Blackstone to Buy Control of Vivint, a Home Security Provider

The Blackstone Group has agreed to buy control of Vivint, a provider of home security services, for more than $2 billion, Vivint's chief executive said in an interview on Tuesday.

Blackstone will be purchasing the privately held company from its existing sponsors, including Goldman Sachs, Jupiter Partners and Peterson Partners, with Vivint's management rolling over a substantial portion of their ownership holdings. After the deal closes, Blackstone will own more than 50 percent of the company.

The buyout firm emerged as the winner of an auction held by Vivint's bankers at Bank of America Merrill Lynch and Citigroup.

“It's a great opportunity for our existing partners to exit with a great return,” Todd Pederson, the company's chief executive, told DealBook. “And for Blackstone, there's a fantastic future return on its investment.”

The deal is aimed at helping Vivint continue its growth as a major provider of automated home services. Such comp anies are attractive to private equity firms because of the steady subscriber fees that they charge customers, which can go toward servicing the debt taken on in an acquisition.

Founded in 1999 in Utah as APX Alarm, the company rapidly expanded, using a small army of door-to-door salespeople. It has since branched out from the home security industry, where the company reckons that it trails only ADT in North America by recurring revenue, to newer services like automated lighting and climate control.

Mr. Pederson said that one increasingly important initiative is the installation and management of solar-power systems, where it hopes to surpass existing industry players like SolarCity in about 18 months.

“Staying out in front and trying to be disruptive in the services we're in is super important,” he said. “We try to be very forward-thinking.”

Vivint's growth has been so strong that the company hasn't had to turn to acquisitions to continue its trajectory, Mr. Pederson said. Though the company will have more financial resources under Blackstone, he said that his thinking hasn't changed.

“I'm not saying that would never be the case, but growth has never been a problem,” he said.

One issue that has dogged the company, however, is customer complaints. The company has amassed 1,452 complaints over the past three years, according to the Better Business Bureau in Utah. Many have contended that the company's sales representatives were too aggressive or offered misleading “free” systems, and the company has had to settle legal disputes with the likes of the Oregon Department of Justice.

Mr. Pederson argued that Vivint takes customer complaints seriously and estimates that the total percentage of dissatisfied customers since 2009 is approximately 0.2 percent.

“Some states look at business that are growing and thriving as a revenue source,” he said. “I don't like having 1,500 complaints , but as a percentage we think we're doing pretty good.”