Initial Security Business Information, Profile, and History

Company Perspectives:

Our methods are meticulous, but our philosophy is simple: we do it right the first time. Don't wait until something happens to protect your company.

History of Initial Security

Initial Security, a San Antonio-based subsidiary of British business-to-business service company Rentokil Initial PLC, offers a range of security services: investigation, patrol services, security officers, special event security, strike coverage, and consulting services. The company employs a proprietary 24-hour personnel management system called SystemsWatch, which protects a site by merging an automated check-in system with a real-time personnel database and service records. In this way, Initial Security can improve site safety and service as well as provide accurate billing to customers. At the heart of the system are mandatory check-in times that must be met by on-site officers. Should they fail to check in, the personnel database can quickly locate the closest back-up officer to be dispatched to the site. The timekeeping function of SystemsWatch is then leveraged on the accounting side to provide customers with a detailed listing of times and types of services provided. Initial Security employs 14,000 security officers in North America, working out of 60 U.S. and Canadian branch offices. The company also has 22,000 security officers working internationally.

1928 Origins

The roots of Initial Security started in 1928 when 18-year-old Stanley Sylvester Smith opened a one-man private detective agency in San Antonio, setting up shop in the recently opened Milam Building (the first air-conditioned building in the world). Despite his youth, Smith had learned the business from another investigator and decided to strike out on his own. Over the years, he developed a steady clientele by forging a solid reputation for competence and honesty. Because many of his assignments required legwork in other parts of the country, he developed alliances with investigators across America. Eventually this network of independent private detectives expanded overseas, leading to the creation of the World Secret Service Association in 1950. Smith became the organization's second president, serving from 1951 to 1952, and 20 years later his contribution to the industry would be recognized when he was named president emeritus of what was now called the World Association of Detectives.

In 1956, a second generation of the Smith family, Stanley's son Sterling, joined the agency. It was Sterling who steered the company toward security services. In 1960, he began to concentrate on the business of providing guard and mobile patrol service in San Antonio, a move that would result in the company adopting the name of Stanley Smith Security. Several years later, in 1968, the company reached a major turning point when it was hired to provide security for San Antonio's World's Fair, officially know as the Texas World Exposition HemisFair.

The idea for a "Fair of the Americas" was hatched ten years earlier by a downtown haberdasher named Jerome K. Harris and became part of an effort to commemorate the 250th anniversary of San Antonio's founding. With a Texan in the White House, Lyndon Johnson, the HemisFair received the kind of international backing necessary to make the idea a reality. Although San Antonio's public officials and business leaders were excited about the benefits to the city in hosting a world's fair, they shared a considerable number of security concerns, which fell on the shoulders of Sterling Smith, the head of security. It was a turbulent time in America's history: the Vietnam War was at its height and the civil rights movement had experienced a good deal of violence. Two days before the HemisFair was to open on April 6, civil rights leader Martin Luther King, Jr. was assassinated. Then, on inaugural day, Lady Bird Johnson, representing the president, and Texas Governor John Connally received death threats, requiring extra security measures. After the fair had been open for just two months, Senator Robert Kennedy, an outspoken critic of the Vietnam war, was assassinated.

World's Fair of 1968 Leads to Expansion

Stanley Smith Security was involved in the HemisFair from the outset. The event was built on the site of an old city housing development, and the firm was hired to provide security during this phase and was then contracted by construction companies for security support while structures were built and sites developed. Sterling Smith was then named security director for the run of the fair, and the family firm was hired by most of the private pavilions to provide security. As a result of its strong record during the fair, Stanley Smith Security was able to utilize the contacts it made, especially with construction companies, when the fair closed. As these builders began work on projects in other Texas cities, they contacted the company about providing security services in these new locations. As a result, Stanley Smith Security began to open branch offices to service their customers' needs, expanding to Austin, Corpus Christi, and Rio Grande Valley. Later, the company entered the major markets of Houston and Dallas. Four central offices located in four Texas cities were then established to support the business across the state. Stanley Smith Security would also expand south of the border into Mexico, providing "total security" services to a major Mexican corporation, which led to a Monterrey-based joint venture with this company to offer security services to the Mexican market.

It was the entry into alarm systems that formed the basis for the company's total security platform, a move that resulted from another major occurrence in the 1960s: the passage of the Bank Act of 1968. Because banks were now required to install security systems and procedures, Stanley Smith Security recognized there was a growing market for alarm systems and decided to become involved in this sector. The company solicited business from some 200 South Texas banks, and about half signed on. This success led to the company's next step, entering the armored car business. A subsidiary to build armor cars was established in Mexico to provide vehicles for both the Mexican and U.S. markets.

With so many security operations in place, Stanley Smith Security looked to become a multi-regional operator in the United States. Much of this expansion was achieved through acquisitions and resulted in major offices being established in such cities as Chicago and Washington, DC. To enjoy further growth, however, the company needed a major supply of funding. After considering the options the Smiths elected to sell the family business to Seattle-based Loomis Armored Car.

Loomis was founded in the 1880s by Leo B. Loomis at a time when armored cars were 50 years in the future. Loomis, armed with a pistol, started out by transporting gold from Alaska mines by dogsled. With the money he earned from the gold rush, he moved to Portland, Oregon, and in 1925 established the Loomis Armored Car Service. The business spread throughout the West, eventually relocated its headquarters to Seattle, added courier services for banking and commercial customers in 1960, and in 1968 went public. Loomis now diversified into the electronic protection sector, establishing a local burglar and fire alarm system for commercial and residential customers. The company also became involved in guard and patrol services, a business that the 1975 acquisition of Stanley Smith Security would greatly enhance.

