CONROE, TX / ACCESSWIRE / April 30, 2020 / Custom Protection Services Inc. (OTC PINK:CSPS) (‘Custom Protection’, or the ‘Company’), an emerging leader in the tailored security and protection services marketplace, announces that the Company is now moving forward with the implementation of its Long Term Growth Strategy.
The contract security industry is highly fragmented with over 8,000 companies operating in the global market. According to a recent industry report by Robert H. Perry Associates, Incorporated the clear majority (96.5%) are privately owned smaller companies with gross revenues less than $5,000,000. The owner demographic of these companies is on average 60+yrs, beginning to think of retirement and motivated to sell.
“There are lot of well-run privately owned security companies out there;” stated John D. Kuykendall, Chief Executive Officer of Custom Protection Services Inc. “We want to attract the top performers by offering a structured exit strategy that is not only fair and timely but offers significant upside with the participation of ownership of stock in a public company. It is a buyers’ market, we are going to leverage that, and to our knowledge no other public company is offering what we are offering;” continued Mr. Kuykendall.
A typical acquisition transaction will utilize a combination of cash and stock. The selling owner will receive a negotiated cash payment combined with a restricted stock position issued from the treasury of Custom Protection in exchange for their ownership percentage. Any restricted stock issued by Custom Protection will be valued at current market values and subject to a vesting agreement. The selling owner must agree to a one to three-year management contract which will allow the development and implementation of a succession plan to limit the disruption of the corporate culture of the acquired company. It will also allow the selling owners to earn an income while transitioning into retirement. As the acquired company continues to perform it will positively impact the consolidated financial position of Custom Protection, thereby resulting in a higher share price and adding value to any common shares issued to the selling owner.
Acquisition targets are vetted to a minimum set of criteria including: a minimum five-year operating history; minimum gross revenues of USD$500,000; minimum gross margin of 50%; profitable with a net margin greater than 7.5%; net positive cash flow adequate to repay any current debt within two years; ability to provide detailed corporate and financial records to satisfy the due diligence process; pass examination and asset tests to meet the applicable exchange and securities commission requirements; and management/key personnel must be willing to execute the minimum one year transition plan.
Custom Protection plans to utilize a combination of cash and stock when acquiring a targeted company. The ideal structure would be: 75% of the purchase price in cash and 25% in common stock. Custom Protection will utilize traditional non-dilutive asset-based funding for the cash portion. Repayment of the debt will be from net profits of the acquisition, much like a landlord buying a house with a mortgage then renting it out and allocating the rental income to pay the mortgage. Repayment will be structured so that all debt associated with the purchase is retired within the 24-month transition period. Any common stock issued would be valued at current market prices and subject to all applicable hold periods.
The goal is to generate sustained revenue growth of 35% per year through the acquisition program that when combined with existing operations will hit the following revenue targets: year ended 2020 – $5M to $10M; year 2021 – $10 to $15M; year ended 2020 $15M to $25M.
About Custom Protection Services Inc.
Custom Protection Services Inc. is a Delaware incorporated company with head offices in Conroe, Texas. It offers a comprehensive portfolio of security and protection services which can be tailored to meet specific needs and situations. Services offered include personal protection, risk analysis, crisis response, guidance & strategic planning, maritime protection, travel security, legal investigation and POA security programs. Client contracts range from hourly to yearly depending on the type of service being provided. The Company can fulfill any client contract by utilizing a network of specialized consultants. Management has 100+ combined years of experience conducting security and protection operations.
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Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements. Actual results may differ materially from those described in forward-looking statements and are subject to risks and uncertainties. See Custom Protection Services Inc.’s filings with OTC Markets, which may identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Safe Harbor Statement
This release includes forward-looking statements, which are based on certain assumptions and reflects management’s current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of these factors include: general global economic conditions; general industry and market conditions, sector changes and growth rates; uncertainty as to whether our strategies and business plans will yield the expected benefits; increasing competition; availability and cost of capital; the ability to identify and develop and achieve commercial success; the level of expenditures necessary to maintain and improve the quality of services; changes in the economy; changes in laws and regulations, including codes and standards, intellectual property rights, and tax matters; or other matters not anticipated; our ability to secure and maintain strategic relationships and distribution agreements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE: Custom Protection Services Inc.
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