Overall, it is easy to see why dealer programs are attractive, on both sides of the fence. They are also a great barometer of the vibrancy of the industry and the capital markets that support its growth. If accounts totaling the size of Broadview can be created and traded during one of the toughest two years in history, this has to bode well for the industry as a whole.
Straight from the conference floor
As to how ADT's purchase of Broadview affects the market, many felt that no one would be unhappy to have one less sales person, especially as sales person with a big company name, knocking at a prospects door. With Broadview off the table, a very appealing operating company, we're unlikely to see a large outsider such as a Telco or cable company come into this industry, which could affect the capital market's interests in the RMR market. This deal and the possible sale of Protection One, divide the playing field into "the" big and the smaller alarm companies. Will this make it easier for independent companies to garner new business, affect buyer's perception of a systems value and cost? We'll see. The multiples offered to Broadview were debatably between 43 and 47.5 given some tax implications but going forward this is not the standard for what an alarm company should expect. Broadview got this multiple "because of their superior operating metric."
- Carol Enman, publisher, SD&I
Michael Barnes is a Partner in Barnes Associates Inc., an advisory and consulting firm located in St. Louis that specializes in the security alarm industry. He can be reached at email@example.com.