One way you differ from your competitors, though, is how you would use it if you had more money to spend. Your business is very different from others. Perhaps you would want to hire an IT professional to help your business sell more network-technology-based security systems. Maybe an opportunity has come up to buy out your partner or acquire a local competitor, open a branch office, or build a central station. Whatever the goal, you may need the help of a financial service professional.

SDM’s 2005 Guide to Financial Services depicts more than two dozen firms that can help security dealers and systems integrators obtain capital in various forms.

Smaller security dealers may benefit the most from such things as leasing programs and authorized dealer programs.

“Leasing programs offer the small to medium-size dealer the opportunity to compete on a level playing field with the larger companies in the commercial segment. Leasing is based on the customer’s ability to make the lease payments, not the dealer’s,” notes Greg Hunigan, general manager of Lease I Inc., Peoria, Ill.

Money Availability

“Generally, the financing market for security dealers has been stable over the last 12 months,” says Michael Barnes of Barnes Associates Inc., Chesterfield, Mo. “Local and regional banks have continued to support minimal amounts of debt capital to security dealers with modest borrowing requirements, while specialized lenders have continued to support the needs of more aggressive levels of borrowing.”

Henry Edmonds, president of The Edmonds Group, St. Louis, Mo., agrees with Barnes’ assessment, but informs that there are fewer options for smaller dealers than for larger dealers.

“Over the last 12 months, capital market conditions have improved significantly for alarm companies. Sale multiples have increased meaningfully. There are a number of new lenders who are interested in the alarm industry and have closed one or more transactions. Existing lenders are providing better pricing and more flexible terms. There is also significant private equity interest for all size transactions.

“Smaller dealers have fewer financing options than larger dealers, but they do have choices. All in all, it’s a good time to be an alarm company,” Edmonds says.

Dealer programs, many of which are structured to help independent dealers sell more security systems and then to purchase the ensuing monitoring contracts, provide a means for security companies to maintain a steady cash flow as systems are sold and installed. Many programs are well-established, but others are new and not yet proven, notes Harry Schenk, vice president and chief financial officer at Central Security Group, Tulsa, Okla., which operates an authorized dealer program.

“There are a few loan programs still available to the small dealer. However, most loan programs have virtually eliminated the ability for the small to medium-size dealer to borrow money,” Hunigan says.

Dan Linscott, vice president of Financial Security Services Inc., Dallas, agrees that financing options for small and medium-sized dealers have become more limited. “Several specialized lenders have either withdrawn from the market or have elected to focus on transactions of not less than $3 to $5 million,” Linscott says.

“The financing arena has become more difficult, especially for the small to medium-sized alarm dealer,” says Jim German, senior vice president at Security Associates Int’l Inc., Arlington Heights, Ill. “Most likely, it’s a combination of tight money, the security alarm industry’s performance record, and the economy which has caused this decline of funding sources.

“Dealers used to be able to find financing at the $50,000 level on up. Now, except for a few companies, dealers have to be looking for a minimum of $1 million and, at that, there are only a few financing groups who specialize in providing those funds for our industry and only after exhausting due diligence,” he says.

Higher Standards

Investors are still very interested in the security industry, the experts say, but they have a higher benchmark for investment, notes Angela Paymard, vice president at Larrabee Ventures, Sherman Oaks, Calif. “[Investors] explicitly want to see a strong management team, low service cost, low attrition (10 percent or less), solid account creation at low multiples, and the ability to dominate a market or region,” Paymard says.

Along with the “traditional valuation criteria” that investors have, what’s new is that investors are now seeking dealers with strong IT capabilities, says Sandra Jones of Sandra Jones and Company, Chardon, Ohio. “Dealers with good management, consistent profits, low attrition rates and solid recurring monthly revenue obtained through monitoring will always be a magnet for investors in the security industry,” Jones says.

Sidebar: Financial/Business Conference to Be Held this Fall

Titled “The Business of Security,” this will be the 10th anniversary of Securing New Ground.

