Brinks Home Security’s bulk acquisition of contracts

Tuesday, June 23, 2020

DALLAS—Monitronics International, Inc. and its subsidiaries, which includes Brinks Home Security, announced it has acquired approximately 114,000 residential alarm monitoring contracts from Protect America, Inc., totaling approximately $4.6M in recurring monthly revenue (RMR). 

“This transaction fits neatly into our philosophy of acquiring profitable accounts at scale and holding them for life,” William Niles, interim CEO, Brinks Home Security, said in the announcement. “The company [Brinks Home Security] 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.” 

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 $15M upfront payment. For the first six months following the closing date, the company will pay a $5.00 monthly earnout payment per active account. For the remaining 44 months immediately following the closing date, the company will pay the seller a $25.00 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. 

The transaction is supported by a majority of the company’s first lien lenders who now enjoy an additional $4.6M of RMR significantly enhancing their credit position.