Monitronics acquires LiveWatch Security for $67m

DALLAS—Third-party monitoring giant Monitronics has acquired LiveWatch Security, a provider of professionally monitored DIY home security systems, for $67 million.

LiveWatch brings with it $900,000 in RMR and 32,000 accounts. Its customers are located in all 50 states and Puerto Rico.

“DIY has been really building a base in the industry for the past few years,” John Orr, senior VP for Ascent Capital Group, told Security Systems News. “We really did [this acquisition] because we think it's an important channel for growth and expansion."

LiveWatch, based in Kansas, will be a stand-alone subsidiary of Monitronics, based here. Ascent Capital Group, Monitronics' parent company, finalized the deal Feb. 23.

Calling the deal a "strategically interesting move" that allows Monitronics to diversify into the fast growing DIY market, Imperial Capital's Jeff Kessler said diversification is becoming more common among large security monitoring companies. For example, Alarm Capital Alliance, Guardian Protection, Vector and others have invested in "multiple types of account generation—internal, DIY, dealer programs, buying rate," Kessler observed.

Monitronics also expanded an existing revolving credit facility by $90 million.

Orr said that Monitronics felt like "LiveWatch had a really forward-thinking management team that had a very good handle on how to go to market through [the direct consumer] channel."

In the future, Monitronics could add services through this new direct consumer channel, Orr said.

The LiveWatch team will stay with the company.

The acquisition was “a nice buy of a strong engine for ongoing growth in the space. It was running extremely well, and we believe [it] will continue to run extremely well,” Orr said.

Kessler agreed with Orr, saying that while the RMR and accounts this deal brings are important, it's the technology and the "engine" that LiveWatch brings to Monitronics that are key.

"It's the people, and marketing techniques and processes that they use ... they're very good on the Internet, with telemarketing," Kessler said. The deal brings "diversification in technology and diversification in selling [techniques]," he added.

Terms of the deal included $6 million of retention bonuses to be paid on the second anniversary of the closing. Ascent Capital Group had $539.4 million in 2014 revenue, and $135.9 million in the last quarter of 2014.

Martha Entwistle contributed to this report.