From the Ground Up & Back Again �������� ����������������������
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What should I talk about today?
1 Who am I, what is Avante Logixx?
2 Where is the Industry going?
3 Why now, why come back?
Growth, Structure, Threats and Values
Passion and Vision
Then and Now
3
Craig Campbell
• Began in the Security Industry at the age of 17
• Grew from Security Guard, to Manager, to Sales
Executive, to Entrepreneur
• Passionate, experienced and entrepreneurial CEO
• Founder of Total Security Management (TSM) in 2000
• TSM Canada provided services to numerous Fortune
500 clients and grew organically at a 36.4% CAGR to
become Canada’s largest privately held security
services firm
• TSM sold its guard division to Garda World Security
• Upon selling its guard division, TSM was rebranded as
Resilience Capital and converted to an investment
holding company
We are the leading provider of technology enabled security services. We acquire, manage and build industry leading businesses which provide specialized, mission-critical solutions that address the security risks of our customers.
Avante Security Inc.High-End Residential Security
Veridin Systems CanadaEnterprise Security Systems
Intelligarde International Inc.Guard Services
Citywide Locksmiths Ltd.Locksmith Services
ADH Fine HardwareHigh-End Decorative Hardware
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INTO ElectronicsHigh-Rise Security ExpertsClosed August 2014
LVS Inc.Commercial and Residential SecurityClosed April 2015
Architronics Ltd.Smart Home AutomationClosed July 2018
Watermark Security Inc.Security Services | Muskoka RegionClosed August 2018
P L AT F O R M S
1 Proprietary Deal Origination
6
Investment Strategy 2 Accelerate Growth
3 Support Management
4 Investment Structuring
People
ServicesTech Enabled
Why The Security Industry?
Opportunities
Everywhere
Everydayü Cameras
ü Access Controls
ü Intrusion Systems
ü Guards
ü Patrols
ü Video Analytics
ü Employee Background Screenings
ü Corporate Investigations
ü High Security Locks
ü Secure Transport
ü Internet Monitoring
ü Insider Risk Programs
ü Safe & Vault Services
You see a streetscape.
We see infinite potential.
Security is a Megatrend
• Driven by global tension, widening
gap in socioeconomic drivers,
urbanization and digitization.
• Cost of manpower is going up, cost
of technology is going down.
1.Ibisworld Industry Report – “Security Services in Canada” – Nov 20172.Ibisworld Industry Report – “Security Alarm Services in Canada” – April 2017
• Highly fragmented market, ripe for further consolidation
Fragmentated & Active Market
• Active M&A marketplace• Large strategic and PE
participation providing multiple exit opportunities
Active M&A Market
• Proven value-add for clients• Improved service and
reducing costs
Established Value Prop
• Outsourced security services are highly cash generative
• Low capex and working capital requirements
• Average conversion rate of EBITDA to FCF > 85%
Consistent FCF
• Diversified client base• Increased security concerns
supports consistent security spend
Recession Resilient
• Security services industry is a large, stable market
• Revenues of 3.7 billion CAD in 2017
• Security services industry 0.6% CAGR 2017 to 20221
• Security alarm services 2.1% CAGR 2017 to 20222
Macro Trends
M A N P O W E R
T E C H N O L O G Y
“New Players, new technologies have increased risk, raised capital cost and lowered market values”
Market Narrative
But I am not so sure this is entirely correct….
1 Alarm Systems WorkFundamental Growth Drivers Remain Strong
2 Underlying Technologies Improving (at lower cost)
3 Penetration Rates Remain Relatively Low
4 Industry Remains “Of Interest” to a Wide Audience
5 Insurance Industry and Regulators Support Use
6 New Technologies Broadening the Market
7 Increased Industry Sophistication, and Improved Marketing
Source/Credit: Barnes Associates
Total Revenue - 20 Year View
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue
8 % C A G R
6 % C A G R
Source/Credit: Barnes Associates
Threats—Real or Perceived
ADT & BrinksValuation
Google & Amazon
Impact on Pricing Margins Attrition Growth!
Evolving Technology
DIY
Alarmist Clock
Source/Credit: Barnes Associates
In Closing
• The industry exhibits significant
fragmentation
• Forecasts establish strong macro trends
• Proven recession resilient business model
• Active M&A market place with large strategic
and PE sponsor participation
• Established value proposition driving long term
clientele and consistent FCF
It’s a great time to be in this business• Growth remains strong
• New technologies and applications expanding
the market
• Key performance metrics remain strong
If you can:• Handle the increasing operating complexity
• Be nimble and adaptable to change
• Raise Capital
RELENTLESSLY SECURING PEACE OF MIND