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CAA symposium to feature four top industry execs

 - 
10/10/2012

SAN FRANCISCO—Leaders from four security companies will speak at an executive symposium at the California Alarm Association’s 2012 Winter Convention, to be held here Dec. 5-8.

Kessler on the multiple paid for Vivint

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Wednesday, September 19, 2012

Whenever a big company in the industry sells, there’s interest in the specific metrics of the deal.

I called Jeff Kessler at Imperial Capital to talk about the pending sale of Vivint to the largest private equity group in the country, Blackstone and the numbers.

It’s not every day there’s a $2 billion deal in the security industry.

While Kessler has high praise for Vivint, he says that certain metrics are not as off-the-charts as one might think, at least according to his calculations.

Kessler pointed out that the sale of Vivint for north of $2 billion includes not only Vivint’s home security/automation business, but 2GIG (a manufacturer of alarm/home automations systems) and Vivint Solar.

So while the total enterprise value for the is “north of $2 billion”, the enterprise value for Vivint home security/automation is less than $2 billion, he said.

Which doesn’t mean the valuation is not impressive, it just means “the multiple of RMR, EBITDA or steady state cash flow will be less than the total amount given for the entire company,” he said.

In terms of a multiple of RMR, Vivint has said it has $30 million in RMR. Kessler said RMR will be higher by the time the sale closes at the end of the year. “If you assume that RMR will be higher, and you assume that [Blackstone will pay] something less than $2 billion for Vivint [home automation/security], the multiple of RMR paid would be in the 50s.”

However, Kessler doesn’t like to talk about multiples of RMR. He prefers to look at multiples of steady state cash flow, because that “really gets rid of the accounting variance that really riddles EBITDA,” he said.

Based on his estimates of Vivint’s [home automation/security’s] steady state cash flow, he said the multiple to be paid is actually “at lower end of the 10 to 13 times [steady state cash flow] range paid for larger, quality companies over the past 18 to 24 months.”

Kessler based his assumption on certain transactions such as Bain & Hellman buying Securitas Direct; Ascent Capital buying Monitronics, Summit buying Central Security Group and Oak Hill Capital buying Security Networks.

(I'm quite certain I'll hear from others who's assumptions and math differ from Kessler's. Please leave a comment on this blog or contact me.)

The important thing is that if you're trying to figure out a mulitple of RMR, steady state cash flow or EBITDA, you need to back Vivint Solar and 2GIG out of the equation.

And if you're trying to figure out if your company's ripe for a sale, take a good look at what Vivint's doing, Kessler said. 

Kessler called Vivint is a “model company” that’s taking advantage of new technology and providing  “a value-added proposition at a premium.” The company’s average RMR per new subscriber is the highest at over $50, and they’re doing good things such as moving away from all summer-sales and increasing in-house sales resources.”

The Blackstone deal “should allow Vivint a lot of growth [with the] forward-looking ideas it has on its platter. … This will allow capital runway for projects like increasing the size of their non-summer sales force, increasing their ability to move into new markets such as small and medium sized commercial security, and to fund the growth and development of new products in home and business services, some of which are not even on paper yet.”

There will be lots more deals done in the security industry in the next year. The capital players are interested, but Kessler said it’s the security companies, like Vivint, what he calls the “haves,” those that are taking advantage of new technology and which have a finely tuned sales and marketing efforts that will be the most sought after.

Vivint to be sold to Blackstone in $2 billion deal

CEO Pedersen: Vivint has plans to become one of the largest national players in commercial security
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09/18/2012

PROVO, Utah—Vivint has entered into an agreement with the Blackstone Group to be acquired in a deal worth “north of $2 billion,” Todd Pedersen, Vivint CEO, told Security Systems News.

The best of ESX: And the winners are ...

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Wednesday, June 27, 2012

Just off the show floor after a very busy Wednesday at ESX, starting with the CSAA Excellence Awards Breakfast. There were a number of great seminars throughout the day and the floor was abuzz with networking. I assume everyone saved a little energy for the ESX Crawl …

I’m about to get out there myself to sample a little of that Nashville hospitality, but I’d be remiss if I didn’t mention the award winners who highlighted the day. For those who might have missed it:

CSAA Central Station of the Year: Vivint
Honorable mention: United Central Control

CSAA Central Station Manager of the Year: Amy Becht, Vivint
Honorable mention: John Williams, Alarmco

