United American Security Case Study



Expedition Capital Partners (“ECP”) identified the contract security guard space as a highly attractive vertical in which to execute a buy and build strategy.  In particular, the Principals at ECP recognized that the industry possessed many qualities inherent in a sector well suited for a private equity-backed consolidation, including:

¨       Purchase price multiple arbitrage upon exit

¨       Large, existing revenue base

¨       High level of fragmentation

¨       Continued growth in the outsourcing of the guard function

¨       Cost synergies available upon consolidating smaller firms into larger, better capitalized entities

¨       Minimal capital expenditure requirements

¨       High level of recurring revenue

¨       Strong correlation between company growth and industry-specific knowledge possessed by the senior management team


Based upon these characteristics, ECP made a strategic decision to find the right platform, management and equity partners in order to build a well-positioned, industry leading security guard firm. 



ECP first sought the right executive with whom to collaborate in executing its buy and build strategy.  Through extensive networking among security industry experts and investors, ECP found an industry veteran in CEO Steve Frost.  Mr. Frost has over 40 years of executive experience in the security guard industry and has completed three separate buy-and-build platforms in the past 15 years.  Across these three platforms, Mr. Frost completed a total of 94 acquisitions and built two of the platforms from inception to $100 million in revenue in less than five years before successfully selling to large, strategic buyers.  Mr. Frost is highly regarded in the security industry for his ability to identify, acquire and quickly integrate firms into a cohesive and powerful platform.


ECP and Mr. Frost quickly realized that they shared a vision of how to build a successful security guard firm and committed to a partnership with the intent to find a suitable initial platform as well as the right equity and debt partners.



ECP and Mr. Frost successfully sourced three proprietary deals to form the initial platform, United American Security, LLC (“UAS”).  The three companies that comprised the UAS platform included Industrial Security Services, Inc. of Cleveland, Ohio, Eagle Security of Portsmouth, Virginia, and Leonard Security Services, Inc. of Virginia Beach, Virginia.  At closing, the Platform generated approximately $23 million in revenue and $2.3 million EBITDA. 


Key criteria in forming the initial UAS platform included a minimum of $20 million in total revenue, scalable infrastructure and systems, a highly stable and recurring customer base, diverse geographic reach and most importantly, motivated, experienced and capable management that bought into the investment thesis.  By combining these three firms into the newly formed UAS entity, ECP was able to form a platform that is well positioned to execute upon its organic and acquisition-based growth strategies with a highly experienced, knowledgeable and dedicated management team.



After signing three letters of intent with exclusivity provisions, ECP marketed UAS to the equity and debt markets with the intent of finding the right equity and debt partners that understood and supported the investment thesis and would bring industry experience and credibility to aid in the growth of the business.   


After speaking with numerous equity parties, ECP selected LaSalle Capital Group (“LaSalle”) as its equity partner.  LaSalle is highly regarded for its investment record in the business services sector, including a very similar acquisition platform in the janitorial services industry.  ECP intends to work alongside LaSalle on the Board of Directors to provide strategic oversight, access to capital markets and to facilitate both organic and acquisitive growth.


LaSalle and ECP subsequently selected Marquette Capital Partners as the mezzanine debt provider.  Marquette focuses on the lower end of the middle market and intends to support ECP’s acquisition thesis by providing incremental debt for subsequent add-on acquisitions.


Operations and Future Acquisitions:

Following the April 16, 2010 close of the transaction and formation of the platform, ECP continues to work alongside LaSalle and management in the execution of the transition plan.  After full integration of the three firms into the new entity, UAS intends to move aggressively into the acquisition phase and has already identified and initiated dialogue with several potential targets.  Management is also working to cross sell significant business in newly complementary geographies to drive the organic growth strategy concurrent with the acquisition plan.