Transom Hits Grand Slam

After a mere 14-month hold, Transom Capital has sold its portfolio company Pelco to Motorola Solutions.

Pelco is a designer, developer and manufacturer of video security products including video security cameras, video management and recording systems, and security software. The company is led by CEO Kurt Takahashi and is headquartered in Fresno, California.

Pelco was founded in 1957 by E.L. Heinrich and originally specialized in pan-tilt devices (devices that turn a stationary camera into a pan and tilt camera) and joysticks that remotely controlled the position of television cameras. In the following years, the company would become a leading supplier of closed-circuit television (CCTV) cameras and components. In 1987, the business was sold to private investor David McDonald and in 2007, Pelco was acquired by French electrical equipment manufacturer Schneider Electric for $1.2 billion.

At its peak, Pelco had more than 2,000 employees but under Schneider ownership, its operating performance suffered led in part by the worldwide shift from analog technology to digital and internet protocol (IP) based technology. Transom acquired Pelco in May 2019 from Schneider. At that time, it was reported that Pelco’s annual revenue was approximately $185 million with an employee count of just over 470.

“We are excited to transition Pelco to its next phase of growth under the stewardship of Motorola Solutions,” said James Oh, a partner at Transom. “Since our acquisition of the company in May 2019, we have successfully executed our ARMOR value creation process to transform the operations and strategic direction of the company. Our Operations team played a critical role in building a corporate infrastructure that enabled Pelco to regain its footing as an industry-leading video security solutions business.” ARMOR is an acronym for acquisition, restructuring, monitoring & operations, and return.

According to an industry source, Transom recorded a 12x cash-on-cash return on its investment in Pelco.

“In addition to the stellar work of our operations team, we could not be more grateful for the hard work, critical thinking, and dedication of Kurt Takahashi, his executive leadership team, and the employees of Pelco,” said Russ Roenick, a managing partner at Transom. “The bedrock of success in any enterprise is its employees, and Pelco’s staff is second-to-none. We are highly confident that Pelco will be a great fit with Motorola Solutions’ existing video security and analytics businesses.”

Chicago-based Motorola Solutions (NYSE: MSI) is a data communications and telecommunications equipment provider. The company’s products include two-way radios and public radio systems for first-responders and law enforcement.

“Video continues to play a more powerful role in enabling safer cities and securing businesses around the world,” said Greg Brown, chairman and CEO of Motorola Solutions. “Pelco’s track record of innovation, internationally recognized brand, global channel and customer installed base enables us to further expand our global footprint with enterprise and public safety customers.”

Transom invests in buyouts and turnarounds of companies with EBITDA from $0 (special situations) to $20 million. In January 2018, the firm held a final closing of Transom Capital Fund III LP with $300 million of capital commitments. The new fund reached its hard-cap in just two months of fundraising and was oversubscribed from its initial $250 million target and $300 million hard-cap. Transom is headquartered near Los Angeles in El Segundo, California.

Private Equity Professional | August 5, 2020

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