More 'distress sales' in 2009?

Thursday, February 5, 2009

PALM BEACH, Fla.--Prior to the opening today of the Barnes Buchanan Security Alarm Conference, one industry investor told Security Systems News that we may see more distress sales in 2009.

"Transactions [sales of alarm companies] are still happening within a reasonably tight range [of multiples] as long as the company isn't distressed," said Henry Edmonds, president of The Edmonds Group (TEG), which has now closed $1.5 billion in transactions since its inception in 2004. Companies who are distressed have avoided selling in the current economic environment, he said: "They don't want to have a fire sale, but they may find that in 2009, they'll have to sell."

It's a different story for companies who are doing well and either buying or selling, he said. "Capital is still available" and the price being paid for accounts, while not "a premium" is "steady."

TEG announced Feb. 2 that it had closed six transactions (all but one in the security alarm industry) in 2008. Before founding TEG, Edmonds was co-founder and CEO of SLP Capital, which was bought by CapitalSource in 2004.

There will be plenty more analysis and alarm-company-investment information dispensed in the next two days here at The Breakers.

Hugh Van der Veer of Buchanan Ingersoll & Rooney will moderate a panel discussion, which will include Joe Nuccio of ASG, Geroge Broady of Kings III of America, John Doyle of Doyle Security, Ira Riklis of COPS, and Daniel Demers of Protectron. Bryan Lawrence of Buchanan Ingersoll & Rooney will moderate the next panel, composed of four industry associations: NBFAA, CSAA, PSA Security Network, Security Network of America. Bill Polk of CapitalSource Finance will wrap up today's presentations with a talk on "Financial Markets and Impact on Lending Overview."

On the roster tomorrow is a CEO roundtable and Mike Barnes' annual and much-anticipated "Alarm Industry and Market Overview."

For more on the Barnes Buchanan conference see the March issue of Security Systems News.