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Friday, Dec 1, 2023

Alert to a Market Niche

From Burbank and Glendale in the east Valley to the high rises in Warner Center in Woodland Hills, property owners have turned to Detection Logic Fire Protection Inc. to instill a sense of safety for the occupants. It was Detection Logic fire alarms in place the morning of a major fire at Universal Studios that destroyed part of a film set and an attraction on the studio tour. The national reach of this Burbank-based company extends north to Washington State and as far east as Louisiana. Plans are always in the works to grow their client list. The company is close to signing deals with two large real estate companies on the West Coast. “I’d like to take that even larger,” said CEO and President Mustafa Colak. Recognized by Inc. magazine as one of the fastest growing private companies in 2007, an optimistic Colak believes 2008 will be one of the best years ever. The reason is the company’s strategy of bypassing new construction to concentrate on designing, installing and servicing alarm and life safety systems for existing high-rise office buildings, school campuses, hotels and hospitals. Anticipating a softening in the real estate market, Detection Logic added salespeople companywide in 2006. That sales staff is now hitting their stride in bringing in new clients and creating the largest the backlog of projects the company has ever seen. Between the first quarter of 2007 and the first quarter of this year revenues leaped 170 percent, Colak said. Detection Logic does not manufacture the systems it sells but instead creates building- and campus-wide systems using products from Honeywell (the Notifier brand), General Electric (the EST brand) and others. Colak characterizes other alarm providers as going after the “big fish” of designing and installing alarm systems for new buildings and then just moving on to the next project. Detection Logic, on the other hand, continues to provide maintenance service, stocking of replacement parts, monitoring of when alarms are triggered, and system audits. These life safety and detection systems are complex controlling the air, pressurizing stairwells, sending audio messages into elevators and hallways. In other words, these are systems that not just any electrician can work on and requires knowledge in computers and electronics, said Dennis Dial, the founder of a detection systems company acquired by Detection Logic last year. As the company designing and programming the system and its codes, Detection Logic gets permanently attached. “Through that process the [building] owner becomes comfortable with you and knows you know the system,” Dial said. Growth strategy Mack Katal and wife Ingrid founded Detection Logic in 1995 after Katal left another alarm company. At that time Colak was in commercial real estate management and familiar with Detection Logic from the work it did in property he managed. He was hired in 2001 as the company began to grow. The strategy to move the company into other states combines acquisition with organic growth by opening offices in Orange County, San Francisco and Seattle. As a certified provider for the General Services Administration the company installs and services alarm systems for government buildings. Detection Logic is one of four companies used by the GSA and its first installation is at a Veterans Administration hospital in Rhode Island, a state the company does not serve. The quickest way for adding new clients is through acquisition of smaller companies, a strategy resulting in expansion in Arizona, California, Louisiana and Mississippi. With the closing of a deal in Tucson, Detection Logic has 100 percent coverage in Arizona. After identifying a new market to move into, the company takes a close look at the competition, its market share, recurring revenue streams and how well the operation is run, Colak said. All the cities where the acquisitions took place provide opportunity for new clients. Buying out, for instance, Vantronics Security Systems, Inc. in Shreveport and Monroe, La. and Pratt Landry Associates, Inc. with locations in Louisiana and Mississippi, made sense as the region builds up from the devastation of Hurricanes Katrina and Rita in 2005. “We see a lot of capital going into that area and it will be a booming market,” Colak said. Technological changes Technological and federal legislation have led to changes in life safety equipment in the past quarter century. It used to be that detection systems were smoke detectors linked together with no way to know which individual detector had been set off without checking all of them. Nowadays advancements have created more intelligence with communication between detectors and allowing for adjustment of sensitivity. For instance, Colak explained, a schedule can be created for detectors to be less sensitive during the working hours when more people, more dust and smoke are present in a building and then automatically become more sensitive during the after work hours. The passing of the Americans with Disabilities Act resulted in a lot of business because prior to that there had been no requirements for flashing lights for the hearing impaired. Fire alarms and life safety systems can now be integrated with homeland security systems, allowing for communications between buildings and talking with the occupants from a remote site, Colak said. The next growth area Colak anticipates is delivering alerts to cell phones, personal digital assistants and e-mail about emergencies. SPOTLIGHT – Detection Logic Fire Protection Inc. Year Founded 1995 Revenues in 2006: $38 million Revenue in 2007: $57 million Employees in 2006: 285 Employees in 2008: 450 in 12 states

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