Billion Dollar Company Wants to Buy US Security Integrators

Author: John Honovich, Published on Dec 09, 2015

A publicly traded company reached out to us, asking if we would help spread the word. We figured some of our thousands of integrators members might be a fit.

In this note, we share the offer, provide color commentary and guidance on valuations.

Offer

Here is the offer:

* ******** ****** ******* ******* *** ** **, ****** ** ** would **** ****** *** ****. ** ******* **** ** *** ********* of *********** ******* ***** ** * ***.

** **** ****, ** ***** *** *****, ******* ***** ********** and ******** ** **********.

*****

**** ** *** *****:

[***************]

* ******** ****** ******* **** ******* *** ************ * ***** ** products *** ********** ********* *** *********, **********, **********, *** ********** customers ***** * ******* ** ******. **** **** ********* ** adding ** ***** $*** ******* **** ************ ** ***** ******* run **** **** *** **** ***** ***** (’**-’**).

*** ******* *** ******** ******* ******** ******* *********** ******** ********* ** Chicago, ******* (**), ******* *** ******* **** *** **** ****** significant ********. ***** ********* ** ** ********** ******** *** ******** wireless ********* ******** *** **** *** ***** ************ ***********.

***** ******* ****** ** ** ******* ***** *********** **** ********* in **********-***** ****** ******* *** **** *********** ******** **** ** verticals **** **********, ********* *** **********.

**** *** **** ** *** ********** ******* *** **** ********** in *** ********* *****:

********** **
*********
*** *********
*******
******
*** *******

****: *** ******* ***** ** ****** *** **** ******** *** *** can ***** **** ******** **: *************@*****.***

******

***** *** ****** *************** ******** *** *** *********** ** * recession ** * *** *****, *** ** * ****** **** time ** ******** ******* *** ** * ***** ***********, ********** for ****** **** *** **+ *** *** ******* *** ********** planning.

*********

***** **** *******'* ********* **** ********** ****** ** **** ******* (****** profitability, ****** ****, *** ** ******* ********, *********** **********, *********** strengths, ***.), ** ********* *********** ** ********* ***** **********.

* ***** **** ** ***** *** * ******** *********** ** 1/2 ** * ***** ****** *******, ** ** **** ******* does $* ******* ** ******* ****** ********* ** *** $* to $* ******* *****. **** ** ** *******, *** ******** to **** *******. ** *** *** ****** ********** (**%+ *** ******), growing **** (*** **%+), **** * **** **** ******* ** recurring ******* (*** **%), *** ********* *** ** ****. *******, security ********** **********, **** ** *** **** ** ***** ********* do *** ******* **** **********.

Comments (18)

Undisclosed Integrator #1

12/09/15 03:04pm

Where are they in Buffalo, NY? Last I knew they were maintaining some systems for the city but were commuting in to do the work. Did they purchase somebody locally and perhaps I missed it?

Undisclosed #2

12/09/15 03:39pm

...now is a fairly good time to consider selling out...

Slightly negative connotation there, no? ;)

John Honovich

IPVM | In reply to Undisclosed #2 | 12/09/15 03:50pm

Realistic. If I owned an integrator and a big company wanted to buy, I would seriously consider it.

Things could get better in a few years, take the cash now, start something new then, etc.

Ari Erenthal

Chesapeake & Midlantic | In reply to Undisclosed #2 | 12/09/15 04:14pm

I'll refer you to this comment thread from yesterday. If I was an integrator again, I'd either 1) concentrate on something the end user will never be able to install themselves, like fire protection, or 2) selling out.

Armando Perez

IPVMU Certified | 12/09/15 03:54pm

Im curious, what is the generally accepted Net profitability of the typical security integrator?

John Honovich

IPVM | In reply to Armando Perez | 12/09/15 05:22pm

0 - 10% is roughly the range.

If one does more than 10% that is great, but not typical.

Undisclosed Integrator #3

12/09/15 04:34pm

What's Hitachi up to now?

Ari Erenthal

Chesapeake & Midlantic | In reply to Undisclosed Integrator #3 | 12/09/15 04:35pm

Machine vision, mainly.

Undisclosed #2

12/09/15 04:39pm

However, security integrator valuations, even in the best of times generally do not command high valuations.

What's your take on the this deal, the one that caused the commandos to ride out of town on their high horses?

Imperial Capital’s Jeff Kessler said “simply based on information from the Reuters report, if the deal is indeed $2 billion, the multiple would be higher than 50x. … It’s a big deal.” ASG Security, a super-regional based in Beltsville, Md., had $10 million in RMR in 2014 and gross revenues of $145.8 million. It does residential and small commercial, as well as high-end enterprise and government work. Protection 1, based in Romeoville, Ill., had $29.7 million in RMR in 2014 and $468 million in gross revenue. Its customers include residential, commercial and national accounts and multi-family residences. It also owns CMS, which is a wholesale monitoring company. GTCR, a Chicago-based private equity firm, bought Protection 1 in 2010 for $828 million.

John Honovich

IPVM | In reply to Undisclosed #2 | 12/09/15 05:21pm

"$29.7 million in RMR"

It's all about RMR.

You probably need to know more about technology to be a good integrator but a good alarm dealer will always make more money.

Integrators - maybe 1x revenue; Alarm dealer - 3x or more revenue. RMR = contracts = predictability

Undisclosed #2

In reply to John Honovich | 12/09/15 05:42pm

It's all about RMR

I understand the value of RMR, but it's hard for me to understand that the majority of the valuation comes from that.

How much of the 2 billion price comes from the 29 million in RMR?

That's a 70 year ROI, just looking at the RMR.