It will take place November 16 and 17, 2005, at the Roosevelt Hotel in New York City. For more information or to register, call (440) 286-4900 or visit www.securingnewground.com.

Acquisition & Funding Services (AFS)

(800) 354-FUND (3863)

(518) 366-5111

www.afssmartfunding.com

Financial Services:

• Loans based on accounts as collateral
• Account purchase, in bulk
• Business acquisitions wholesale and retail

Other Services:

• Will purchase central station and wholesale accounts

Now’s the time to sell. Don’t miss out. Timing is everything. Values are back. Bulk accounts only. We need sellers now. Acquisition & Funding Services specializes in mergers and acquisitions, providing services to potential sellers looking to sell their companies. We are interested in purchasing traditional alarm companies. Sellers can receive higher-than-normal industry multiples, providing that it is a traditional alarm business. We work with both commercial and residential accounts. We also work with companies who are interested in purchasing wholesale monitored accounts. We have serviced more than eight companies that have been acquired in this calendar year.

Alarm Capital Alliance Media, Pa.

Financial Services:

• Dealer program
• Partial acquisitions
• Full acquisitions

Other Services:

• Central station monitoring
• Billing and/or collections
• Remote access to all account activity

Keep your name, keep your identity, and keep the money coming in. Finally, an independent dealer financing program that lets you truly remain independent. Our mission is simple, direct and flexible. Alarm Capital Alliance is as committed to your business as you are. We offer competitive purchase price multiples and you retain monthly service revenues, customer relationships, and all sales leads. Alarm Capital Alliance offers you a valuable opportunity to handle whatever cash flow challenges come your way, while helping to grow your business at the same time.

Alarm Financial Services Inc.

(866) 204-9350

www.alarmfunding.com

Financial Services:

• Loans based on accounts as collateral
• Revenue sharing
• Account purchase, in bulk
• Account purchase, ongoing
• Consumer financing

Other Services:

• Billing and/or collections

Alarm Financial Services provides funding to dealers via account acquisitions, loans and a hybrid program through which the dealer retains 50 percent of the accounts funded, effectively providing a multiple of 50 times or higher. Dealer receives all ongoing revenue from service, add-ons, moves, changes and referrals. We allow the dealer to keep accounts with the central station of their choice.

Founded in 1986, Alarm Financial Services is the oldest continually operating funding provider in the alarm industry. The company was started and is run by a former installing and servicing alarm dealer with more than 30 years of industry experience.

Barnes Associates Inc.

(636) 519-1905

www.barnesassociates.com

Financial Services:

• We assist alarm company owners and executives in determining the optimal type and size of financing and assist them in securing the financing.

Barnes Associates is a specialized investment banking and consulting firm, dedicated to the security alarm industry. We assist alarm company owners and executives with determining the optimal size and structure of financing, the options available, and assist in securing the financing. We also provide all forms of advisory services related to acquisitions. Since its founding in 1986, the firm has been involved in more than 200 alarm company acquisitions and financings with an aggregate transaction value in excess of $5 billion. Additionally, Barnes Associates consults in the areas of financial and operating performance assessment, valuation, and strategic planning. Our in-depth understanding of alarm company operations and the industry allows us to work effectively and efficiently with our clients and to obtain the best possible outcomes.

CapitalSource

(314) 802-0590

www.capitalsource.com

Financial Services:

• Loans based on accounts as collateral
• Loans based on cash flows

Other Services:

• Billing and/or collections

CapitalSource is a specialized commercial finance company offering asset-based, senior, cash flow and mezzanine financing to small and mid-sized borrowers. We excel in situations that require extraordinary service, industry knowledge, creativity, flexibility and speed. We provide loans in excess of $3 million for acquisitions, recapitalizations, internal growth and working capital. We have a dedicated team of security industry specialists who work closely with management, private equity, sponsors, strategic investors and financial intermediaries.

