ADT Introduction
ADT has been around for a long time – they were founded in 1874 and pioneered the current security monitoring business in 1920. They are the giant in the home and commercial security market with over 8 million customers and 18,000 employees in 200 locations.
The company has a checkered history – they were found guilty of monopolistic practices in 1964 which required them to change their business practices and pay fines and damages to the government, customers, and competitors.
In 1997 Tyco acquired ADT and then spent $2B to acquire the #2 security business (Brinks Home Security/Broadview) which was merged into ADT. Then in 2012 Tyco split their businesses up and ADT debuted as a public company on the NYSE.
Just a few years later, In 2016, Apollo paid $7B (a 50% premium) to acquire ADT and combine it with another large security business they owned called Protection 1. The ADT “American Success Story” slide is a bit misleading when they boast about “hitting a 2 million customer milestone in home automation” since these customers basically came with the merger with Protection 1.
The merged entity was bloated and inefficient with a reputation for high cost and average service. Apollo knows how to put together a bunch of businesses, get them working together and then improve operations so they can resell it at a higher price. Thanks to their overwhelming size and scale they had time to work on improving operations.
To their credit management owns up to how bad the “old ADT” in 2015 was and has followed a familiar and proven set of management methods to get out of the rut they were in.
Specifically, they got out of the office and into the field, focused on measuring and improving customer service, retained more customers and implemented new measurement systems to monitor and respond more rapidly as a service organization.