CSAA Central Station Operator of the Year: Gale Gordon, The Protection Bureau
Honorable mention: Jorge Rodriguez, Monitronics

CSAA Central Station Support Person of the Year: David Palacios, UCC
Honorable mention: Kate Brickner, Vivint

ESX also announced its Maximum Impact Award winners for 2012. Hats off to the following:

Overall winner: 2GIG Technologies Go! 2.0

Best Access Control/ID Systems—Access Control System: Interlogix TruPortal

Best Access Control/ID Systems—Biometrics: 3M Cogent MiY-Card

Best Access Control/ID Systems—Telephone Entry Control/Intercom Systems: Optex iVision Plus

Best Accessories & Aids—Dealer Company Software: DICE Matrix Tech Service

Best Accessories & Aids—Mobile Applications: SedonaOffice, SedonaFSU Web Edition

Best Accessories & Aids—Installation Tool/Tester: Salient Systems, Salient University eLearning

Best Alarm Equipment—Alarm Signal Transmission Equipment: Telguard Cellular Communications for 3G/4G Networks

Best Alarm Equipment—Annunciators, Bells, Sirens, Strobes: Metis Secure Solutions, Metis Secure ENS

Best Alarm Equipment—Enhanced Video Alarm: Videofied-RSI Video Tech, IP Upgrade Kit with Videofied Free

Best Alarm Equipment—Intrusion Alarm Control Panels: Interlogix Simon XTi

Best Alarm Equipment—Intrusion Sensors/Detectors: Honeywell Security Group 5816OD

Best Alarm Equipment—PERS Hardware: SilverFox Link Watch/Pendant PERS System

Best Alarm Equipment—Wireless Alarm Systems: 2GIG Technologies Go! 2.0

Best Central Station Equipment—Central Station Software: DICE Matrix Fire Inspection

Best Central Station Equipment—Remote Video Monitoring Equipment/Software: SureView Systems Immix Cloud

Best Services—Alarm Monitoring: Bold Technologies UniversalConnector

Best Services—Dealer Marketing Services: BlueStar Security Solutions FUSION

Best Services—Security as a Service (SaaS): Honeywell Security Group MAXPRO Cloud

Best Services—Video Monitoring Services: I-View Now

Best Video Security—Cameras: Altronix eBridge IP over Coax Adapters

Best Video Security—Video Analytics: CheckVideo, CheckVideo HD Megapixel IP Bullet Camera (CV135)

Best Video Security—Video Surveillance System: Axis Communications, AXIS Camera Companion

That’s it for now. The weather prognosticators are calling for a summer stew over the next couple of days in Nashville, so the ESX show floor will be the place to be. See you out there …

Showdown at the cableco corral? ESX has ammo

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Wednesday, June 20, 2012

The big, bad cable giants and telecoms are riding into town, aiming to steal your horses and accounts and whatever else they can toss a lasso around. Everyone knew the day was coming, but now that it’s here, are you prepared to hold your ground? Do you really have what it takes to compete, or will you forever be at the mercy of the black hats?

Rest assured there’s hope, and you can tap into it at ESX. A number of sessions are planned to help alarm companies deal with this new landscape by staying technologically savvy and by offering what has long been seen as the silver bullet for the industry: superior customer service.

At the ESA Industry Luncheon and Annual Meeting on June 28, Kristen Simmons, managing partner at Lightswitch and former VP of marketing for Mazda North America, will share her expertise about what it takes to earn customers and turn them into advocates for your business. Simmons led Mazda’s “Zoom Zoom” ad campaign and also founded LiveSmart Security, a boutique provider of home security services.

“Over the next five to 10 years, one factor will become ever more critical to the success of manufacturers, security integrators and monitoring companies alike: the customer experience,” Simmons said in an ESX news release. “New technology and integrated approaches have enabled a far more captivating experience for security customers than the traditional ‘detect and respond’ model. Leveraging these capabilities will be an enormous catalyst for customer loyalty, RMR growth and bottom-line profitability.”

On the technology side, at least a dozen sessions are planned at ESX to help attendees take on the telecoms and cablecos. A recent addition to the schedule features Patrick Egan, owner of Lancaster, Pa.-based Security Partners, who will host a series of interviews with industry leaders on how alarm companies can compete with the big boys entering the market. Egan will talk with each executive for about 15 minutes, then open the floor for a 15-minute Q&A.