Selling the company to Loomis was also of strategic value for Stanley Smith Security. Although the company's founder now retired at the age of 65, his son Sterling stayed on to run the business, which retained the family name. With financing from its corporate parent, the company was able to complete a number of acquisitions to achieve further growth. Ownership would change hands in 1979 when Loomis was acquired by Mayne Nickless, an Australian transport company that had diversified into health services and security services. With the backing of its new owners, Stanley Smith Security accelerated its pace of acquisitions and grew even larger. It also took advantage of Mayne Nickless's operations in Canada, where the Australians were already heavily involved in transportation but also operated a small guard service business. This formed a platform for Stanley Smith Security's entry into the Canadian market. While the company was expanding, it was also in some ways contracting: The increased focus on guard services led to the divestiture of other security services.

New Leadership in the 1990s and Beyond

In 1988, the Smith family's connection to the business came to an end when Sterling Smith decided to launch his own company, Sterling Smith Cecurity. Five years later, a third generation of the family became involved in the security field when Sterling's daughter, Julie Smith, joined her father's firm. In 1998, she too would strike out on her own, opting to name her San Antonio company Smith Legacy Security, a tribute to the heritage established by her father and grandfather. Stanley Smith lived until September 7, 2001, dying at the age of 91.

Mayne Nickless did not fare well in the U.S. armored car business, and after a decade of disappointing results sold off Loomis in 1989. Stanley Smith Security, on the other hand, was retained for several more years, but in the mid-1990s became expendable as Mayne Nickless decided to concentrate on its core transportation and logistics businesses. In September 1995, it sold Stanley Smith Security and Barnes Security Services of Canada to Rentokil Group PLC for $51.5 million.

A pest-control business, Rentokil was founded in 1924 by Harold Maxwell Lefroy, a professor of Entomology at Imperial College in London. A few years earlier, Lefroy was enlisted by the government to find a way to eliminate the death watch beetles that infested Westminster Hall, which was uncomfortably close to England's House of Parliament. He developed some wormwood fluids that proved successful, and as a result he received a number of inquiries from people asking if he could provide them with some of his chemical formulations. He and an assistant, Elizabeth Eades, started up a small factory and went into business. He coined the name of the business, Ento-Kill by merging an abbreviation of the Greek word for insect, "entomon," with "kill." Unfortunately for Lefroy, his line of work was highly dangerous: a year later he was killed by poisonous fumes while conducting an experiment. His assistant managed to carry on the business until it was well established. In 1957, Entokill was acquired by British Ratin, a company that specialized in the extermination of rats and mice. The names of the two brands were combined to create the name of the resulting company, Rentokil Group. Starting in the 1970s, the company began to expand geographically and diversify into such areas as health care, office cleaning, plant care, and office machinery maintenance. In 1993, Rentokil became involved in the security business with the acquisition of Securiguard plc. The acquisitions of Stanley Smith Security and Barnes Security extended the business into the North American market.

Rentokil's management decided that the Rentokil name was not suitable for some of its new business lines, including security, and turned to another brand name--"Initial"--it had picked up in the 1996 acquisition of British Electric Traction (BET). This brand started out associated with a London towel rental service launched by American A.P. Bigelow in 1903. Each towel was marked with the customer's initials, hence Bigelow named the business "Initial Towel Supply Company." BET bought a stake in the company in the 1930s, which would proved highly valuable because Initial, in the years following World War II, expanded into Europe, the United States, and Australia. BET bought more of the company and in 1985 acquired a 100 percent interest. BET was a major competitor of Rentokil in the business support services sector and its acquisition, the largest in Rentokil's history, was a major step in growing the company. Among the areas strengthened by the addition of BET, to the benefit of subsidiary Stanley Smith Security, was electronic security.

One of the Rentokil businesses designated to assume the Initial brand was Stanley Smith Security, which on January 1, 1998 officially changed its name to Initial Security, severing its final tie to founder Stanley Smith. Under its new name and new corporate sponsorship, the company expanded steadily over the next several years, completing a number of major acquisitions. In 1999, the company acquired four Houston-based security companies that collectively comprised thirteen branches, with operations spread across Texas, Louisiana, Arkansas, and Tennessee. In 2000, Initial Security bought southern Illinois-based Barton Protective Services, adding to the company's Midwest business, which was further strengthened in 2002 by the acquisition of Industrial Security Specialists Inc., serving the Chicago and Milwaukee markets. In 2003, Initial Security again looked to Chicago, adding the assets of NTC Electronics Inc., a company that designed and installed electronic security systems and which became the foundation for a new division, Initial Electronics. In 2003, Initial Security added the Seattle firm Amerisex and also grew its Canadian business, acquiring Vancouver-based security firm The Inner-Tec Group.

By 2004, Initial Security was one of the top five security firms in the United States. As a result of its spate of acquisitions in 2003, the company reorganized the way the business was divided among regions, splitting the Central Region into two entities, Central and East Central. Responsibilities of senior management were also refined and new executives brought on board as Initial Security positioned itself for even greater growth in the future.

Principal Divisions: Initial Electronics.

Principal Competitors: Allied Security, Inc.; Guardsmark, Inc.; The Wackenhut Corporation.

Chronology

• Key Dates:
• 1928: Stanley S. Smith starts a private detective agency in San Antonio, Texas.
• 1956: Stanley Smith's son Sterling joins the company.
• 1968: San Antonio's world's fair spurs company's growth.
• 1975: Loomis Armored Car acquires the company.
• 1979: Mayne Nickless acquires Loomis.
• 1995: Rentokil Group plc acquires Stanley Smith Security.
• 1998: The company assumes the Initial Security name.
• 2003: Initial Security expands through a series of acquisitions.