I guess it's too late to just stick "blockchain" somewhere in your name and raise $$$
If it was my money on the line, I'd probably step back a bit, and wait and see what Ring/Amazon are up to. They're seemingly executing flawlessly so far, and its not hard to imagine them slithering their way into this segment also - and if they do, well, it's probably game over for a bunch of wounded players (either too small, or too big with mountains of debt).
I have also heard that Citizens is getting out of the resi deals space. BoA is advising residential customers to find another bank, but is not getting out of the commercial space.
CIBC and CapitalOne, from what I have heard, are not planning to move away from financing these deals though.
According to others I spoke to, CapitalSource had ~$650M out there, and the deals have a prepayment penalty. If any of their current financing customers need to alter terms for any reason (which is not totally uncommon), they are pretty much stuck, as CapitalSource is going to be unlikely to want to extend terms, offering more financing, etc. This leaves those customers needing to seek a new bank, from limited players, and then facing prepayment penalties on their existing loan, making any challenging scenario that needs financing flexibility being that much more expensive.
I would expect this overall to lead to reduced multiples for valuations, and possibly some peaks in M&A activity in this space next year as some organizations are forced to sell if they can't find the capital they need at the valuations required.
I struggle to see how anyone could vote positive on this? Can anyone lay out a case, whether you agree with it or not, on what exactly is positive in the residential space? Other than if you work for Amazon.
Your Poll asked… “What is the future of traditional residential security providers”? We believe…. they are doomed if they don’t embrace the changes in the market. The market itself is a bottomless opportunity, worldwide. The DIY trend will expand Do-It-For-Me. One of the barricades to traditional residential growth is understanding how to do business without the local police as their silent partner. Even SimpliSafe will be learning the same lesson…. SimpliSafe does not own their remote monitoring facilities, and not operate under their own monitoring licenses, and all systems are not remote-witness. They off-load monitoring and license to one of the big traditional third-party sources…. thus recognized as just another security provider with a big advertising budget and lots of puffery. Lots of disclosures if planning IPO. Source: Lee Jones; Support Services Group