Fire Safety Industry Recap of 2009

January 21, 2010

A great deal has happened in the past year and not all of it was adverse. At this time last year we were in the midst of a change of administration in Washington D. C., the economy was sliding into a deep recession, many companies in the Fire Safety Industry were laying-off employees, while the corporate players of the industry were trying to determine a path forward with many resolving to put growth and investment plans on hold. The outlook seemed somewhat bleak, as the government stimulus programs were just emerging and the financial sector had yet to show any signs of recovery.

Certainly the first half of 2009 was a challenge for everyone, both manufacturers and distributors alike, as existing construction projects were completed and new projects were held in abeyance. However, the second half of the year did show some signs of encouragement, particularly for business in mergers and acquisitions. The large corporate strategic buyers seemed to come back to life driven by the view that the economic recovery would be slow and that the best way to grow was through acquisition, either of complementary product lines or field service locations. A few of the notable deals completed in the Fire Safety Industry during the year were:
• UTC Fire and Security announced the acquisition of GE Security on November 12, 2009, which includes the Edwards Systems Technology business line, for $1.8B. The deal is expected to be completed the first half of this year.
• German based Minimax and U.S. based Viking Group announced that the two companies were combining their fire control and life safety systems activities on November 17, 2009. The transaction has created a global industry leader, with over a billion Euros (U.S. $1.44B) in revenue and 6,000 employees. Minimax already owned Consolidated Fire Protection, one of the largest fire protection and life safety companies in Western and Southern States of the U.S., which along with Viking’s operations, combines some of the most significant players in the U.S. market.
Along with many other deals that went unannounced. In the Fire Safety Industry, particularly in the distribution area, M&A activity is certainly picking up.
In Washington, there seems to be a strong consensus that the Obama administration will allow the “Bush Tax Cuts” to expire on 2010 Fiscal Year End, particularly with regard to capital gains taxes due to the need to reduce the budget deficit and fund stimulus programs and on-going military operations overseas. As such, 2010 is shaping up to be a very active period for mergers and acquisitions, after which tax increases and reduced consolidation activity may make the environment more uncertain.
In July last year, Bob Coleman of Paramax Corporation, spoke at the NFPA Americas Fire and Security Conference in Miami on the topic of the fire industry consolidation. Much of what Bob discussed has proven to be insightful.
Paramax plans on continuing its very active investment banking leadership role in the Fire Safety Industry with a number of initiatives set for 2010:
• Paramax will be attending the NAFED, NFPA, FDIC and ASIS conferences in 2010 and our industry experts will be available for private confidential meetings.
• Paramax has recently added former Vice President of Business Development for Kidde plc’s North American Group (now part of UTC Fire and Security) Stephen Summerill as a Senior Advisor. Stephen along with Bob Coleman and Tim Minneci, bring Paramax unequaled experience in the Fire and Security Industries.
• Throughout the year Paramax will be issuing periodic industry updates to keep our friends aware of the latest industry events and transaction timing considerations.
• Paramax will also be offering consulting services with the aim of assisting business owners with determining and implementing opportunities for growth and value enhancement, as well as preparing for potential ownership transition. A business “tune-up” to re-focus on value enhancement is always a good investment

As we enter the New Year, we wish you good health and every success for 2010.

About Robert F. Coleman:
Bob Coleman has over 20 years of experience as a senior executive in the Fire Safety and Security Industry. During his 16 years at UTC/Kidde Fire Safety NA as Chief Financial Officer, Bob was involved with over 25 M&A transactions. Among these deals, Bob oversaw the acquisition of a multi-company fire protection division, the acquisition of a major U.S. lock manufacturer, and the acquisition of a leading company in the security industry. Bob’s involvement in large strategic transactions included directing Due Diligence, Deal Structuring, and Post-Transaction Strategic Integration consistently achieving significant post-transaction profits. As an operator, Bob possesses extensive experience and skill in financial reporting, budgetary control, tax strategy, and compliance as well as the development and implementation of business improvement and reorganization plans.