ADT TO ACQUIRE RED HAWK FIRE & SECURITY, SIGNIFICANTLY EXPANDING COMMERCIAL SECURITY OFFERING
BOCA RATON, Fla., October 25, 2018 – ADT Inc. (NYSE: ADT), the leading provider of monitored security
and interactive home and business automation solutions in the United States and Canada, today
announced it has entered into a definitive agreement to acquire Boca Raton, FL-based Red Hawk Fire &
Security, a leader in commercial fire, life safety and security services and portfolio company of Comvest
Partners, for $317.5 million in cash.
This transaction accelerates ADT’s growth in the commercial security market and expands the
Company’s product portfolio with the introduction of commercial fire safety related solutions. It is the
latest in a series of strategic acquisitions made over the last year to drive commercial growth and build
on ADT’s strong foundation of superior customer service. With the addition of Red Hawk, ADT will have
an increased geographic footprint and enhanced customer service capabilities across the nation.
Revenues from the combined company’s business customers are expected to represent approximately
25% of total revenue.
Red Hawk is a leader in the design, installation, integration, monitoring and servicing of commercial fire,
security and life safety solutions. Red Hawk represents one of the few last independent large national
commercial integrators, offering complex, mission-critical solutions across its 45 district locations and is
expected to generate approximately $300 million of revenues in 2018. In recent years, Red Hawk has
demonstrated double-digit revenue growth across a diverse set of customers, markets and geographies,
leveraging its strong local presence backed by its nationwide footprint and differentiated fire and
“Commercial security is one of the core pillars of ADT’s growth strategy and today’s announcement
marks a significant step in our concerted efforts to expand our commercial business with the critical
capabilities and services that our customers expect,” said ADT President and incoming CEO, Jim DeVries.
“Red Hawk’s exceptional portfolio of commercial fire and security solutions complements ADT’s existing
commercial business, positioning us to provide a superior customer experience at a local and national
level. We are excited to welcome the talented and experienced Red Hawk team to the ADT family while
expanding our geographic reach, service capabilities and product offerings. Having long admired Red
Hawk, we are confident that combining the strengths of our two companies will allow us to deliver
increased value to our customers and shareholders.”
“We are delighted to join a company with ADT’s resources, growth potential and shared commitment to
providing high quality customer service and innovative solutions to customers,” said Red Hawk
President and CEO Michael McWilliams. “We look forward to our future with ADT, which we are
confident will help us to achieve our next phase of growth.”
“It was a rewarding and collaborative experience working with Michael McWilliams, Mark Foley, Red
Hawk’s CFO, and the other members of Red Hawk’s senior management team to build Red Hawk into a
market leader from our original acquisition, and Red Hawk is positioned to continue to thrive under
ADT’s leadership,” said Roger Marrero, the Managing Partner of Comvest Partners.
Strategic and Financial Benefits of Transaction
• Substantial Increase in Scale to Accelerate ADT’s Commercial Growth: The combined
commercial business will have substantially increased scale with an expanded commercial
technician work force that will allow the Company to meet growing customer demand across
the U.S. and provide enhanced customer service capabilities. This transaction creates the
opportunity to leverage the capabilities of both organizations to create a more robust and
differentiated commercial security offering in a highly fragmented industry.
• Introduction of Fire Safety Solutions: This transaction expands ADT’s product portfolio with the
introduction of Red Hawk’s fire safety solutions, allowing the Company to become a single
destination for both fire and security needs at the commercial level. The Company intends to
leverage Red Hawk’s fire safety solutions and expertise to help capture new business
opportunities with new and existing customers.
• Compelling Long-term Financial Benefits: Given the strong financial and operating profile of
Red Hawk’s business – which, similar to ADT’s growing commercial and multi-site businesses,
has very attractive net customer acquisition cost and retention characteristics – the acquisition
is expected to be accretive to free cash flow generation, before taking into account meaningful
expected cost benefits.