John Honovich

IPVM | In reply to Undisclosed #2 | 12/09/15 06:38pm

The $2 billion price is for both companies combined, which have total revenue of a reported $600+ million including ~$500 million in annual recurring revenue.

Undisclosed #2

In reply to John Honovich | 12/09/15 06:48pm

I don't see that high an RMR number. But it would make sense if it is that high. Maybe this article is wrong?

ASG Security... had $10 million in RMR in 2014 and gross revenues of $145.8 million.

Protection 1...had $29.7 million in RMR in 2014 and $468 million in gross revenue.

I was thinking that the numbers seemed whacked for an alarm company to have less than 10% RMR.

John Honovich

IPVM | In reply to Undisclosed #2 | 12/09/15 06:51pm

$10 million RMR = $120 million annual

I am reading it that, of ASG's total $145.8 million annual revenue, $120 million comes from RMR.

Undisclosed #2

In reply to John Honovich | 12/09/15 06:53pm

Ah, the M in RMR. I'm sure that's it.

Ken Mills

12/09/15 09:13pm

I am consulting with a security integrator that is looking to purchase another security integrator valued between $5 million and $30 million, with HQ located in FL, GA, AL, TN, SC, or NC.

Undisclosed Distributor #4

12/10/15 04:47am

How much impact to their stock price would these acquisitions have?

John Honovich

IPVM | In reply to Undisclosed Distributor #4 | 12/10/15 12:15pm

Buying integrators? My understanding is that they are looking at small to medium size integrators, so given their fairly large size, I doubt it would have much of an impact.

For example, Axis might be huge for the surveillance industry, but Canon is a massive conglomerate, so it minimizes the overall stock impact good or bad.

Login to read this IPVM report.

Why do I need to log in?

IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports on Integrators

Video Surveillance Hard Drive Size Statistics 2018 on Nov 08, 2018

What is the most common hard drive size for video surveillance? 150+ integrators answered: What size hard drive do you most commonly use? What...

Favorite Video Surveillance Hard Drive Manufacturer 2018 on Nov 06, 2018

Who is the favorite hard drive for video surveillance use? 150+ integrators answered: What is your preferred brand/model of hard drive for...

Worst Products on Nov 03, 2018

Security integrators periodically report on their favorite and worst products to IPVM. These are known integrators who IPVM pays to answer surveys....

Video Surveillance Hard Drive Failure Statistics 2018 on Nov 02, 2018

Hard drive failures can be significant service problems but how common of an issue are they in video surveillance? How long do drives last when...

Cloud Video Storage Usage 2018 on Oct 31, 2018

Storing email and documents in the cloud have long been common, with on-site email or file servers increasingly eliminated. However, what about...

ADT Acquires Red Hawk, Becomes Billion Dollar Commercial Business on Oct 25, 2018

With its ~7th commercial acquisition in the past year, ADT is transforming itself from a residential provider to a commercial player with now more...

Exacq Co-Founders Return, Start Qumulex on Oct 24, 2018

Exacq co-founders Dan Rittman, Tom Buckley, and David Underwood are back, starting up Qumulex. In 2000, they sold Integral to Andover...

Geutebruck Company Profile on Oct 22, 2018

Geutebrück has been in business for nearly 50 years, but they are not well known within the US surveillance market. In this report, we profile...

Integrator Laptop Guide on Oct 16, 2018

This 18-page guide provides guidance and statistics about integrator laptop use. 150 integrators explained to IPVM in detail about their laptops,...

Security System Health Monitoring Usage Statistics 2018 on Oct 09, 2018

How well and quickly do integrators know if devices are offline or broken? New IPVM statistics show that typically no health monitoring is...

Most Recent Industry Reports

Axis: "No One Wants To Buy A Camera" on Nov 09, 2018

Axis has, in its own description, made a bold declaration: The industry is changing so rapidly that the following statement might seem bold but...

Video Surveillance Hard Drive Size Statistics 2018 on Nov 08, 2018

What is the most common hard drive size for video surveillance? 150+ integrators answered: What size hard drive do you most commonly use? What...

Axis 2N Intercom Tested on Nov 08, 2018

Axis expanded its video intercom business buying Czech-based 2N in 2016. Despite competing against owner Axis' intercoms, 2N recently registered as...

Haven Targets School Security with Lockdown Lineup on Nov 08, 2018

Haven, a US startup founded in 2014 as a residential-focused company, has now raised funding and is offering a lineup of commercial grade locks for...

Ubiquiti Protect Video Surveillance Profile on Nov 07, 2018

Ubiquiti has now been in the video surveillance market for 7 years (see our first coverage back in 2011). In that time, the company's revenue has...

Kogniz Silicon Valley AI Startup Profile on Nov 07, 2018

Kogniz is a Silicon Valley company that aims to bring AI analytics to security and surveillance, centering on their own smart cameras: We spoke...

Dahua Dual Imager Dome Camera Tested (HDBW4231FN-E2-M) on Nov 07, 2018

Dahua has introduced a dual-imager dome model, the HDBW4231FN-E2-M, with two independently positionable sensors including integrated IR, not found...

Directory Of Video Doorbells on Nov 06, 2018

Video doorbells are one of the fastest growing categories in video surveillance, especially among residences. The optimal placement of these...

Avigilon Opens Up Analytics And Cameras on Nov 06, 2018

Avigilon is opening up. The company historically famous for advocating its own end-to-end solutions and making it harder for 3rd parties to...

Favorite Video Surveillance Hard Drive Manufacturer 2018 on Nov 06, 2018

Who is the favorite hard drive for video surveillance use? 150+ integrators answered: What is your preferred brand/model of hard drive for...