Snow Phipps Group LLC completed the acquisition of SDM 100 No. 22-ranked Electric Guard Dog from an affiliate of Ulysses Management LLC on June 10, 2016.
Electric Guard Dog is the largest provider of monitored electric security fence systems in the United States and had an RMR of $2.5 million and 3,277 subscribers as of December 31, 2015. The company’s security solutions allow customers to protect high-value assets stored at commercial and industrial locations. Electric Guard was a 2015 SDM Dealer of the Year Honoree (www.SDMmag.com/electric-guard-dog-honoree).
Jack DeMao, CEO of Electric Guard Dog, said the impetus for selling was Electric Guard Dog’s business model and growth rate. “We have a customer-friendly business model, in that we don’t require any initial investment from the commercial customer,” DeMao said. “They simply sign a three-year contract, but we make the entire investment in the system and provide unlimited free service. It is a very cash-hungry business. We continue to grow at about 15 percent a year since 2007, and we think the demand is even greater than that, so we need a new partner with greater resources.”
Sean Epps, partner at Snow Phipps, said, “Snow Phipps is excited to partner with Electric Guard Dog’s management team, which has an outstanding track record of delivering security solutions to its customers. The company is poised for significant growth and we intend to meet growing demand by continuing to invest in sales, marketing, service technicians, compliance and technology.”
DeMao said this acquisition is Snow Phipps’ first foray into the security business. “They had just raised a new fund, and we were their first investment with that fund, and the first investment in the security industry,” DeMao said. He said Snow Phipps had been studying the security industry and liked all the long-term drivers in the security business.
In the near term, DeMao plans to add more resources to Electric Guard Dog in the areas of sales & marketing and support, and to expand the current markets the company serves to areas such as trucking, data centers, county jails and more. Also, the company plans to offer greater integration with access control, video surveillance and more. DeMao anticipates that with this new partnership, Electric Guard Dog will be able to meet demand faster and grow at a higher rate than in the past.
DeMao and the existing Electric Guard Dog management team will continue to lead the company following the transaction. Snow Phipps Operating Partner John Kenny, who focuses on industrial service businesses, will join Electric Guard Dog as the non-executive chairman of the board of directors. Kenny currently serves as chairman of Cascade Environmental Services and was formerly the CFO of Iron Mountain Inc., a storage and information management company.
Snow Phipps wasn’t the only company interested in Electric Guard Dog. “They were one of a number of companies that approached us,” DeMao said, “but what was particularly attractive about them is they have what is called an operating partner model. Through that operating partner [in this case, Kenny], they tend to build value and success better than average. That was a key differentiator.”
The Electric Guard Dog employees will not only all be staying in place, but DeMao set up a transaction bonus for all employees. “When the transaction was successful,” DeMao said, “I was able to give all employees a bonus.”
Paul Barnett, managing director at Ulysses, said, “It has been a pleasure to work with Jack and the entire management team over the past nine years. I’m proud of what we accomplished and am eager to see what the future brings for Electric Guard Dog.”
DeMao said, “We have made substantial investments in our business that have driven robust growth and expanded our capabilities. We look forward to further growth while providing the same high level of service to customers under Snow Phipps’ ownership.”
Raymond James & Associates Inc. served as exclusive financial adviser to Electric Guard Dog, and Robinson, Bradshaw & Hinson, P.A. served as its legal adviser. Weil, Gotshal & Manges LLP served as legal counsel to Snow Phipps.
DeMao was selected as a finalist in the Southeast region for the Ernst & Young EY Entrepreneur of the Year, which will be chosen June 23.
