Barry EpsteinPresident

Vertex Capitalbepstein4@sbcglobal.net

972-740-2740

SedonaOffice 2013 Vertex Capital

Advisory services specializing in the Life Safety sector

Buy and sell side advisory services across the country

Representation of all types of buyers: local, regional, private equity backed, public

Acquisitions throughout the Life Safety arena, including alarms, integrators, guards, fire/fire sprinkler, medical alert

SedonaOffice 2013 Vertex Capital

Why do acquisitions?

Types of buyers and sellers in today’s market

What the seller needs to have and wants to know

Ingredients of the letter of intent

Financing the deal

Looking at a seller’s actual bids

SedonaOffice 2013 Vertex Capital

Faster growth

More markets= more of a referral base

Pick up strong sales reps and techs

Smoother revenue stream

Replace attrition- buying an SDM 50 to stay even

SedonaOffice 2013 Vertex Capital

Local with $50k in mrr

Regional with $600k in mrr

National account buyer with $4mm in mrr

National company buyer with $8mm in mrr

SedonaOffice 2013 Vertex Capital

Relish contracted recurring revenue

Good opportunity for growth through acquisition

Low market penetration vs. other recurring revenue (TV, internet, phone)

Very liquid market = easy exit

Lenders throwing money at large borrowers

SedonaOffice 2013 Vertex Capital

Dealer with $6,000 in mrr (contracts/mixed phone line)

Dealer with $32,000 in mrr (good contracts, c corp)

Dealer with $70k in mrr (valuation expectation)

Dealer with $180k in mrr (offices, own central, kids in business)

SedonaOffice 2013 Vertex Capital

Signed Contracts Own The Phone Lines Attrition Calculation (static pool) Financial Statements with Adjusted EBITDA Knowledge of Tax Implications Legal Representation Sell Side Representation (State to State) Multiple Offers

SedonaOffice 2013 Vertex Capital

What’s the multiple? Does contract term matter? Is there a minimum MRR? Will the buyer keep my people? Rich man,

poor men Do I have a shot at the holdback? Is the multiple the price or + b/s items? Does the buyer have the money?

SedonaOffice 2013 Vertex Capital

If wholesale, let your customers know

Put ad in state association newsletter

Put the word out at the association meetings

Don’t assume he won’t sell to you (2 old rams who hadn’t spoken in 12 years)

Look for orphans (Large buyers/small markets too much trouble)

Build a pipeline (They may sell in 4 years)

ASK CONNECTORS

SedonaOffice 2013 Vertex Capital

Nonbinding

Multiple

Number of accounts

Amount of recurring revenue

LOI expiration date (ideally less than 4 years!)

Freeze period

Stock purchase vs asset purchase

Accounts only or assets (a/r, inv, veh, fix, lease)

SedonaOffice 2013 Vertex Capital

Buying 1,000 accounts at $25 per month= $25,000 in mrr.

Purchase price is 33x, 10% held back for one year.

$25,000 * 33x = $825,000 * .9 = $742,500.

Bank lends 22x or $550,000. Buyer comes up with balance of $192,500 or puts up more mrr to the bank ($33,700 total= no cash upfront)

SedonaOffice 2013 Vertex Capital

Attrition has settled down and will remain stable

Number of buyers on increase as banks keep lending

No killer app in sight to destroy monitoring revenue

Utilities trying again to gain tremendous market share

Multiples will remain strong as private equity firms have huge amounts of money on the sideline that must be put to use

SedonaOffice 2013 Vertex Capital