Central Security Group Inc.

(888) 848-8851

www.centralsecuritygroup.com

Financial Services:

• Account purchase, in bulk
• Account purchase, ongoing

Other Services:

• Central station monitoring
• Dealer program

Central Security Group offers a no-nonsense Dealer Program that provides up to 36 times RMR cash, no holdbacks and no hold-ups to your funding. With individual attention provided by your assigned dealer coordinator, you get one-stop service rather than being lost in a maze of red tape.

Our U.L. central station has one of the fastest response times in the industry. When a customer calls in, they don’t get a recorded message – they get a real person with real answers. Our territories include: AL, AR, AZ, CA, FL, GA, KS, MO, MS, OK, TN, TX.

Cheval Capital

(703) 549-8602

www.chevalcapital.com

Financial Services:

• Mergers and acquisitions

Cheval Capital provides mergers and acquisitions assistance to companies in the security alarm industry. The firm was founded in 1996 and its services are built upon the experience and relationships its principals have gained in raising $1 billion of equity and debt and completing close to $1 billion of M&A transactions. Cheval Capital’s M&A services include determining an acquisition or sale strategy, contacting prospective buyers or sellers, performing financial and valuation analyses, and structuring, negotiating and closing the transaction. Cheval is unique in that its services include extensive management support and assistance in completing the transaction, which it believes leads to better transaction terms, faster completion and less management distraction.

Cornerstone Funding

(888) 629-8101

www.alarmbills.com

Financial Services:

• Loans based on accounts as collateral

Other Services:

• Alarm company software
• Billing and/or collections

Cornerstone provides cost-effective financing to established dealers needing $50,000 to $500,000. Through high-quality subscriber billing services and software, we help borrowing and non-borrowing security companies dramatically simplify subscriber account management. Our services free up hundreds of hours of staff time, so your people can proactively manage your customers, resulting in lower attrition, more cross-sale opportunities, and more referrals. Founded in 1996, Cornerstone works exclusively with security dealers. Our mission: Provide affordable financing and billing services to dealers so they can profitably grow their businesses. Our secure account management system leaves your staff in control of your account data, but eliminates most of the paperwork. We are happy to provide you references from many satisfied dealers around the country.

Criticom International

(800) 810-7574

www.criticomintl.com

Financial Services:

• Dealer Program
• Loans
• Acquisitions
• Cash Advance Program

Other Services:

• Monitoring
• Video
• GPS
• End-User billing/collections
• Equipment discounts

Criticom is the single source that provides capital funding, bulk account purchasing, weekly account funding, dealer loans, and state-of-the-art central station monitoring. We’re the one-stop shop for everything your business needs.

The Edmonds Group

(314) 422-4649

www.theedmondsgroup.com

Financial Services:

• Loans based on accounts as collateral
• Account purchase, in bulk
• Account purchase, ongoing
• Investment banking: arrange financing (senior, sub and equity) and do mergers and acquisitions and asset sales

The Edmonds Group assists companies in raising senior debt, subordinated debt and equity. The company also helps clients identify, evaluate and complete mergers, acquisitions and asset sales. Services include consulting with clients to help them evaluate key business risks and develop a clear business strategy so they can determine the amount of capital required and the optimal capital structure. The Edmonds Group has closed more than $130 million in transactions since its inception in mid-2004. Henry Edmonds, president, was co-founder and former CEO of SLP Capital. Edmonds has extensive experience in middle-market financing, investment banking, and consulting. Prior to his time at SLP, Edmonds was an investment banker with PaineWebber in New York. Edmonds has an MBA from Harvard Business School and a BS from the University of Virginia.

Electronic Funding Corp.

