VIA International hopes to become the first home automation, entertainment and integration company in the high-end market. To date, no major consolidation has worked in the custom-installation business; no franchising model has worked; no national brand has emerged outside of the mass market.
Could VIA be the first? I think so.
Back in 2003, six top integrators “merged” into SMG to attempt exactly what VIA is doing. Together, they would establish best practices, combine back-end systems, and launch a national marketing campaign to drive business to SMG. There would be acquisitions and expansions and organic growth and lots of funding to become a national home systems integration powerhouse.
Shortly thereafter, the group would go public or enjoy some other buyout, and the integrators would get rich—just like the investor who orchestrated the merger.
Not surprisingly, like the other would-be industry roll-ups, this one flopped. In the end, the money guys led by Jim Monroe of Bluefin Management held too much sway and there was no investment in doing it right—hiring M&A experts, codifying best practices, aligning IT services and the like.
That stuff takes money, and “it’s a tough industry to get outside funding,” says Randy Stearns of Engineered Environments, who was then part of SMG and is now CEO of VIA.
In the end, the risk-averse investors in SMG didn’t spend money on the fundamentals and the group dissolved pretty quickly.
Fast-forward to VIA: With a combined $66 million in revenues in 2012 ($73 projected for 2013), the combined VIA group of companies has an EBITDA in the double digits and growing—enough to fund the extensive work that needs to be done prior to any successful merger, especially one that includes six strong companies.
Paying outside experts to guide the merger was an “absolute requirement,” Stearns says. “We realized we’re all really busy. We didn’t have the time and expertise to pull off a merger ourselves. We made a significant investment in that.”
An M&A expert and financial consultant performed due diligence and determined valuations; former CEDIA president Ray Lepper visited all of the offices to guide best practices; HR professionals developed policies, benefits and payrolls for multiple companies in different states with different corporate cultures; a branding consultant, PR agency, investment banker (“but we haven’t used him really”), attorney and strategic adviser were all involved in the earliest stages.
It sounds like VIA really has done the important groundwork for this venture and we could indeed see the first national home systems integration firm by 2014, when all of the original companies are expected to transition to the new brand.
Signature Media Group Plans National Consolidation of Top CE Firms (2003)
Saavihome, Theater Xtreme Launch Home Technology Franchises (includes history of home technology franchises) (2005)
Inside TheaterXtreme’s Bankruptcy (2009)
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