Alarm Funding Associates buys accounts stays invisible

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Wednesday, March 1, 2006

EXTON, Pa.-- Alarm Funding Associates secured two acquisitions as of January and chief executive officer Greg Westhoff said more deals for the funding company are on the way.
AFA purchases all or some of a company's recurring revenue and, under the agreement, the alarm company continues business under their own name.
Westhoff, former chief executive officer at Alarm Capital Alliance, thought the industry needed something different on the acquisition front rather than coming in and buying a company, changing the signs, and keeping only the key employees. "What I saw is that it doesn't help. You can't do it the way that little niche company did it." Westhhoff examined his company's role and asked, "Why change it if you don't have to? ... They needed money for whatever reason, but they want to stay in business. They like the industry and that's what we let them do."
AFA launched a year-and-one-half ago. Already, the company has closed deals in Florida and Texas totaling roughly 4,000 accounts. The funding comes through equity, Westhoff said. He mentioned that the company is in the process of setting a debt facility. Westhoff added that the company plans to secure a handful of deals in the first half of this year. The company's marketing initiatives will be concentrated in the southern tier of the United States from Georgia to California.
Westhoff said there is interest in this business model in the South. "There are lots of good alarm companies that are looking for a model like ours."
AFA does not have an operating company for the acquired accounts. This enables the alarm company whose accounts have been purchased to continue to service clients and develop business leads or add-ons in their own name and region.
The partnership with AlarmWatch, of Hunt Valley, Md., a third party central station, provides the monitoring and back office support such as billing and collection for the accounts AFA adds.
The company's model "is perfect for the guy who wants to take some money out of his business without going out of business." The company bills and collects customers under its own name, while AFA is "pretty much invisible," Westhoff said.