ROMEOVILLE, Ill. – Protection 1 has not entered into a sale process but instead is evaluating a range of options, including a public offering, a source familiar with the deliberations tells SSI.
This week Reuters reported that Protection 1 is being put up for sale by private equity firm GTCR, which acquired the then publicly held security company in 2010 for $828 million, including the assumption of debt. The news agency’s report, which cited unidentified sources, said GTCR has enlisted Morgan Stanley to assist with the sale.
However, a source who requested anonymity because of GTCR’s ongoing evaluation tells SSI the news agency’s report is “incomplete at best.”
“P1 is not in a sale process,” the source said. “But given its success over the past four years, P1 is evaluating a range of options, including an IPO.”
While Reuters said Protection 1’s asking price is “more than $1.5 billion,” the current valuation of the company, based on recent industry transactions and current multiples, would indicate a loftier price — potentially even well north of $2 billion.
For example, publicly held ADT and Monitronics trade at approximately 13x to 15x their respective steady-state net operating cash flow (SSNOCF). Protectron, Securitas Direct, Security Networks, among other companies dealt in blockbuster industry deals in recent time, traded for similar multiples in sales. Protection 1’s roughly $140 million of SSNOCF, publicly known in the debt market, when calculated at a 15x multiple would total approximately $2.1 billion.
That total is tantamount to rarified air in the security industry, which has only produced a handful of installing/monitoring company acquisitions of such magnitude. The most recent instance being Blackstone Group’s $2 billion deal for Vivint in 2012.
SSI continues to report on this developing story.