Cctv

Overview

By 2001, the owners of Derwent were looking to sell the business and retire. Derwent approached Extreme CCTV as a potential buyer. Jack Gin, owner of Extreme CCTV, needed to decide whether or not his company should purchase Derwent. In order to make the right business decision, Jack needed to analyze what Extreme CCTV was really buying. Would there be enough cash on hand to continue growing both companies, and would the purchase interfere with his goal to take Extreme CCTV public?

Analysis

Derwent’s product line consisted of infrared illuminators with a target market in the United Kingdom (UK). The UK has the highest per capita usage of CCTV in the world. Both Derwent and Extreme CCTV offer competing low powered infrared illuminators. However, Derwent also provides high-powered infrared illuminators, a market in which Extreme CCTV does not compete. The partnership between Extreme CCTV and Derwent has allowed Extreme CCTV to break into the UK market and offer a complimenting product to the high-powered infrared illuminators. The acquisition of Derwent would allow Extreme CCTV to maintain a presence in the UK and continue to offer high-powered infrared illuminators to complement their Integrated Day Night cameras.

In 2000, through the partnership with Derwent, Derwent sold $220,000 worth of Extreme CCTVs products in the UK. This was roughly a 3% increase from 1999. This also represented roughly 26% of Extreme CCTVs revenue for 2000. Extreme CCTV sold almost $1M worth of Derwent’s products in North America. This was roughly a 33% increase since 1999. This represented roughly 22% of Derwent’s revenue in 2000. If Derwent were acquired by one of Extreme CCTV’s competitors, like Pelco, they could potentially lose some, if not all, of this revenue stream. While Extreme CCTV’s market presence hasn’t grown significantly in the UK, Derwent’s presence in North America has grown significantly. This growth could provide a significant revenue...