Since 1997, ADT, the number one security provider in America, has been part of the Tyco family of companies. In 2011, Tyco’s board of directors announced it would split the company into three separate companies, with ADT being one of the three. Just over a year later, ADT became a public company listed on the New York Stock Exchange (NYSE: ADT), and began trading on October 8.
“The launch of ADT as an independent company is a great moment for our employees, and it marks an exciting milestone in our proud history,” said ADT CEO Naren Gursahaney.
Tyco International Ltd. (NYSE: TYC) was founded in 1960 as Tyco, Inc. and immediately began working on governmental research and military experiments. In just two years, the company, colloquially known as Tyco, became involved in high-tech materials science and energy conservation products.
The 1970s saw Tyco grow by leaps and bounds, primarily because of its aggressive acquisitions of several companies, including Grinnell Fire Protection Systems and the Ludlow Corporation. From 1991 to 2001, CEO Dennis Kozlowski helped the company to acquire more than 1,000 other companies.
In 1997, the company did what’s called a reverse merger, essentially letting a smaller, public company acquire them. That company was ADT Limited and Tyco became their wholly owned subsidiary. At the same time, ADT Limited changed its name to Tyco International Ltd.
As a result of the 1997 reverse merger, ADT Security Services was created as a subsidiary of Tyco International Ltd., which is the company most people refer to as ADT today.
The three-way divestiture looks like this:
· ADT—ADT will continue to focus on home security products and services, including security alarms and monitoring services.
· Tyco—Tyco will continue to focus on fire and security services, primarily under the name Tyco Security Products.
· Pentair Ltd.—Pentair Ltd. is a new company in the flow-control business, manufacturing and installing pumps, pipeline systems, filters and filtrations systems, and process treatment plants. They are the result of merger between Pentair Inc. and Tyco Flow Control.
Large companies that decide to become a public company, like ADT, do so for a variety of reasons. ADT is gaining money for research and development, likely to use for expanding markets and identifying new opportunities.
“ADT leads the security industry because of our commitment to customer service, focus on innovation and continued investment in our infrastructure and our people,” said Gursahaney. “But what really differentiates us is that we never forget what we do for a living – we help save lives.”
One great way for ADT to get its products and service in front of more potential customers is to strengthen their relationship with home builders. CEO Gursahaney told FOX Business that ADT “will continue to invest in homebuilder partnerships” as the housing market continues to recover. At present, only one in five homeowners have any type of security product installed in their primary residence, which is something Gursahaney sees as their greatest opportunity for growth.
For existing ADT customers, the process of going public will have little effect on its day-to-day business. New ADT subscribes could see more aggressive marketing campaigns featuring local crime rate statistics, which could include new offers for becoming a new subscriber.
For employees, the chance at owning a piece of their company has many benefits. Employees who own a share in their employer feel like they have a direct stake in the future financial success of the company. A premium can be placed on employee retention as many company stock grants have a vesting period of several years.
When employees feel empowered like this, customers are often the recipients of improved processes, and find that employees look for ways to go the extra mile to assist them. Deciding to go public could likely translate to increased market share, product innovations the come about because of additional funding, and higher levels of customer satisfaction and retention due to increase employee loyalty.
If ADT continues doing what they’ve done since 1874, investors, employees, and shareholders alike should be pleased with their company.
What do you think about ADT going public?