AFS Talks M&A with Security Info Watch at ISC West 2024

Two hands shaking for a business deal

Rory Russell, president of Acquisition & Funding Services, had an informative conversation with Security Info Watch Editor-In-Chief Paul Rothman at the recent ISC West Conference. ISC West, the leading security trade event in the U.S., was the perfect platform for Russell to share his experience and discuss the latest developments in mergers and acquisitions.

SecurityInfoWatch.com is the industry’s best source for everything from breaking news to cutting-edge technology analysis. Rothman’s questions and the conversation below provide valuable insight into the value and sales trends related to security businesses under current market conditions.

AFS & Security Info Watch Interview Transcript

Paul Rothman – We’re here at ISC West, we’ve got a real treat today. We’ve got Rory Russell, the world famous, from Acquisition and Funding Services and we’re going to talk about M&A in the industry. Let’s start with outside forces on M&A right now. Is anything slowing it down?

Rory Russell – No. Not now. It seems to be a really great time to be selling your business. There’s a plethora of money out there right now, in private equity especially. Interest rates are a little higher, but it really hasn’t really affected the market.

Paul Rothman — What about the election?

Rory Russell – Politics really doesn’t come into play with our industry, it never has. All the years whoever is running for office or not running for office hasn’t affected it at all so politics doesn’t play a part in it.

Paul Rothman – So everything is going strong?

Rory Russell – It’s booming. The deals being done are high in terms of valuation. We’re getting multiples on RMR supported with profit.  We’re getting into the low 40s. For EBITDA, depending on size of transaction, anywhere from 4 to 10. I’m seeing new buyers and also young people coming in working for private equity. I have, I would say, 6 – 8 new buyers in the market for security, fire, and integration companies.

Paul Rothman – So exactly what are those folks looking for in an integration company?

Rory Russell – What I think we’ve missed over the years is everyone has been looking at buying RMR. What we need to start looking at is making sure the company makes money. If you’ve got 30 thousand RMR, it should be worth this much money. Not necessarily. If you can get more, show me the money—show me your company is profitable.  Other revenue sources, such as service or test and inspect, that all add value.

With the new buyers, the new private equity—that’s a word people don’t understand—It’s just a pool of money people have put together and they deploy it to individuals to go out and buy certain types of companies. There’s different ones out there, there’s a fire private equity guy, there’s an integration private equity guy, there’s a security integration guy. Some buy all 3, they want to buy that one stop shop.

What we need to do in the future is make sure your company not only has RMR, but also has a footing under it of cash flow as well. If you have both, you’re going to get top dollar. Now we’re finding that the deals are actually no holdbacks. If you have the right company and right ingredients, there are no holdbacks.

Paul Rothman – Working with a broker like you, how does it make the whole process easier for an integrator or owner?

Rory Russell – First of all, you never represent yourself. You know how they say: if you’re a lawyer, you never represent yourself.  We sort through the tire kickers, the people who are really just gathering information. We make sure it stays confidential because ‘loose lips sink ships’ and the more people who know, it can get out there. We make sure that all the buyers we bring into it get a confidentiality non-circumvent agreement signed. That eliminates this thing sneaking out and your employees finding out.

In all my 30 years of doing this, it’s been a long time. I was in the security business and it was a blast—I sold the business and then got into lending money and now all I do now is mergers and acquisitions. I’m really not in the funding business anymore; I send that over to Jim Wooster. I work with other professionals in the industry and have a group of professionals—lawyers and accountants—that work around me. Mike Barnes, I call him to work on bigger transactions so I can do any deal from one million to a hundred million dollars.

Paul Rothman – How does somebody go about contacting you?

Rory Russell – The best way to contact me you can call me directly at my personal cellphone number. I’m available 24/7 at 888-680-6727 and at afssmartfunding.com.

Ready to Sell Your Alarm/Security Integration Company?

At Acquisition & Funding Services, President Rory Russell has worked on every aspect of mergers and acquisitions in the security alarm, fire, and integration industry for more than 20 years. If you need expert guidance to navigate a transaction, AFS provides assistance with all facets of the deal from financing to bringing the right buyers and sellers together to ensure mutual success. For more information, contact AFS today to learn more about how we collaborate to help you meet your business and personal goals.