SD&I: Currently, what types of investors or others are looking at the security industry and how has this changed from the past?
Barnes: “Generally, there has been consistent interest in the industry from a consistent mix of investors. The recurring revenue component and the market’s sustained growth during the recession have helped to keep the industry attractive to investors. The impact of the recession however has made investors more conservative with an emphasis on investments that are more proven and less risky.”
Schmidt: “The physical security space has always experienced strong consolidation economics, which have led to consistent consolidation interest from the leading industry companies. What has changed over the past six years is the number of financial buyers, mostly private equity firms, which have discovered the great opportunities that exist in the security industry. In addition to significant capital, these private equity firms bring additional resources and discipline to the industry.”
Davis: “The types of investors who have come into the industry over the years have not changed dramatically. They do not have a high degree of risk tolerance and are looking for stable, cash-flow businesses. Many have come out of the cable, satellite dish or telephone industry and understand RMR. They are looking for a large platform company to get established in the industry. Today’s investors may be younger or even smarter but at the end of the day, they’re interested in a good operating company and that has not changed.”