Security watch

ADT and Broadview acquisition: 42x RMR is benchmark

Wahrsager said the move primarily affects the residential security alarm industry, since both ADT and Broadview Security were top players in that space. He said that while ADT has a strong presence in the commercial marketplace for burglar alarms and security systems, Broadview Security was not particularly strong in that area.

“Truthfully, this [merger] is a revelation for our industry,” said Wahrsager. “They just widened the gap tremendously.”

John Mack, executive vice president and co-head of investment banking for Imperial Capital said the merger could run up against anti-trust regulations. He expected the deal to give the combined ADT-Broadview business unit approximately 35 to 45 percent of the U.S. residential alarm market.

Mack added that the $2 billion price gives an RMR multiple of approximately 42 times RMR. That multiple is significantly lower than what many businesses have expected; since the previous range of RMR multiples on sales was typically between 50 and 60 times RMR.

“It portends a significant direction for sale of these types of businesses,” said Mack. “Companies may no longer be getting 50 or 60 times RMR. These are the best players in the residential alarm business, and this is the benchmark transaction in the industry and will be for a long time.”

Mack agreed with Wahrsager’s belief that the deal was very good for the industry and shouldn’t be seen as a negative for smaller alarm businesses.

“If the market wasn’t growing, consolidation would be intimidating for the other companies, but we’re seeing growth of sometimes up to 10 percent a year in this industry,” said Mack. “I generally think there is opportunity for small- to mid-size companies with respectability in the market.” –Reprinted from

Control Panel Standard Gains Additional Flexibility

Recent revisions to the groundbreaking ANSI/SIA-CP-01 Control Panel Standard – Features for False Alarm Reduction, may have the new flexibility in programming options to encourage even more widespread compliance in the voluntary standard by control panel and alarm receiver manufacturers, according to Stan Martin, executive director of the non-profit Security Industry Alarm Coalition (SIAC), based in Frisco, Texas.

SIAC, which is comprised of the Canadian Security Association (CANASA), Security Industry Association (SIA), Central Station Alarm Association (CSAA) and the Electronic Security Association (ESA), originally created the standard in 2000 when it decided it was in the industry’s best interests to have panels manufactured ‘pre-programmed’ from the factory with default parameters, especially related to entry and exit, where most user-caused alarms were logged. The majority of the industry’s control panel and alarm receiver manufacturers participated in the creation of the standard.

Now, with a drop in dispatch rate by 70 percent, even with a much larger installed base of alarms, SIAC has made revisions to portions of the standard to make certain default parameters more flexible—which may result in more widespread adoption in the voluntary standard by manufacturers of these products.

SIAC announced there were several significant changes pending to the standard, barring approval by the Security Industry Standards Council, according to Martin. Two of the proposed default programming changes are expanded swinger shut-down programming and the abort window (communication delay).

Swinger shut-down programming is how many times a zone may trip before automatically bypassing. Prior to this most recent revision, the default number was one and it could only be programmed to a maximum of two. The revised standard would allow the user to program to allow for a maximum of six zone trips, giving an additional margin of safety before bypassing the zone. Most users will not change the default from more than two, but if the programmer so desires they can set it to the maximum of six, Martin said.

Another significant issue was the 30-second minimum communication delay. A small group thought the 30-second communication delay was not necessary with the advent of two-call verification and cellular telephones which allow central station operators to quickly reach responsible parties to determine alarm status. Now, that delay can be programmed to zero and the zone type to immediate but the control panel factory default would still be the 30-second delay. This communication delay would not apply to panic or duress signals.