LSC Companies, parent Lone Star Communications, has acquired ArCom Systems, a provider of low-voltage life safety equipment to the Arkansas and Louisiana commercial, education and healthcare markets.
[related]With the acquisition Lone Star, which was recognized on CI’s Fast Growing Firms 2018 list, the Grand Prairie, Texas-based AV, live safety and communications integration firm is propelled into new geographic regions and over strategic business growth goals.
ArCom, a Rauland communications products distributor as is Lone Star, supports 152 hospitals with life safety equipment and because of the acquisition, ArCom Systems now becomes a member of LSC Companies joining Lone Star Communications Grand Prairie and Lone Star Communications Houston and expands LSC’s reach to 456 hospitals in five states.
“They have a good reputation in their market and it gives us a good opportunity to springboard off of that and to bring our expertise to that market and take them to another level,” Raymond Bailey, president of LSC Companies, tells CI.
Bailey discussed several specific ways in which the acquisition of ArCom was a strategic match for Lone Star Communications.
Rauland Distribution Is Key
Being an integration firm that is an authorized dealer of Rauland nurse call communication solutions has a lot of benefits. A big one is that Rauland is strict about dealer geographic exclusivity. Rauland dealers tend not to have to compete with other authorized Rauland dealers in a geographic regions.
As such, the fact that ArCom Systems became a Rauland distributor in 2000 and expanded its core focus into acute care hospitals, a market that Lone Star pursues in its Texas markets, makes it an extremely good fit for LSC Companies.
Geographic Opportunity
Given that Rauland distribution is geographically limited and that nurse call solutions for hospitals is an important part of Lone Star’s business, geographic expansion opportunities are limited – or, at least, tricky.
“What makes this really good is it’s adjacent to our current territory,” Bailey says. “It goes straight out to the east and it doubles the physical size of our territory. Obviously it doesn’t have near the population base [as LSC’s Dallas and Houston areas], but it’s a Rauland distributor. It’s been in business in place for a long time.”
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Pursuit of New Revenue
The geographic and market symmetries logically made ArCom a coveted acquisition focus for LCS Companies. Bailey says talks began around the beginning of 2018 and continued with pretty consistent information exchanges.
One hesitancy that Bailey acknowledges was an ArCom offering that falls outside of Lone Star’s AV and life safety comfort zones. “They have a sprinkler division and at first I was nervous about that because that’s not a market I’ve been in before,” he says. “But after you get into it and really dig down you see how it operates and the success that they’ve had and the profitability of that particular part of their business. It’s ultimately worth it to keep it. What made us really excited [about acquiring ArCom Systems] is the diversity of it.”
Reaching Key Business Milestones
The newly merged company will boast well over 200 employees. Hitting that milestone was appealing, according to Bailey.
Along with acquiring ArCom’s business in Arkansas and Louisiana markets, LSC Companies also adds 55 new employees.
With 161 employees plus a significant number of contractors to support a busy year for LSC, the newly merged company will boast well over 200 employees. Hitting that milestone was appealing, according to Bailey.
“When you go over 200 there’s a whole different degree of benefits that we can offer our employees,” he says. “The cost on things like disability and some of the other [benefits] that we provide employees will go down significantly. Our broker tells us the healthcare will probably go down by as much is 20 percent by going over the 200 mark.”
Achieving More Industry Prominence
“The idea is to build a bigger entity that has a larger geographical footprint and has a bigger prominence in the market,” Bailey says.
When Bailey talks about the importance of an acquisition like this helping Lone Star to achieve more industry prominence, he doesn’t seem to be referring to more magazine covers or populating more lists.
The fact that adding ArCom’s 152 hospital relationships catapults LSC Companies up to 456 hospital customers is more compelling from a business strategy standpoint.
Growth is a priority for Lone Star and it was part of the motivation when it restructured to create LSC Companies with Lone Star Communications as the first entity before adding Lone Star Houston in that market and now ArCom in Louisiana and Arkansas.
“The idea is to build a bigger entity that has a larger geographical footprint and has a bigger prominence in the market,” Bailey says.
Having a bigger footprint with the hospitals it serves, for instance, gives it a chance to provide better and more consistent solutions and service.
More about Lone Star’s acquisition of ArCom Systems from the press release:
Lone Star Communications, a Texas-based leader in the life safety industry, expands its market reach to Arkansas and Louisiana by recently acquiring ArCom Systems, a leader in low voltage life safety equipment to the Arkansas and Louisiana commercial, education, and healthcare market.
ArCom Systems was founded in 1975 by David Watson II installing fire alarm and nurse call systems in long-term healthcare and assisted living facilities throughout the south central and southeastern portion of the United States. In 2000, President David Watson III took over operations and initiated commitments with the best of breed product lines available in the U.S. for I.P. Video Surveillance, Access Control, Nurse Call and Fire Alarm. ArCom became a Rauland distributor in 2000 which expanded its focus into acute care hospitals. Today, ArCom supports 152 hospitals with life safety equipment and because of the acquisition, each hospital will become part of the Lone Star Communications family.
ArCom Systems now becomes a member of LSC Companies joining Lone Star Communications Grand Prairie and Lone Star Communications Houston and expands LSC’s reach to 456 hospitals in 5 states.
Watson will join the Lone Star Communications team helping with the integration and expansion of the education group for the first year. With more than 30 years of experience in the life safety industry, David is excited to join a diverse team at Lone Star Communications.
“We are honored to have the ArCom Systems team of outstanding life safety professionals join the Lone Star Communications family,” said Ray Bailey, president of LSC Companies. “Providers today are intensely focused on consistent quality outcomes and outstanding patient experiences. As their workloads have increased profoundly over the past few years, clinical workflow automation has become essential. The combined depth of experience makes Lone Star one of the most highly specialized and talent-rich clinical systems integrators in the state of Texas, and now we will expand our ability to help the Providers in the Arkansas and Louisiana markets to measurably improve quality and lower operating costs.”
Lone Star Communications not only broadens its market to Arkansas and Louisiana, but also gains 55 devoted team members during this acquisition, leaving Lone Star Communications with more than 200 highly specialized professionals. Lone Star Communications is the recognized leader in life safety communications in Texas for hundreds of independent school districts and major healthcare service providers. For more details about how Lone Star Communications can assist your business, please visit [here].
