Thrive agreed to acquire ADT at 5.7 times trailing adjusted EBITDA as recurring revenue slipped

Thrive Holdings' $15.3bn enterprise value for ADT equals 5.7 times trailing adjusted EBITDA. In the second quarter ADT's recurring revenue fell on lost volume, and installation sales carried the growth.

Thrive Holdings has agreed to acquire ADT at an enterprise value of about 5.7 times trailing adjusted EBITDA. Second quarter recurring revenue was $11m below the year-earlier period, and the lost volume includes ADT's multifamily divestiture.

How the multiple is built

Trailing adjusted EBITDA was about $2,690.3m. ADT reported $2,680.4m for 2025, and the first half of 2026 was $9.9m above the first half of 2025.

On CTOL's arithmetic, dividing the $15.3bn enterprise value by $2,690.3m gives 5.69 times, rounded to 5.7 times. The same value is about 3.0 times 2025 revenue of $5.13bn.

Two terms need separating. Enterprise value is the price of the whole business, including debt. The ADT release puts equity value at about $7.6bn, at $10.00 a share in cash.

Enterprise value is about $7.7bn above equity value. ADT separately reported $7.8bn of debt principal at 30 June, a different measure that need not match that gap.

Adjusted EBITDA is ADT's own non-GAAP measure, struck before depreciation and amortisation. Those charges were $346.9m in the second quarter, which is 51.7 percent of that quarter's $670.5m of adjusted EBITDA on CTOL's arithmetic. Operating income was $315.9m.

ADT's second quarter 10-Q shows first half operating cash flow of $1,304.5m, against adjusted EBITDA of $1,344.3m. Outflows in the same half included $239.0m for dealer generated customer accounts and bulk account purchases, $169.6m for subscriber system assets and $95.2m for property and equipment.

What shareholders get

The 8-K converts each share into $10.00 in cash, a 45.6 percent premium to the 27 October close of $6.87. It is 52.1 percent above the 30 day volume weighted average. The 5.7 times multiple and the premium measure different things, one the whole business and the other the share price.

The stock then rose 7.9 percent on 28 October, before the announcement, to $7.41. It closed at $9.87 on 29 October and traded at the same level at 12:41 PM EDT on 30 October.

That is a $0.13 discount to the $10.00 cash price, or 1.3 percent, on CTOL's arithmetic. The spread reflects the market price of a pending cash deal, not a view on ADT's enterprise valuation.

What the operating record shows

ADT's second quarter 10-Q shows revenue of $1,312.3m, up $25.3m on a year earlier. Recurring revenue fell $11m, because lost volume of $31m outweighed price increases of $20m. The volume figure includes ADT's multifamily divestiture, which the filing does not separate.

Installation revenue rose $32m on a mix of outright sales, which is more than the whole consolidated increase. Recurring monthly revenue was $360.1m against $362.8m a year earlier, down 0.7 percent.

Gross customer revenue attrition was 13.1 percent against 12.8 percent. Adjusted EBITDA was $670.5m, $3.1m lower, though the half year total was $9.9m higher.

Annual growth has been steadier. Adjusted EBITDA rose from $2,481m in 2023 to $2,680m in 2025. ADT also retired shares, with diluted weighted shares of 765m in the second quarter against 840m a year earlier.

Who funds the deal and what holders get

Apollo Global Management provides the preferred equity and debt that have been disclosed. The release says financing commitments "have been solely provided by funds managed by affiliates of Apollo".

The merger agreement is more complete. It names Thrive Holdings as the party that delivered the equity commitment letter and the guarantee. The 8-K lists that equity commitment alongside Apollo's preferred equity and debt. It says the deal is not subject to a financing condition, and it gives no split between the three.

Apollo sold its last 102m ADT shares in May 2026, and the 10-Q says it has ceased to be a related party. ADT bought back 29m shares at about $7.25 in that offering. Apollo funds now sit on the other side of the table as lenders and preferred investors.

State Farm Fire and Casualty holds about 133m shares, roughly 18 percent of the total, according to a July prospectus supplement cited in the 10-Q.

Holders also get protections that matter for the next four weeks. ADT cannot pay dividends before closing without the buyer's consent, and the current dividend is $0.055 a quarter, last paid on 1 October. Unvested options and restricted stock units convert to a cash right at $10 on the same vesting schedule.

The agreement leaves room for a rival. ADT can solicit other bids until 11:59 pm New York time on 28 November. A bidder judged likely to lead to a superior proposal gets until 8 December.

ADT pays $114m if it ends the deal for a superior proposal in that window, against $227m afterwards. The buyer owes ADT $473m under certain circumstances, including a failure to close. Closing is expected in the first quarter of 2027, with an outside date of 29 July 2027.

Where AI fits and what could change the reading

The artificial intelligence thesis is thin in the documents. The release says Thrive Holdings' engineering teams "will work alongside ADT's professionals to identify opportunities for technology". TechCrunch described Thrive Holdings as OpenAI-backed and said OpenAI supplies models and forward-deployed engineers to Thrive's companies.

The filings assign OpenAI no role in this deal, and they name no new AI product.

ADT already owns relevant technology. It bought Origin Wireless, maker of camera-free presence detection, for $164m in cash in February. On the same day ADT's compensation committee added chief executive James DeVries, finance chief Jeffrey Likosar and David Smail to its change in control severance plan.

Kareem Zaki of Thrive Holdings said the group has "the capital and patience to invest over decades". ADT says its data policies "will remain unchanged" and that no new data sharing will occur without customer permission.

CTOL's view is that 5.7 times is what Thrive agreed to pay relative to ADT's historical adjusted EBITDA. The second quarter record is the evidence: price rises offset most of the lost recurring volume, and installation sales supplied the growth.

Two observations would test that reading. ADT reports third quarter results on 3 November before the open, with no questions taken on the call. Third quarter recurring monthly revenue below the second quarter's $360.1m would be a sequential decline in the reported metric. It would not separate the divestiture from customer losses.

A close above $10.00 before the go-shop ends on 28 November would be consistent with speculation about a higher bid. It would not show that a rival proposal is coming.