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

  • 12 Commercial Crime Sites to Do Your Research

    12 Commercial Crime Sites to Do Your Research

    Understanding crime statistics in your industry and area is crucial for making important decisions about your security budget. With so much information out there, how can you know which statistics to trust? Read Now

  • Boosting Safety and Efficiency

    Boosting Safety and Efficiency

    In alignment with the state of Mississippi’s mission of “Empowering Mississippi citizens to stay connected and engaged with their government,” Salient's CompleteView VMS is being installed throughout more than 150 state boards, commissions and agencies in order to ensure safety for thousands of constituents who access state services daily. Read Now

  • Live From GSX: Post-Show Review

    Live From GSX: Post-Show Review

    This year’s Live From GSX program was a rousing success! Again, we’d like to thank our partners, and IPVideo, for working with us and letting us broadcast their solutions to the industry. You can follow our Live From GSX 2023 page to keep up with post-show developments and announcements. And if you’re interested in working with us in 2024, please don’t hesitate to ask about our Live From programs for ISC West in March or next year’s GSX. Read Now

    • Industry Events
    • GSX
  • People Say the Funniest Things

    People Say the Funniest Things

    By all accounts, GSX version 2023 was completely successful. Apparently, there were plenty of mix-ups with the airlines and getting aircraft from the East Coast into Big D. I am all ears when I am in a gathering of people. You never know when a nugget of information might flip out. Read Now

    • Industry Events
    • GSX

Featured Cybersecurity

Webinars

New Products

  • ComNet CNGE6FX2TX4PoE

    The ComNet cost-efficient CNGE6FX2TX4PoE is a six-port switch that offers four Gbps TX ports that support the IEEE802.3at standard and provide up to 30 watts of PoE to PDs. It also has a dedicated FX/TX combination port as well as a single FX SFP to act as an additional port or an uplink port, giving the user additional options in managing network traffic. The CNGE6FX2TX4PoE is designed for use in unconditioned environments and typically used in perimeter surveillance. 3

  • Automatic Systems V07

    Automatic Systems V07

    Automatic Systems, an industry-leading manufacturer of pedestrian and vehicle secure entrance control access systems, is pleased to announce the release of its groundbreaking V07 software. The V07 software update is designed specifically to address cybersecurity concerns and will ensure the integrity and confidentiality of Automatic Systems applications. With the new V07 software, updates will be delivered by means of an encrypted file. 3

  • ResponderLink

    ResponderLink

    Shooter Detection Systems (SDS), an Alarm.com company and a global leader in gunshot detection solutions, has introduced ResponderLink, a groundbreaking new 911 notification service for gunshot events. ResponderLink completes the circle from detection to 911 notification to first responder awareness, giving law enforcement enhanced situational intelligence they urgently need to save lives. Integrating SDS’s proven gunshot detection system with Noonlight’s SendPolice platform, ResponderLink is the first solution to automatically deliver real-time gunshot detection data to 911 call centers and first responders. When shots are detected, the 911 dispatching center, also known as the Public Safety Answering Point or PSAP, is contacted based on the gunfire location, enabling faster initiation of life-saving emergency protocols. 3