and services create new platform for home and small business security and automation
HOUSTON, Texas and HUDSON, Wisconsin – September 6, 2017 — ipDatatel and Resolution Products today announced a merger of the two companies. As part of the transaction, veteran technology industry executive, Robin Pederson will become chairman of the combined company. The combined company creates an innovative solution set for alarm dealers and home systems installers at a time when increasingly intelligent devices are entering the consumer and commercial markets.
To date, Resolution Products provides a broad range of wireless technologies that enable professional, security dealers to improve their business operations. Its flagship platform is HelixTM – a full range, wireless security system that connects to monitoring centers and the cloud over IP or cellular links. ipDatatel makes homes and businesses more secure with solutions that upgrade existing, out-of-date alarm communications systems, leveraging a broad range of IP and cellular communicators coupled with an extremely robust network architecture used for central station reporting and interactive services.
“Both of these companies were founded by technology leaders that have advanced the home automation and security industries for decades,” said Robin Pederson. “I am excited to help them join forces to continue to introduce new products and services for the tens of thousands of independent security dealers and home entertainment and technology integrators making secure smart homes and intelligent, efficient workplaces a reality.”
When combined, the complementary companies will do more for customers in less time and at a lower cost, offering dealers and installers higher, long-term recurring revenue. The combined organization helps dealers by focusing on reducing account creation costs, increasing recurring revenue and reducing attrition rates. Together, the products and services provide security dealers, alarm installers and home technology experts a platform to service and retain accounts and, takeover existing products and services in a unified, secure communications environment. Since there is virtually no overlap between the offerings of ipDatatel and Resolution Products, the two companies will mostly be unchanged.
Today, the companies jointly sell a complete security, alarm, access control and automation solution for smart homes and commercial installations using the Resolution Products’ HelixTM Alarm Panel and ipDatatel’s Universal Alarm Communicators and cloud services. The companies also provide innovative Universal Translator modules, allowing dealers to take-over accounts without replacing sensors, and deliver an innovative line of wireless sensors compatible with virtually any professionally installed security system.
“The combination of our two companies will create a comprehensive, vertically-integrated solution for independent home and commercial installers of security, technology, entertainment and automation,” explained Brian Seemann, CEO, Resolution Products. “Working together, we’ll be able to move more quickly to serve more of the market.”
“Nowadays, consumers are filling their homes with the latest DIY home automation technology such as the Amazon EchoTM with AlexaTM and NestTM smart thermostats/cameras,” said Russell Vail, CEO of ipDatatel. “The merger of Resolution Products and ipDatatel will bring these homeowners or renters a suite of solutions that connect legacy alarm systems, new installations and DIY automation in a simpler, more intuitive way. Additionally, the technology will be less expensive and faster for the installer to both set up and maintain.”
Imperial Capital, LLC. served as the financial advisor to the two companies on the transaction.
ipDatatel, LLC designs and engineers innovative cellular and Internet alarm communication devices for the security and home automation industries. ipDatatel universal alarm communicators enable dealers to easily take over existing hard-wired alarm panels and turn them into smart devices with high-quality alarm communications and remote access from PC’s and mobile devices. In addition, dealers can increase their RMR with ipDatatel’s cloud video solution and the ability to control lights, locks, thermostats and garage door openers. ipDatatel products are available nationwide through distributors that cater to the alarm and integrator industry.
About Resolution Products
Resolution Products is an eight year-old technology company, delivering high performance wireless solutions to the security industry. Resolution is comprised of some of the top engineers in the industry, with roots in creating some of the industry’s most groundbreaking products. Resolution’s product lines include industry-disrupting Translators, a full array of compatible sensors and peripherals and most recently, a line of interactive services communicators. Resolution’s Interactive Gateway Module line won the Best of Commercial and Monitoring Solutions award in the SIA 2014 New Product Showcase at ISC West.
About Robin Pederson
Robin Pederson is a 30-plus year veteran of the technology industry. Pederson was the COO of Infor Global Solutions, now considered the largest privately-held software company in the world. During his tenure, Infor grew from $40M to revenues of 2.2B in five years. Prior to Infor, Pederson served as a senior executive at Stellent, Escalate, Information Advantage, Great Plains Software and Banyan Systems. Pederson graduated with a BSBA from the University of North Dakota.