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?
Billion Dollar Company Wants to Buy US Security Integrators
Published Dec 09, 2015 05:00 AM
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:
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***** **** *******'* ********* **** ********** ****** on **** ******* (****** *************, ****** rate, *** ** ******* ********, *********** advantages, *********** *********, ***.), ** ********* integrators ** ********* ***** **********.
* ***** **** ** ***** *** a ******** *********** ** */* ** 1 ***** ****** *******, ** ** your ******* **** $* ******* ** revenue ****** ********* ** *** $* to $* ******* *****. **** ** in *******, *** ******** ** **** company. ** *** *** ****** ********** (**%+ net ******), ******* **** (*** **%+), have * **** **** ******* ** recurring ******* (*** **%), *** ********* can ** ****. *******, ******** ********** valuations, **** ** *** **** ** times ********* ** *** ******* **** valuations.
Comments (18)
UI
Undisclosed Integrator #1
Dec 09, 2015U
Undisclosed #2
Dec 09, 2015...now is a fairly good time to consider selling out...
Slightly negative connotation there, no? ;)
JH
John Honovich
Dec 09, 2015Realistic. 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
Dec 09, 2015I'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
Dec 09, 2015Im curious, what is the generally accepted Net profitability of the typical security integrator?
JH
John Honovich
Dec 09, 20150 - 10% is roughly the range.
If one does more than 10% that is great, but not typical.
UI
Undisclosed Integrator #3
Dec 09, 2015What's Hitachi up to now?
Ari Erenthal
Dec 09, 2015U
Undisclosed #2
Dec 09, 2015However, 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.
JH
John Honovich
Dec 09, 2015"$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
U
Undisclosed #2
Dec 09, 2015It'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.
JH
John Honovich
Dec 09, 2015The $2 billion price is for both companies combined, which have total revenue of a reported $600+ million including ~$500 million in annual recurring revenue.
U
Undisclosed #2
Dec 09, 2015I 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.
JH
John Honovich
Dec 09, 2015$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.
U
Undisclosed #2
Dec 09, 2015
Ken Mills
Dec 09, 2015I 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.
UD
Undisclosed Distributor #4
Dec 10, 2015How much impact to their stock price would these acquisitions have?
JH
John Honovich
Dec 10, 2015Buying 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.