Last week home security and alarm firm ADT Inc. filed for an initial public offering of up to $100 million, reports Bloomberg. Proceeds from the IPO will be used to pay down $10.1 billion in debt and redeem preferred securities. If approved by the Securities and Exchange Commission, ADT will list its shares on the New York Stock Exchange under the ticker symbol ADT. The IPO is being led by Morgan Stanley and Goldman Sachs Group Inc.

Founded in 1874 as American Direct Telegraph, ADT was one of the early forerunners of home security. In May 2016, Protection One, a competitor, acquired ADT through private equity firm Apollo Global Management for $12.3 billion including debt. The two companies merged and are operated out of Boca Baton, FL under the ADT brand. Less than two years later, Apollo is filing for an IPO to take the company public. According to Seeking Alpha, Apollo will retain a controlling interest in ADT.

In 2016, ADT had total revenue of $2.9 billion and a net loss of $537 million. Through the first nine months of 2017, ADT has had total revenue of $3.21 billion and a net loss of $295.6 million. The company reports total assets of $17.1 billion. More than 90 percent of ADT’s revenue comes from ‘contractually-committed monthly payments under customer contract terms that are generally three to five years in length and where the average customer tenure exceeds the initial contract term.’

In the S-1 filling, ADT reports more than 8 million residential and business customers, and 18,000 employees in more than 200 locations. The company handles more than 15 million alarms a year which breaks down to 28 alarms a minute/24-7-365. ADT cites three primary strengths for potential investors:

• Significant and stable operating cash flow, due to subscription revenue
• ‘Highly attractive’ rate of return on customer acquisition expenditures
• Growth opportunities

The company also cites its high brand recognition, significant market share, nationwide presence and wide range of products and services. Since the 2016 acquisition, ADT said it has improved operational and financial metrics, strengthened operating discipline, improved customer service, reduced customer revenue attrition and progress in growth areas.

Insider Take:

ADT has a 140+ year legacy, huge market share (five times that of its closest competitor) and a lot of strengths to tout to any investor. In addition, as ADT explains in the IPO, the home security monitoring market is growing, and ADT is well positioned to benefit from this growth as long as its customer service improvements hold and the company stays up with the latest technology. Though other large IPOs have fallen flat in the last year (e.g., Stitch Fix and Snap), ADT has the potential to do well. We’re eager to see how they do.