It has been an eventful few months for Arecont Vision, which has gone through Chapter 11 bankruptcy and, ultimately, was acquired by Costar Technologies Inc. What emerged is a new company, Arecont Vision Costar, poised for future growth unfettered by previous debt. For insights into what’s next for the newly minted company, we posed several questions to Jim Pritchett, CEO, Costar Technologies Inc., and Raul Calderon, President, Arecont Vision Costar.
Q. Please relate how Costar came to acquire Arecont Vision. Why did you see it as an attractive acquisition target?
Pritchett: We were excited when we learned that Arecont Vision was for sale. We have a long history with the management team and know the potential of the brand as a leader in omnidirectional megapixel cameras. It also solidifies the breadth of Costar’s offerings for our three major market segments – commercial security, traffic, and critical infrastructure.
Q. What benefits and/or synergies do you see of adding Arecont Vision to the Costar “family?”
This acquisition transitions us from 50% of revenue related to design and manufacturing to 75%Pritchett: The security market continues to face significant competition and pricing pressures. The more scale we gain, the better we can compete. Size also allows us to invest more in the business, producing differentiated products. To that end, this acquisition transitions us from 50% of revenue related to design and manufacturing to 75%. Not only is that another step towards unlocking value for our shareholders, it better allows us to control our own destiny.
Q. What new insights have you gained during these first few weeks since the acquisition? What has surprised you the most?
Calderon: Since I have known the Costar management team for over two decades, there have been no real surprises. We have already had cross-company strategy meetings and are making decisions that will improve different facets of the organization, starting with adding much-needed headcount on both the domestic and international sales teams.
Q. What is the path ahead for Arecont Vision Costar? How is that path different than what we discussed previously about your expectations if Turnspire Capital Partners had acquired the company (as previously proposed)?
There are opportunities to leverage products and benefit customers between companiesCalderon: Arecont Vision set a plan in motion last year for turning around the organization. There will be no significant deviation under Arecont Vision Costar of the main components of that turnaround. They are still in motion. The main difference is that Costar and its group of companies are in the same business as we are. So, there is already a fundamental understanding of our requirements, and of our competitive pressures, and of how the industry works. This will help greatly as we mold our strategy to fit within the new organization. Additionally, there are opportunities to leverage products and benefit customers between companies that would not have existed under different ownership.
Q. How actively involved will Costar be in managing Arecont Vision going forward? Any other changes in how the company is managed?
Pritchett: Costar will be very actively involved in supporting the Arecont Vision business plan. Having said that, our mantra is that our people make the difference. Our job on the executive team is to remove obstacles from the paths of our employees, enabling them to execute the strategy. We have a long history and a lot of confidence in the Arecont Vision Costar leadership team.
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| Costar will be very actively involved in supporting the Arecont Vision business plan |
Q. What misconceptions have you encountered in the market about the bankruptcy process, the new owner, and/or other aspects of the transition?
Calderon: Bankruptcy (Chapter 11) typically has a negative connotation because it is many times associated with shuttering a company. For Arecont Vision, this was a tactical vehicle that enabled us to improve the company’s balance sheet and secure our financial future by selling its assets to Costar. This has made us a much stronger company than we otherwise would have been. There has been very little mis-step in onboarding all our employees. We are already in process of or have completed paying the pre-petition liabilities to our vendors. All-in-all, the transition is going smoothly, and our customers will soon begin to notice the improvements that we are making.
Q. Do you expect any personnel downsizing or other efficiencies as the companies combine (i.e., eliminating any redundancies in the two operations)?
We are looking for areas where we can expand the workforce, not reduce itPritchett: We are looking for areas where we can expand the workforce, not reduce it. Specifically, sales, engineering, and customer support are all critical to our customers’ experiences. With the industry’s obsession with decreasing prices over the last number of years, it seems there is a real opportunity for a company that is laser-focused on the customer, and that is what the Costar Technologies companies will deliver.
Q. What is your hope and/or expectations for Arecont Vision Costar in the next year?
Pritchett: It is a little over a month after the transaction closed. During that time, we onboarded all the employees, had in-depth strategy meetings with the executive management team, and identified the areas where we are going to make immediate investments. We are also in the process of scoping our NetSuite (business software) implementation plan for Arecont Vision Costar, transitioning them from QuickBooks and Fishbowl. The various initiatives and investments will not only pay off in the long run but will also make this acquisition accretive in 2019.
Q. Will we see you at the upcoming GSX show in Las Vegas?
ISC West 2019 will be the first show where you will see a fully combined presence for the Costar group of companiesCalderon: Arecont Vision decided long ago not to participate in GSX this year for a variety of reasons. We will have a meeting room not far from the exhibits, and we will be presenting to our key customers during scheduled meetings. We’ll also be making several pre-planned product announcements around additions to the Arecont Vision Total Video Solution that we first unveiled at ISC West 2018. ISC West 2019 next April will be the first show where you will see a fully combined presence for the Costar group of companies, including Arecont Vision.
Q. What is your overarching message to the security marketplace about the “new” Arecont Vision Costar?
Calderon: The new Arecont Vision Costar is stronger than ever with a renewed commitment to its customers and partners to provide improved product solutions and customer experience. We will continue to build upon our legacy of industry leadership in megapixel camera firsts, in advanced designs that our competitors frequently attempt to copy, and now in leadership of both stand-alone and web-enabled surveillance systems with our Contera families.
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