ADT is the largest home security company in the world. In Canada and the US, ADT has over 6 million customers. ADT has a very interesting history. This blog will provide an overview of who ADT is. How did ADT start and where are they now?
Before focusing on ADT, it’s important to look at the creation of alarm systems. In 1870, the first known alarm system was created. This was done by the President of the Gold and Stock Telegraph Company. After he woke up to a stranger in his home, he was inspired. This led to a telegraph based alert system. 50 neighbouring homes were connected through telegraph. If a “break-in” were to happen, a telegraphic signal would be sent a alert boxes in a central station. This is the first known monitored alarm system.
In 1874, ADT was officially created when 57 district telegraph delivery affiliated and became “American District Telegraph”. ADT’s business changed dramatically though over the next few years. Telegraph usage began to decrease. This is due to the increase in telephone usage. With this change, ADT had to pivot, incorporating signaling into their business strategy. In 1901, ADT incorporated into Western Union. It was then they decided to separate their two lines of business, their messenger and signaling businesses. In 1909, AT&T (the American Telephone and Telegraph Company) took control of Western Union and ADT. This was advantageous to ADT, where they began to expand into other areas – specifically fire and security detection systems.
Over the next 60 years, ADT continued to grow. While technology was limited, ADT found ways to be quite successful. It was in the 1960’s, ADT became a publicly traded company.
Over the next few years, ADT had tremendous success. So much so that In 1964, ADT was found to be a monopoly, where it provided approximately 80% of the central station alarm monitoring for all of the United States. This was due to them manipulating pricing to counter competition. However the pricing was not universal. Meaning that in certain areas where there was no competition, ADT would charge a higher price then areas where there was multiple competitors. The US government forced ADT to create a standard price list. Plus ADT had to pay multiple fines in various areas.
In 1987, the firm of Hawley Goodall decided to enter the American security marketing by first acquiring Crime Control Inc then buying ADT. These two purchases immediately make Hawley a massive presence in the home security space. Hawley changed their name to ADT and from that point focused solely on security.
In 1997, things changed dramatically for ADT as they were purchased by Tyco through a reverse takeover. ADT continued to focus on security for both homes and businesses.
ADT would grow their business through multiple channels – organic growth, dealer programs and acquisitions. These three channels proved to be very successful. This helped them combat attrition. When you have so many customers, you’re going to lose them in high volume every year. The purchasing of other alarm companies helped their growth numbers.
In January 2010, Tyco purchased Broadview Security. This was ADT’s largest transaction, valued at approximately $2.0 billion. ADT rebranded these accounts and stopped using the Broadview Security brand. Broadview Security had minimal value as they were recently rebranded from Brink’s Home Security a few years earlier.
In September 2011, Tyco announced it would split into three companies, ADT being one of the three. On October 1, 2012, ADT debuted as an independent public company and began trading on the New York Stock Exchange. ADT focused specifically only home security. Tyco would focus on commercial security. In 2014, ADT acquired the Canadian company Reliance Protectron Security Services. They would keep the Reliance brand alive throughout Canada.
In February 2016, Apollo Global Management acquired ADT for nearly $7 billion. Next Apollo Global purchased Protection 1 and merged the two national security powerhouse companies together. Apollo Global brought in Tim Whall to run the newfound merged business. The goal was to increase efficiencies, cut redundant costs and target attrition. The new merged company continued under the ADT name. Protection 1 branding was discontinued.
In January 2018, ADT once again went public through an IPO on the NYSE. The stock opened at over $12/share. Over the next few months the stock dipped to a low of $7. There is currently a class action lawsuit pending against ADT, where certain shareholders are claiming that ADT was not open about certain risks associated with the stock upon their IPO.
ADT continues to be a dominant brand in the security industry. All ADT systems require a 3-year contract. Pricing for ADT typically is in the $40/month range. ADT has continued to acquire companies, even after their IPO. Moreover, ADT has continued both their dealer program and their direct marketing.