Case Study

Convergint Technologies is a security and safety technology integration company that prides itself on its original and dynamic corporate culture. From the company’s manifest promotion of work-life balance, to its annual celebration of “Convergint Social Responsibility Day” (in which work is suspended for a full business day to make time for local community service) Convergint’s commitment to cultural excellence has been integral to its business success.

The company is North America’s largest independent provider of electronic security, fire alarm and life safety (FLS), building automation, and healthcare technologies integration. Revenues are stable and predictable due to the company’s maintenance of thousands of service agreements with a near-perfect renewal rate. The vast majority of annual systems revenue is generated by repeat customers, many of them blue chip Fortune 500 companies.

In August 2012, KRG Capital Partners acquired Convergint, partnering with the company’s management to pursue a roll-up strategy. PennantPark’s investment in the initial transaction included $24.5mm in Senior Subordinated Notes (11% Cash / 1% PIK) and $2.5mm of equity.

Outcome:

• The Company demonstrated strong performance during our hold period, including both from organic growth and by making accretive acquisitions
• PennantPark had board observer rights, and one of our partners participated in multiple Board of Directors meetings
• With PennantPark’s support, Convergint was able to consolidate the fragmented security integration market
• During PennantPark’s hold period, the Company grew EBITDA more than threefold
• In December 2014, PennantPark realized its investment in the Senior Subordinated Notes when the company completed a refinancing
• In February 2018, Ares purchased Convergint. PennantPark realized its equity investment as part of the transaction