The completion of the transaction is subject to customary closing conditions, including regulatory
approvals. The transaction is expected to close by the end of the fourth quarter 2018.
Financing is being provided by Joint Lead Arrangers Barclays, Citigroup Global Markets Inc., Citizens
Bank, Deutsche Bank and RBC Capital Markets, as well as Credit Suisse, Goldman Sachs and Morgan
Stanley. Raymond James is serving as financial advisor to ADT, and Jefferies and Lincoln International are
serving as financial advisors to Red Hawk. McDermott Will & Emery LLP is acting as legal advisor to Red
Hawk. Morgan, Lewis & Bockius LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal
advisors to ADT.
ADT is a leading provider of security and automation solutions in the United States and Canada,
protecting homes and businesses, people on-the-go and digital networks. ADT delivers same-day service
and live answer within seconds in customer operations, making security more accessible than ever
before, backed by 24/7 support, helping customers feel more safe and empowered. ADT is
headquartered in Boca Raton, Florida and employs approximately 17,500 people throughout North
About Red Hawk Fire & Security
Red Hawk Fire & Security designs, installs, tests, inspects and maintains a broad portfolio of fire, life
safety and security solutions using the latest technologies and advanced systems integration for
enterprise level access control, video surveillance systems and physical security equipment. An industry
leader with over 1,300 employees and a national footprint, the company serves commercial facilities in
financial services, retail, education, healthcare and manufacturing. Red Hawk Fire & Security is
headquartered in Boca Raton, Florida and their website is http://www.redhawkus.com.
Comvest Partners is a private investment firm providing equity and debt capital to middle-market
companies across North America. Since its founding in 2000, Comvest has invested over $3.6 billion in
over 170 companies. Today, Comvest’s funds have over $3.4 billion of assets under management.
Through our extensive capital resources and broad network of industry relationships, we offer our
companies financial sponsorship, critical strategic and operational support, and business development
assistance. For more information, please visit www.comvest.com.
Free Cash Flow
We define Free Cash Flow as cash from operating activities less cash outlays related to capital expenditures.
We define capital expenditures to include purchases of property, plant, and equipment; subscriber system
asset additions; and accounts purchased through our network of authorized dealers or third parties outside
of our authorized dealer network. These items are subtracted from cash from operating activities because
they represent long-term investments that are required for normal business activities. As a result, subject
to the limitations described below, Free Cash Flow is a useful measure of our cash available to repay debt,
make other investments, and pay dividends. Free Cash Flow adjusts for cash items that are ultimately
within management’s discretion to direct, and therefore, may imply that there is less or more cash that is
available than the most comparable GAAP measure. Free Cash Flow is not intended to represent residual
cash flow for discretionary expenditures since debt repayment requirements and other non-discretionary
expenditures are not deducted. These limitations are best addressed by using Free Cash Flow in
combination with the cash flow results according to GAAP.
ADT has made statements in this press release and other reports, filings, and other public written and
verbal announcements that are forward-looking and therefore subject to risks and uncertainties. All
statements, other than statements of historical fact, included in this document are, or could be,
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995
and are made in reliance on the safe harbor protections provided thereunder. These forward-looking
statements relate to anticipated financial performance, management’s plans and objectives for future
operations, business prospects, outcome of regulatory proceedings, market conditions and other
matters. Any forward-looking statement made in this press release speaks only as of the date on which
it is made. ADT undertakes no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future developments or otherwise. Forward-looking statements
can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,”
“confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,”
“goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking
statements are based on management’s current beliefs and assumptions and on information currently
available to management. ADT cautions that these statements are subject to risks and uncertainties,
many of which are outside of ADT’s control, and could cause future events or results to be materially
different from those stated or implied in this document, including among others, risk factors that are
described in the Company’s Annual Report on Form 10-K and other filings with the Securities and
Exchange Commission , including the sections entitled “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” contained therein.
Jason Smith – ADT
Adam Feigen – ADT