Select Security Spends $11.6M to Acquire U.S.-Based Subscribers From AlarmForce
The transaction will add approximately 28,000 customers to Select Security’s account base.
LANCASTER, Pa. — Following on the heels of a pair of acquisitions announced earlier this week, Select Security has entered into an agreement to purchase the United States subscribers of Toronto-based AlarmForce Industries (TSE: AF).
According to AlarmForce’s second quarter financial results, released Wednesday, the company sold the accounts to Select Security for $11.6 million (approximately CAD$15.3 million). Expected to close on or around June 23, the transaction will add approximately 28,000 customers to Select Security’s ranks. The addition will bring the company’s total customer base to almost 60,000 subscribers.
The deal will expand Select Security’s territory in Ohio, North Carolina, Florida, Georgia, Kentucky, Virginia, Minnesota, California, New York, Texas, Colorado and New Jersey.
SSI Editor-in-Chief/Associate Publisher Scott Goldfine spoke with Select Security President Steve Firestone about the transaction while attending the Electronic Security Expo (ESX) in Nashville.
Firestone explains the purchase marks the super-regional security firm’s largest acquisition by far since its founding in 2003. He says the company became aware of the opportunity about 60 days ago. About 40% of the acquired subscribers reside in existing areas already covered by Select Security, while the remaining 60% are in “attractive markets” currently not serviced by the company, he says.
“It’s a nice way in to those markets with an embedded customer base,” Firestone says.
Select Security picks up about $850,000 in recurring revenue, bringing its total RMR to nearly $2 million, he adds.
To service the additional clientele, Select Security plans to recruit employees to staff 40 new positions, half of which will serve at the corporate level at the company’s headquarters in Lancaster. The other positions will be based in field offices. Firestone also says the company will open six or seven new branches, extending its satellite offices to more than 20.
“Our people are very excited at Select for potential new career opportunities this brings them now,” Firestone says.
Select Security expects to have its new customers fully integrated into the company within about 60 days. There will be much to accomplish in that time. Because AlarmForce uses proprietary alarm systems, Select will have to contact each of the new customers and either attempt to integrate their existing system or change over to a new system.
AlarmForce reported its total subscribers declined during Q2 to 131,160, down 2.7% compared to the previous quarter or 3,583 subscribers, more than 70% of which were in the U.S.
AlarmForce reported average revenue per new subscriber (ARPNU) for the first six months of 2017 of $39.01, up from $35.68 for the same period in 2016 when the company was still adding new U.S. subscribers in certain markets. The company stated in the quarterly results announcement that it would remain focused on growing its existing subscriber base and increasing recurring monthly revenue (RMR) in the Canadian market.
AlarmForce stated its “long-term strategy involved the departure from the U.S. market as the cost per acquisition for new subscribers had turned out to be cost prohibitive and not consistent with parallel opportunities in the Canadian market.”
“It has been a pleasure working with the leadership team at AlarmForce to close this deal, and I look forward to releasing more information on this acquisition and our integration plans in the near future,” says Select Security Founder and CEO Patrick Egan.
A full-service provider of security and home automation products and services, Select Security was founded in 2003. The company offers monitoring services through its network of four central stations, each of which is UL listed, FM approved and have earned the Five Diamond certification from The Monitoring Association (formerly CSAA).
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