Monitronics International to Acquire Security Networks

Monitronics International to Acquire Security Networks

Monitronics International to Acquire Security NetworksAscent Capital Group, Inc., ("Ascent") announced today that its primary operating subsidiary, Monitronics International, Inc., (“Monitronics”), has signed a definitive agreement to acquire Security Networks, LLC, resulting in a leading home security solutions provider with greater scale, an expanded footprint and enhanced growth prospects.

Founded in 2000, Security Networks provides monitored security system services to approximately 195,000 residential and commercial customers, making it the 14th largest residential alarm monitoring company in the U.S.1  Similar to Monitronics’ business model, Security Networks utilizes a network of exclusive dealer affiliates to sell and install the security systems it monitors.

The transaction consideration will consist of $487.5 million of cash and 253,333 newly-issued shares of Ascent Series A common stock with an agreed value of $20 million. The purchase price is subject to adjustment at closing and is based upon Security Networks delivering recurring monthly revenue (as defined in the acquisition agreement, “Acquisition RMR”) of $8.8 million. The transaction will be financed primarily with new debt at the Ascent and Monitronics levels, as well as an incremental amount of cash from Ascent's balance sheet. The transaction is expected to close in mid-August 2013, subject to customary closing conditions, including regulatory approvals.

Ascent’s Chief Executive Officer, William Fitzgerald, commented, “Security Networks provides  many of the characteristics that originally attracted us to Monitronics, including a high-quality, subscriber portfolio, a scalable business model, a very productive dealer affiliate network providing strong account growth and attractive recurring monthly revenue that generates significant, steady, state-free cash flow. This combination of two very successful home security industry leaders positions us for accelerated growth and ongoing strong profitability.  In addition, we expect the combined operations to provide enhanced borrowing capacity that will allow us to substantially fund the acquisition with incremental debt, delivering attractive value for our shareholders over time.”

As of June 30, 2013, Security Networks reported Acquisition RMR of $8.4 million (including approximately $0.1 million of wholesale monitoring).  For the twelve months ending December 31, 2012, Security Networks generated revenue of $78.5 million and Adjusted EBITDA2 of $46.5 million. The company maintains a strong account base with an average credit score of 720 and life cycle attrition levels in line with Monitronics’ current portfolio.

Mike Haislip, president and CEO of Monitronics, stated, “We are very excited about this transaction and want to welcome the Security Networks dealer affiliates and customers on board. The combined company will have an impressive network of over 600 dealer affiliates nationwide and will service over one million subscribers. As we integrate the two companies, we expect to generate meaningful synergies from the combined operations. We expect the integration to be

seamless and will make certain that our customers and dealer affiliates remain top priorities and continue to receive the high-quality service that they have come to expect.” 

Richard Perry, president and CEO of Security Networks, added, “Monitronics is a well-respected company and one that has a proven track record of growth in the home security market.  I am confident that this transaction is the right next step for our business, creating a compelling growth platform and offering greater value to our customers.  I would like to thank Oak Hill Capital Partners for their partnership, guidance and market acumen.  Together, we have helped to shape Security Networks into the dynamic business it is today.”

Security Networks has been named to SDM Magazine’s Top 100 list of U.S. security firms for seven consecutive years and was SDM’s Dealer of the Year Honoree over the past two consecutive years. The company was also named to SD&I Magazine’s Fast50 in 2012, which recognizes America's fastest growing systems integrators.

Jonathan Friesel and Benjamin Diesbach, Partners at Oak Hill Capital, jointly commented, “During our partnership with Security Networks, we enjoyed working closely with Rich Perry and his team to build the company into a leading provider of home security solutions.  Security Networks and its affiliates are well-positioned to maintain their impressive growth and leadership in the residential home security market under their new ownership.”

Following the close of the transaction, the combined companies will be headquartered in Dallas, Texas, with Mike Haislip serving as CEO.


1 According to SDM Magazine’s SDM100 rankings issued in May, 2013.

2 For a definition and explanation of Adjusted EBITDA, please refer to the Company’s public investor presentation posted on July 10, 2013 on the Ascent Capital Group, Inc., investor relations site at http://www.ascentcapitalgroupinc.com/Investor-Relations.aspx.

Featured

  • Survey: 54% of Organizations Cite Technical Debt as Top Hurdle to Identity System Modernization

    Modernizing identity systems is proving difficult for organizations due to two key challenges: decades of accumulated Identity and Access Management (IAM) technical debt and the complexity of managing access across multiple identity providers (IDPs). These findings come from the new Strata Identity-commissioned report, State of Multi-Cloud Identity: Insights and Trends for 2025. The report, based on survey data from the Cloud Security Alliance (CSA), highlights trends and challenges in securing cloud environments. The CSA is the world’s leading organization dedicated to defining standards, certifications, and best practices to help ensure a secure cloud computing environment. Read Now

  • Study: Only 35 Percent of Companies Include Cybersecurity Teams When Implementing AI

    Only 35 percent of cybersecurity professionals or teams are involved in the development of policy governing the use of AI technology in their enterprise, and nearly half (45 percent) report no involvement in the development, onboarding, or implementation of AI solutions, according to the recently released 2024 State of Cybersecurity survey report from ISACA, a global professional association advancing trust in technology. Read Now

  • New Report Series Highlights E-Commerce Threats, Fraud Against Retailers

    Trustwave, a cybersecurity and managed security services provider, recently released a series of reports detailing the threats facing the retail sector, marking the second year of its ongoing research into these critical security issues. Read Now

  • Stay Secure in 2024: Updated Cybersecurity Tips for the Office and at Home

    Cyber criminals get more inventive every year. Cybersecurity threats continue to evolve and are a moving target for business owners in 2024. Companies large and small need to employ cybersecurity best practices throughout their organization. That includes security integrators, manufacturers, and end users. Read Now

Featured Cybersecurity

Webinars

New Products

  • FEP GameChanger

    FEP GameChanger

    Paige Datacom Solutions Introduces Important and Innovative Cabling Products GameChanger Cable, a proven and patented solution that significantly exceeds the reach of traditional category cable will now have a FEP/FEP construction. 3

  • HD2055 Modular Barricade

    Delta Scientific’s electric HD2055 modular shallow foundation barricade is tested to ASTM M50/P1 with negative penetration from the vehicle upon impact. With a shallow foundation of only 24 inches, the HD2055 can be installed without worrying about buried power lines and other below grade obstructions. The modular make-up of the barrier also allows you to cover wider roadways by adding additional modules to the system. The HD2055 boasts an Emergency Fast Operation of 1.5 seconds giving the guard ample time to deploy under a high threat situation. 3

  • Compact IP Video Intercom

    Viking’s X-205 Series of intercoms provide HD IP video and two-way voice communication - all wrapped up in an attractive compact chassis. 3