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

      1. ********** **
      2. *********
      3. *** *********
      4. *******
      5. ******
      6. *** *******

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

******

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

*********

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

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

Comments (18)

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?

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

Slightly negative connotation there, no? ;)

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.

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.

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

0 - 10% is roughly the range.

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

What's Hitachi up to now?

Machine vision, mainly.

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.

"$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

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.

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.

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.

$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.

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

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.

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

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

Favorite Request-to-Exit (RTE) Manufacturers 2018 on Sep 19, 2018
Request To Exit devices like motion sensors and lock releasing push-buttons are a part of almost every access install, but who makes the equipment...
Favorite Intercom Manufacturers 2018 on Sep 14, 2018
Intercoms are certainly increasing in popularity, driven by the integration of video and IP networking. But who is the favorite? On the one side,...
Stanley Security Acquires 3xLogic, Kushner Becomes Product President on Sep 10, 2018
Stanley Security acquired 3xLogic a few months ago. However, the company has still not officially publicly announced it, leading many to wonder...
Dell Launches IoT for Surveillance on Sep 05, 2018
Historically, Dell has been a PC and server provider (e.g., "Dude, you're getting a Dell") and widely used for surveillance storage. However, in...
Sell Dahua or Hikvision At All, Banned From Selling to US Federal Government, Says US HASC on Aug 29, 2018
The US House Armed Services Committee (HASC) Communications Director has confirmed to IPVM that if a company sells Dahua or Hikvision at all, they...
France Political Scandal Reveals Video Surveillance Problems on Aug 22, 2018
In what French media describes as "the most damaging crisis yet for" French President Marcon, a political scandal has revealed major gaps in the...
ISS VMS / Video Analytics Company Profile on Aug 16, 2018
Who is ISS? In the past few months, they had one of the craziest ISC West promo items in years. Then, they hired industry veteran and ex-Dahua...
RealNetworks Free School Facial Recognition on Aug 03, 2018
The company that created RealPlayer is moving beyond media delivery and into the security space with a new facial recognition platform they have...
Improved Security And Surveillance Bidding - 2018 MasterFormat Divisions Examined) on Jul 19, 2018
Navigating the world of system specifications and bidding work can be complex and confusing, but a standard format exists, and understanding it...
4 Most Difficult Camera Installs (Statistics) on Jul 12, 2018
Heavy housings, cumbersome brackets, heavy ladders required, and tricky field of view requirements will cause difficulties no matter the camera...

Most Recent Industry Reports

Genetec Takes Aim At 'Untrustworthy' 'Foreign Government-Owned Vendors' on Sep 24, 2018
Genetec is taking aim at 'untrustworthy' 'foreign government-owned vendors'. This is not a new theme for Genetec as nearly 2 years ago, Genetec...
4MP Camera Shootout - Axis, Dahua, DW, Hanwha, Hikvision, Uniview, Vivotek on Sep 24, 2018
4MP usage continues to climb, especially for low cost fixed lens models. To see who was best, we bought and tested seven 4MP models from Axis,...
Alexa Guard Expands Amazon's Security Offerings, Boosts ADT's Stock on Sep 21, 2018
Amazon is expanding their security offerings yet again, this time with Alexa Guard that delivers security audio analytics and a virtual "Fake...
UTC, Owner of Lenel, Acquires S2 on Sep 20, 2018
UTC now owns two of the biggest access control providers, one of integrator's most hated access control platforms, Lenel, and one of their...
BluePoint Aims To Bring Life-Safety Mind-Set To Police Pull Stations on Sep 20, 2018
Fire alarm pull stations are commonplace but police ones are not. A self-funded startup, BluePoint Alert Solutions is aiming to make police pull...
SIA Plays Dumb On OEMs And Hikua Ban on Sep 20, 2018
OEMs widely pretend to be 'manufacturers', deceiving their customers and putting them at risk for cybersecurity attacks and, soon, violation of US...
Axis Vs. Hikvision IR PTZ Shootout on Sep 20, 2018
Hikvision has their high-end dual-sensor DarkfighterX. Axis has their high-end concealed IR Q6125-LE. Which is better? We bought both and tested...
Avigilon Announces AI-Powered H5 Camera Development on Sep 19, 2018
Avigilon will be showcasing "next-generation AI" at next week's ASIS GSX. In an atypical move, the company is not actually releasing these...
Favorite Request-to-Exit (RTE) Manufacturers 2018 on Sep 19, 2018
Request To Exit devices like motion sensors and lock releasing push-buttons are a part of almost every access install, but who makes the equipment...
25% China Tariffs Finalized For 2019, 10% Start Now, Includes Select Video Surveillance on Sep 18, 2018
A surprise move: In July, when the most recent tariff round was first announced, the tariffs were only scheduled for 10%. However, now, the US...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact