Investment Opportunity
In the early 1990s, the security alarm industry represented an excellent opportunity to acquire companies as the industry was highly fragmented and possessed both substantial growth potential as well as stable and predictable recurring revenue streams. In 1993, the overall security alarm industry had revenues in excess of $11 billion with annual growth averaging 9% since 1988, despite only 10% residential alarm penetration. Additionally, the industry was represented by 13,000 companies and was consolidating rapidly.

Business Description
In the mid-1990s, three Southeastern security alarm businesses with operations in Alabama and North Carolina were acquired in order to take advantage of the consolidation and internal growth opportunities in the industry. By 1996, 280 Security Holdings, Inc. was ranked among the top twenty alarm companies nationwide, generating in excess of $850,000 in monthly recurring revenue through the installation, servicing and monitoring of residential and commercial burglary and fire alarm systems.

Transaction Description
In December 1994, Automatic Detection Systems, Inc. was acquired through the contribution of approximately $4.8 million in the form of $1.8 million in common equity and $3.0 million in subordinated debt. A $9.8 million term loan and revolving credit facility was arranged with Bank of Boston, of which $4.6 million was designated as a line of credit for future acquisitions and internal growth.

In May 1995, 280 Security Holdings, Inc. made its first add-on acquisition in the alarm monitoring industry by purchasing National Security Consultants, Inc. An additional $1.2 million in the form of $0.5 million in common equity and $0.7 million in subordinated debt was contributed to complete the acquisition. An increase in the term loan with Bank of Boston completed the financing for this transaction.

In March 1996, 280 Security Holdings, Inc. acquired National Security Service, Inc. for a transaction value of $17.5 million. The credit facility with Bank of Boston assisted in funding this acquisition.