'Exceptional' $10 Million Florida Integrator Aims To Sell For Just $10-$12 Million

John Honovich

•Apr 05, 2019

IPVM

Integrators can sometimes overvalue themselves but this is a good example of a fairly reasonable valuation sought (i.e., not the super-rich valuations Convergint is giving).

Ron Davis is selling a Florida integrator. Here is his description:

Calling it an 'exceptional property', he is estimating a sales price of around $10 to $12 million:

Given he is the seller's agent, he is presumably not being pessimistic.

Notice, he also notes a 'decreasing pool for integrators' as Convergint and ADT have rolled up so many recently.

A price to sales ratio of 1 (i.e., $10 million valuation for $10 million annual sales) is not unreasonable for integrators, given the general lack of recurring revenue, modest growth rates, modest profits, etc.

Thoughts? Questions?

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Undisclosed #1

•Apr 05, 2019

How much is tangible property worth for an integrator averaging $10mil in annual revenue? Wouldn't it be cheaper to buy the equipment, lease a space, and recruit some veteran sales people with strong relationships? I wouldn't buy a hot dog cart for a million dollars because they sold a million hotdogs last year. Probably an overly simplistic analogy, but still....$10mil should give you some burn time if you started from scratch. What do you think the net profit is a year?

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John Honovich

•Apr 05, 2019

IPVM

In reply to Undisclosed #1

What you are alluding to - the relatively low barriers of entry to integration - somewhat suppresses valuation for these businesses.

That said, even if you knew what you were doing and had money, it would still take time (a few years) and some risk (knocking out incumbents, etc.) that some buyers find more costly/complicated than buying it out whole.

I am curious how it is going to work out financially for ADT and Convergint who are right now running grand experiments in spending hundreds of millions on integrators.

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