Monitronics International Inc. and its subsidiaries (doing business as Brinks Home Security) announced that it has acquired approximately 114,000 residential alarm monitoring contracts from Protect America Inc. totaling approximately $4.6 million in recurring monthly revenue.
Per the terms of the transaction, Brinks Home Security will take ownership of the alarm monitoring contracts at closing through an earnout structure that includes a $15 million upfront payment. For the first six months following the closing date the company will pay a $5 monthly earnout payment per active account. For the remaining 44 months immediately following the initial earnout period, the company will pay the seller a $25 monthly earnout payment per active account.
The company acquired the accounts lien free at closing and, after month 50, will have no further earnout obligation to the seller.
“This transaction fits neatly into our philosophy of acquiring profitable accounts at scale and holding them for life,” said Brinks Home Security CEO William Niles. “The company will only make monthly earnout payments on active accounts with no payment required for non-pay or non-active customers, thus largely eliminating any related attrition risk. Further, the economic interests of the company and the seller are aligned as both the company and seller stand to benefit from Brinks Home Security’s award winning and best in class customer service.”
The transaction is supported by a majority of the company’s first lien lenders who now enjoy an additional $4.6 million of RMR, significantly enhancing their credit position.
Protect America Inc. was represented in this transaction by Imperial Capital.
