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Henry Edmonds

Monitronics to acquire Security Networks

After $487m cash deal, Monitronics will have 600 dealers, 1 million customers
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07/10/2013

ENGLEWOOD, Colo.—Monitronics will have more than 600 dealers and 1 million accounts when it completes the $487 million acquisition, announced today, of super-regional security company Security Networks, the 14th largest residential alarm monitoring company in the United States.

Ascent Capital's largest stockholder sells half of his preferred shares

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Wednesday, October 30, 2013

Some intriguing financial news out of the Monitronics/Ascent Capital camp. Ascent Capital Group’s largest direct stockholder, media mogul John Malone, recently sold half his preferred shares—worth $32.7 million in cash—back to the company, according to a news release from Ascent Capital. The divestment comes nearly three years after Ascent acquired Monitronics in a $1.2 billion deal.

Malone, who sold 351,734 shares, now owns the same number of Series B shares, plus 198,540 Series A shares, which together comprise 21.6 percent of the Ascent shareholder vote, the release noted.

In an email exchange, Henry Edmonds, president of The Edmonds Group, a St. Louis-based investment bank, indicated that the move would likely please shareholders. "Ascent has had plenty of cash on its balance sheet so this is not a bad use of funds to help stock price," he said.

It will be interesting to see what (if any) effect this has on operations at Monitronics, a wholly owned operating subsidiary of Ascent. An investor I contacted seemed to believe it would not have much effect. Yesterday, the company announced that it will report its earnings on Nov. 12, 2013. On that date, the company will host a conference call in which management will give an update on Ascent’s operations, including the financial performance of Monitronics, and “may also discuss future opportunities,” the release said.

In all likelihood I’ll be dialing into that conference call, which I’m hoping will shed some light on what those opportunities might be. 

PE ponders PERS

Edmonds: ‘capital providers’ join MAMA ranks
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10/23/2013

ST. LOUIS—There will be more transactions in the typically quiet PERS space over the next six to 12 months, and maybe even sooner, according to Henry Edmonds, president of The Edmonds Group, an investment bank here, which specializes in recurring-revenue businesses.

Henry Edmonds presents on PERS valuations

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Wednesday, October 9, 2013

As I encounter new theories and projections about PERS valuations, I continue to find a refreshing lack of uniformity among the experts. That’s not to say there aren’t areas of agreement. There are. Those watching the market often cite similar determinants of valuation, such as attrition rates, cash flow and the costs of creating new accounts. But experts seldom endow the same metrics with equal importance.     

For example, Barry Epstein, president of Dallas-based Vertex Capital, believes reducing attrition rates to be a critical component of increasing PERS valuations. Conversely, Mark Sandler, a principal with SPP Advisors, downplayed the importance of churn, saying instead that a company’s value hinges more on how efficiently they can redeploy their units.

Today I came across a presentation on PERS valuations delivered by Henry Edmonds, president of The Edmonds Group, at the Medical Alert Monitoring Association conference held last week in Orlando. Edmonds’ insights reflect another nuanced interpretation of the market. In the presentation, he boiled PERS valuations down to four key metrics: cash flow; churn (attrition rate); growth rate/new account volume; and creation cost.

Just as vital for maximizing value is the ability of dealers to compile solid data on these metrics, Edmonds noted in one of the slides.

Edmonds developed some pretty in-depth calculations that he believes dealers should be cognizant of. For instance, churn rate metrics should account for total lost RMR on a trailing 12-month or trailing six-month basis. That figure should then be divided by average outstanding RMR. With respect to the cash flow, Edmonds advises dealers to focus on adjusted EBITDA and steady state free cash flow.

Edmonds’ presentation also offered a trove of information about buyers. He noted that buyers will create finance models for target companies, develop key assumptions based on a target company’s past performance and determine a capital structure based on current market conditions.

Edmonds also provided the following aphorism: “Buyers never pay more than they think they have to.”

In the coming weeks I plan to speak with Henry Edmonds himself to get a more in-depth take on PERS valuations and the state of the market in general. Stay tuned.

Former Security Networks CEO Rich Perry mulls next move

Perry looks to 'find the right situation, grow another business'
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08/21/2013

WEST PALM BEACH, Fla.—With the Aug. 16 close of the Monitronics-Security Networks deal behind him, former Security Networks CEO Rich Perry is taking some time off, but he’s spending some of that time thinking about his next venture in the security industry.