The sessions are scheduled to run from 1:30 to 6:30 p.m. on June 27 at the Security Partners booth (No. 725) at the Nashville Convention Center. Seating is first come, first served. Executives on board so far include Kirk MacDowell from GE, Lance Dean from 2GIG, Gordon Hope from Honeywell, and Jay Kenny from Alarm.com.

“With all the buzz in the marketplace, we think this is going to generate a lot of interest,” said Joseph Mitton, marketing coordinator for Security Partners.

To check out the full list of ESX seminars, go to www.esxweb.com. See you in Nashville …

Security providers early winners in home automation/home security space

But telecoms and cable companies also are ‘in it to win’ and shouldn’t be discounted, an industry analyst says
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05/29/2012

DALLAS—Security providers have a “first mover” advantage in home automation/home security right now, but the big telecoms and cable companies entering the space are serious competitors who may be game-changers in the future, according to a market research company analyst.

Running, walking and talking—Day 2 at ISC West

 - 
Friday, March 30, 2012

Day 2 of ISC West started off with a bang … as in the bang from the starter’s pistol as I ran in the annual Mission 500 Security 5K, the running race that Security Systems News helps sponsor.

Not only does the race do good—this year the more than 500 participants helped raise about $80,000 for needy children in Mexico, India and Tanzania—but it’s a legitimate excuse to take some time to exercise at this busy show. And this year it featured new event, a 2K walk. I heard from several people on the show floor later that they’ve wanted to participate in the race previously but can’t run 3.2 miles. They said a walk would be more doable and said they may participate in that part of the event next year. So, I’m betting that at ISC West 2013 we’ll see even more people joining in this good, healthy—and fun—cause.

Speaking of Mexico, during my visit to the 2GIG booth, Todd Santiago, president of the Carlsbad, Calif.-based home security systems developer told me the company is expanding to Mexico and other Latin American countries this year. “We see international expansion as a huge opportunity,” he said. “We have significant demand for our security offering.”

He said the company, founded about two years ago, also is doing great in North America, with more than 1,100 dealers now.

Among other Day 2 meetings I had were with a couple of fire dealers who impressed me with their innovative ideas.

One was Carter Rierson, founder and president of Best Defense Security & Fire Protection of Waunakee, Wis.
Among things that Rierson and I discussed were his trademark “cellevator,” a cellular solution that enables people in an elevator to summon help in an emergency. Rierson said customers like his solution because it costs half of the traditional solution, which is a phone line voice connection to an elevator.

I also talked to Mark Popkowski of Texas-based Modern System Concepts, a Texas fire and security company. He told me he’s outfitting all the company’s technicians with iPads. He’s also saving time and money by having them do fire inspections with a new inspection app that his company developed. He plans to beta test the new software and then market it to other companies this summer.

He said the app allows companies to “have multiple technicians out in the field on an inspection and they can be doing one part of the inspection and somebody else can be doing the other” but they both produce one report.

2GIG’s “sleek” panel is “elegant,” The WSJ says

 - 
Monday, February 27, 2012

The Wall Street Journal just gave a nice nod to 2GIG, touting the 2GIG Alarm Kit in a recent technology article.

In the piece entitled, “Safe at Home,” which is about easy-to-install, tech-friendly security systems and written by Michael Hsu, the WSJ singles out 2GIG’s alarm system in this way:
 

You can't judge an alarm system by how it looks, but the 2GIG Alarm Kit's control panel is so much more elegant than any other security solution out there, it's hard to justify devoting the wall space to anything else. Instead of a clunky keypad that makes you feel like you're working the midnight shift at a convenience store, the 2GIG control panel is a sleek white box with a color touchscreen.

And Hsu says it’s easy to install and he also noted other features he likes about the product of 2GIG, a Carlsbad, Calif.-based home security systems developer, such as:

 

The best part about 2GIG is how it integrates with the rest of your house. By adding compatible devices, like a thermostat and lamp module, you can have the system lower the heat and turn lights on or off when you arm the system.

 

According to Wikipedia, the WSJ is the largest newspaper in the United States, with a circulation of 2.1 million copies (including 400,000 online paid subscriptions) in 2010. That's a lot of potential security customers!

Online Alarm Quotes gets funding, 2GIG deal

The new dealer program also will buy accounts for renters and those with low credit scores
 - 
04/14/2011

YONKERS, N.Y.—Online Alarm Quotes, a new dealer program based here, recently announced it has added a funding program and closed a deal with 2GIG Technologies to offer its products.

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