(775) 267-0067

www.achnetwork.com

Other Services:

• Billing and/or collections

Electronic Funds Corp. (EFC) is part of the fast-growing Electronic Funds Transfer (EFT) industry. Trillions of dollars are safely transacted via EFT through the banking system each year. EFC provides an electronic-payment EFT program that provides your customers automatic on-time payments that can be easily traced through the electronic banking system. And introduction, implementation and training of EFT are quick and easy. EFC also offers a proven marketing plan, communication templates, and sales collateral that assist in selling the EFT program. EFC’s software gives you total control of the EFT process from your office. The system can also be networked with a number of users. Every transaction is processed through the Automated Clearing House (ACH) and there are no fees charged to your customer by his bank for EFT.

EMERgency 24

(773) 725-0222

www.emergency24.com

Financial Services:

• Loans based on accounts as collateral
• Account purchase, in bulk
• Account purchase, ongoing
• Commercial leasing

Other Services:

• Central station monitoring
• Billing and/or collections

Featuring account purchase, commercial leasing, and competitive buy-outs.

Financial Security Services Inc.

(800) 864-3131

www.fssinc.net

Financial Services:

• Loans based on accounts as collateral

Other Services:

• Central station monitoring
• Billing and/or collections

Since 1990, Financial Security Services has specialized in lending money to independent alarm dealers. Cash borrowed from FSS is used to make acquisitions, consolidate debt, buy out partners, fund low-cost residential installation programs (instead of selling into a dealer program) and to refinance debt. Both line of credit and term loan financing from $100,000 to $3 million is available to provide maximum flexibility. While many financing programs have come and gone, FSS has provided financing continuously since 1990. During the past 15 years we have never missed a funding. Disciplined use of FSS financing can definitely be an important tool to support growth, profitability and the creation of long-term value.

Focus Enterprises Inc.

(202) 785-9404

www.focusenterprises.com

Financial Services:

• Financing for mergers and acquisitions

FOCUS Enterprises Inc., founded in 1982 in Washington, D.C., provides a range of investment banking services tailored to the needs of middle-market and small businesses. Today we are a national firm serving clients from offices in major cities across the United States. We specialize in transactions for entities with $5 million to $100 million in revenues, serving entrepreneurs, corporate owners, and various types of investors. FOCUS clients include large corporations and private equity firms who engage FOCUS for transactions in our size range. For more than two decades, our transaction success rate has been 70 percent. We believe that this figure compares very favorably with the performance of other firms. We have achieved this singular success rate because of the unique resources, process, and the perspective that we bring to investment banking.

G&M Financial LLC

(417) 725-7970

www.gm-financial.com

Financial Services:

• Loans based on accounts as collateral
• SBA loans
• Purchase order financing
• Commercial leasing

We provide financing and leasing for start-up companies, established companies, and A-C credit. We also provide the following services: SBA loans, working capital loans, lines of credit, accounts receivable factoring, and purchase order financing. We are your one stop for all your leasing, financing and creative funding solutions. Transactions from $3,000 to $2 million.

Knight Security Center

(800) 222-2296

www.knightsecuritycenter.com

Financial Services:

• Loans based on accounts as collateral
• Revenue sharing
• Account purchase, in bulk
• Account purchase, ongoing
• Commercial leasing
• Consumer financing
• Knight Charge Card

Other Services:

• Central station monitoring
• Dealer program
• Billing and/or collections
• Product discounts through ADI

As a one-stop dealer solutions company, we provide a complete range of financial options through Knight Financial Services. Highlights include Knight Authorized Dealer Program, loans, Knight Charge Card, commercial leasing up to $150,000 per sale, and funding to buy out partners or other companies. For more than a quarter of a century dealers have been able to rely on Knight for ground-breaking financial solutions.

Larrabee Ventures Inc.

(818) 789-6020

www.larrabeeventures.com

Financial Services:

• Financial Advisory Services

LVI provides services involved with the acquisition, divestiture, financing and improvement of operations for client companies in the physical security industry. We represent sellers, buyers, borrowers, investors, banks and entrepreneurs. Larrabee Ventures Inc. (LVI) was formed in 1984 by experienced professionals to provide high-quality, specialized consulting, primarily to security alarm companies in the U.S. Today, LVI is a full-service investment bank that provides expertise to companies of all sizes, across North America, Europe and Latin America. Our services include: raising new capital; selling an existing company or division (or accounts); acquiring another company; recapitalizing or refinancing a company; buying out an existing owner (MBO or LBO); and turning around a distressed company.

