Talk to people involved in security dealer financing or buying and selling security dealers about recent trends and you’re likely to hear the word “frothy.” It’s the word that the financial community uses to describe the industry just prior to COVID-19 when security dealers were selling for relatively high prices, expressed as a multiple of recurring monthly revenue (RMR), but as Mike Barnes, founding partner for St. Louis-based Barnes Associates, Inc., puts it, “the average performance of alarm companies had been slipping.”
Market valuations, according to Barnes, were frothy and there was a need for those valuations to moderate, if not come down.