Smart home and small business security giant ADT Inc. (NYSE: ADT) has entered into a definitive agreement to sell its commercial security, fire and life safety business unit to private equity firm GTCR for $1.6 billion. The sale mirrors a similar transaction that occurred earlier this year when Bose sold its Professional Audio Division to Transom Capital Group, another private equity firm.
ADT stated that $1.5 billion of the sale will be used to cut ADT’s current debt. Following this news, ADT’s market shares rose as much as 3.3% in the premarket.
The sale allows ADT to focus on its smart home, multifamily consumer and small business markets, says Jim DeVries, the company’s president and CEO, in the announcement.
“With greater financial flexibility, we will be better positioned to grow through our strategic differentiators and innovative offerings, including our partnerships with Google and State Farm,” DeVries says. “We will continue our journey to be the premier provider of safe, smart and sustainable solutions that meet the evolved definition of what safety means to consumers today.”
According to DeVries, the transaction supports ADT’s goal to be the “premier provider of smart home and residential solar solutions by leveraging (the company’s) strategic differentiators: innovative offerings, unrivaled safety and premium customer experiences.”
GTCR is no stranger to the commercial security industry, having completed its acquisition of electronic security alarm monitoring company Protection One in 2010 among its many transactions.
“This transaction is mutually beneficial for ADT and ADT Commercial, which will benefit from GTCR’s support and expertise, positioning the business to continue providing best-in-class solutions and services to its customers,” DeVries says in the company announcement. “We thank the entire ADT Commercial team for their hard work and look forward to seeing them grow.”
Dan Bresingham, president of ADT Commercial, says the unit “has been instrumental over the last several years building our commercial business success and bringing a depth of value, experience and knowledge to our customers.
“We are excited to partner with GTCR, an organization that supports our mission and shares our passion to build this business to become the premier service provider in the commercial security, fire and life safety industry,” he says in the announcement.
The transaction has been approved by ADT’s board of directors and is expected to close in the fourth quarter of 2023, subject to customary closing conditions, including regulatory approvals, according to the company announcement.
“ADT Commercial has established itself as an innovative leader in providing the critical safety services that businesses need to protect their day-to-day functionality,” says David Donnini, managing director and head of business & consumer services at GTCR, in the announcement.
“We are very proud to once again partner with the leadership team of ADT Commercial to continue to invest in the platform and deliver the solutions its customers have come to expect,” he says. “ADT has done a tremendous job in further developing this segment in recent years and we are excited to help drive the business forward in its next chapter of growth.”
Industry Reaction to ADT Selling Commercial Unit
Security industry consultant Peter Giacalone says he saw this move coming for ADT.
“Based on the direction of the ADT marketing in recent times, it appeared that they may have focused on residential,” he tells SSI. “Spinning the commercial business off was a logical next move.
“Spinning it off the GTCR along with the ‘A’ team of (former ADT CEO) Tim Whall and (ADT Commercial Executive VP) Dan Bresingham was a natural move. They are world-class operators with an impeccable reputation for excellence,” he says.
Alarm industry lawyer Ken Kirschenbaum agrees with Giacalone that this move was a long time coming.
“From my perspective, ADT seems to have concentrated its efforts on the residential side,” he says. “I have not heard from any clients who have competed against ADT Commercial.”
Kirk MacDowell, president of MacGuard Security Advisors, has faith in Whall and Bresingham to lead the former ADT commercial unit into the future.
“They have worked together and led Protection One and they were a focused, direct, and a well-meshed senior team then and well see that same focus applied to this new spinoff,” he tells SSI. “Many security professionals questioned Google’s security commitment in the commercial sector for some time and this development ends the guessing.
“I imagine that there are a few intrusion manufacturers and platform providers that are breathing a sigh of relief today. GTCR has deep roots in the security industry. That group was instrumental with Tim Whall in 2010 in forming Protection One. History is repeating itself here,” he says.
Craig MacCormack is a veteran journalist who joined Security Sales & Integration in June 2023 as web editor. He covered the security industry with SSI’s sister publication, Commercial Integrator, from January 2011 to June 2021.
A version of this article originally appeared on our sister site Security Sales & Integration 08.08.23. It has since been updated for CE Pro audiences.
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