LEASE I Inc.

(800) 747-7304

www.leaseone.net

Financial Services:

• Commercial leasing

LEASE I was established in 1989 and specializes in leasing commercial security equipment. In fact, more than 95 percent of our revenue is generated by the security industry. In selecting a lease program, you want to work with a company that truly understands the security industry and the issues that an alarm company faces in its day-to-day business operations. The staff at LEASE I has more than 50 years of experience in the security industry. Approved equipment includes: cameras, DVRs, basic security, fire, CCTV, access control, integrated systems, telephone systems, etc. LEASE I’s program is easy, simple, flexible and profitable. We offer quick credit decisions, fast funding, non-recourse to dealer, simple one-page lease documents, competitive rates, no processing fees or document fees, leases from $1,000 to $150,000 and up, plus more.

Monitronics International Inc.

(877) 289-0899

www.monitronics.net

Financial Services:

• Revenue sharing
• Account purchase, in bulk
• Account purchase, ongoing

Other Services:

Dealer program

Dealers also receive revenue sharing, sales literature, cooperating marketing materials, sales leads, sales training, private labeled security equipment, equipment purchase discounts, and management support from Monitronics. Dealers can use the Monitronics’ brand name in their sales and marketing activities and on the products they sell and install. They benefit from affiliation with Monitronics and its national reputation for high customer satisfaction and the support they received as authorized dealers.

Partners Financial Services Inc.

Ellisville, Mo.

(800) 926-1303

www.partners-mo.com

Financial Services:

• Loans based on accounts as collateral
• Account purchase, in bulk
• Account purchase, ongoing
• Commercial leasing
• Consumer financing

Other Services:

• Billing and/or collections

Providing central stations and dealers with collections and low-cost billing services for defaulted contracts and charge-backs. We specialize in collecting the debt your company is most likely writing off – the debt that is associated with consumer retail alarm installation and monitoring. These contracts can keep you tied to your past instead of building your business and financial future. We capture the lost revenue and return it to your company. 100 percent contingency-based only – it costs you nothing unless we collect your money. Featuring skilled negotiators; professional skip tracers on staff; national attorney network; and Internet access to your files and reports.

SAFE LP

San Ramon, Calif.

(800) 669-7779

www.safesecurity.com

Financial Services:

• Account purchase, in bulk
• Account purchase, ongoing

Other Services:

• Dealer program
• Billing and/or collections
• Business tracking services
• Authorized service dealer program
• Quality customer service platform
• Marketing support

SAFE is a national leader in the purchase and servicing of high-end commercial and residential security alarm monitoring contracts for independent alarm companies. Competitive dealer and bulk purchase programs for all or part of an account base are tailored to growth needs. Teamwork is an essential process component when partnering with SAFE to grow your business. Our dedicated acquisitions professionals work quickly to complete your deal with proven policies that identify valuable assets and suppress attrition. Reliable and flexible funding is the result. A stable funding source known for dealer support and quality customer service, SAFE has the technology, infrastructure and experienced management team capable of accommodating greater asset growth. Since 1988, SAFE has more than 50 years of executive industry experience and a reputation for integrity.

Sandra Jones and Company

Chardon, Ohio

(440) 285-4444

www.sjandco.com

Financial Services:

• Finding buyers and sellers

Other Services:

• Consulting

For more than 16 years, Sandra Jones and Company’s team of industry professionals have helped businesses like yours optimize their financial performance and profits in the security industry. We can help you refine your business strategies, develop new sources of recurring revenue, make introductions to strategic alliances or help you with mergers and acquisitions in the U.S., Europe, and China. Complete due diligence services are available to buyers, sellers, and investors. Go to www.sjandco.com to see what our clients say and why 70 percent of our work is from repeat clients.

Security Associates International Inc.

Arlington Heights, Ill.

(800) 323-7601 x1113

www.sai-inc.com

Financial Services:

• Loans based on accounts as collateral
• Revenue sharing
• Account purchase, in bulk
• Account purchase, ongoing

Other Services:

• Central station monitoring
• Dealer program
• Billing and/or collections

With SAI’s Authorized Dealer Program and funding programs, you get the only money-making team that delivers more money so your security business grows, sustains and succeeds in today’s competitive industry.

• Extremely competitive multiples
• Reliable, quick and frequent funding
• Increased RMR and funding multiples by upselling subscriber services
• Ongoing sales and management training
• Guaranteed lead referrals
• Marketing and sales materials
• Equipment purchase discounts
• A partner that doesn’t compete

SAI offers more services, more RMR opportunities and simply more money per account.

Security Finance Associates Inc.

Pasadena, Calif.

(626) 795-9199

www.securityfinance.com

Financial Services:

• Loans based on accounts as collateral
• Account purchase, in bulk
• Account purchase, ongoing
• Commercial leasing
• Consumer financing
• Asset-based lending
• Assistance raising equity capital

Other Services:

• Dealer program
• Consulting in finance and marketing
• Valuations of companies
• Expert witness

Security Finance Associates Inc. is a boutique investment banking firm specializing in the security alarm industry. SFA works with alarm dealers who are interested in selling their accounts or in growing their business through acquisition. We represent more than one dealer purchase program for those companies looking to grow in that segment of the industry. SFA will also assist companies to locate equity or to borrow money against their account base. SFA also does valuations of alarm companies and has acted as an expert witness in judicial proceedings.

TimePayment Corp.

Woburn, Mass.

(877) 868-3800 x7006

www.timepaymentcorp.com

Financial Services:

• Commercial leasing
• Consumer financing

As the industry leader in fixed monthly payment leases, TimePayment Corp. has helped security system dealers, installers, distributors and manufacturers sell more equipment. Specializing in equipment purchases as little as $500, to residential as well as commercial clients in business for less than two years, TimePayment provides an attractive alternative for equipment financing. Make the discovery for yourself. Try selling with TimePayment. You’ll find that you’re closing more sales, faster, easier and more profitably than ever before.

USBX Advisory Services

Santa Monica, Calif.

(310) 315-6711

www.usbx.com

Financial Services:

• Investment banking

USBX Advisory Services is a full-service investment bank focused on serving the middle-market. While USBX is active in virtually every sector, the firm has a particularly strong presence in the security systems and services industry, providing a full range of M&A solutions: sell side advice, buy side advice, recapitalizations, leveraged buyouts, and fairness opinions. In addition, USBX provides clients with a host of strategic financing placement services, including private equity, mezzanine finance, and senior debt. We provide our clients with unmatched service and expertise through extensive industry expertise, proprietary M&A databases and strong relationships with lenders, investors, and C-level executives of the industry’s largest companies.

US Express Leasing Inc.

Parsippany, N.J.

(866) 879-USXL (8795) x606

www.usxl.com

Financial Services:

• Commercial leasing

USXL can help you close more commercial sales – quickly, efficiently, and profitably with a leasing program customized for your dealership. At USXL, we think you deserve more. More personal attention, more targeted programs, and last but not least, more success:

• We can fund deals before installation and help you better manage the cash flow of your business.
• We’ll do the paperwork for you, so leasing is as easy to administer as a cash sale.
• We guarantee fast turnaround – typically, same-day approvals.
• Funding within 24 hours
• Notification if your customer requests a buyout or termination quote

Whether it’s fire alarms, intrusion detection, video monitoring and surveillance, or identification equipment, our local relationship managers are readily available to help your commercial customers make the right financing choices.