To sell a security systems and monitoring company, prove that your recurring monthly revenue is stable, contracted and transferable. Buyers pay for that base, not for installs. Clean up your customer records, understand who owns your monitoring, and run a confidential process with more than one buyer.
What do buyers pay for in a security systems and monitoring company?
Buyers pay for revenue that comes back every month without a new sale. In your business, that is monitoring. Installation brings the customer in, and monitoring keeps the customer paying.
This is why two companies with the same sales can sell for very different prices. A company with a large, stable monitoring base looks like an annuity. A company that earns most of its money from installs looks like a contracting business, and buyers price it that way.
There is no single valuation multiple that fits every security and monitoring company. The right range depends on your revenue mix, recurring revenue quality and earnings. The Exit Audit builds a valuation range from your own numbers.
What is recurring monthly revenue, and why does it drive the price?
Recurring monthly revenue, usually shortened to RMR, is the monthly fee your customers pay for monitoring and related services. Buyers often quote value as a multiple of RMR, because RMR shows how much predictable revenue comes with the company.
RMR drives price for a simple reason. A buyer who acquires your RMR acquires a stream of payments that continues after you leave. The more reliable the stream, the more the buyer will pay for it.
Buyers also look at your earnings. A large RMR base with weak margins is worth less than the same base run well. Expect them to look at both.
Our detailed guide to how RMR sets the multiple is coming. [LINK once live: Security monitoring valuation post]
How do buyers test the quality of your RMR?
Not every dollar of RMR is equal. Buyers dig into your customer records and sort the base by quality. Here is what they check.
Attrition: the share of monthly revenue you lose each year to cancellations. Lower is better, and buyers look at several years.
Contract terms: whether customers are on written agreements, how long the terms run, and how renewals work.
Account age: older accounts tend to stay longer than recent ones.
Payment method: customers who pay by automatic bank debit or card tend to be easier to keep than those who pay by invoice.
Who owns the monitoring: whether you run your own monitoring centre or pay a third party, and what the contract says about transfer.
Customer mix: the split between residential, commercial and institutional customers, and how much comes from your largest accounts.
Pull these figures together before you meet a buyer. If your records are patchy, a buyer assumes the worst and prices in the risk. If they are clean, they speed the sale up.
Which buyers are active, and what do they want?
Three kinds of buyer purchase security and monitoring companies. Each wants something different, and each structures offers differently.
| Buyer type | What they pay for | What to check in the offer |
|---|---|---|
| National integrator or strategic buyer | Customer density, technicians and monitoring accounts in markets they want | How much of the price is held back, and how long customers must stay for you to be paid in full |
| Fund-backed platform | An add-on that grows a group they are building | Earn-outs, rollover equity terms and working capital adjustments |
| Regional competitor | Accounts and staff in a market they know well | Financing certainty and how long you must stay on |
Compare offers on net proceeds. Terms that punish you after signing, such as a heavy holdback tied to attrition, can cost you more than a slightly lower headline price.
Will your licences transfer to a buyer?
Security and alarm businesses work under licences. The rules differ by province and by state, and some licences are tied to a named person, not to the company. In many places, a change of ownership means the buyer must apply, notify the regulator or both.
Do not assume your licence moves with the sale. Ask your lawyer to confirm the rules that apply to you and, where needed, check with the regulator. Then tell buyers what you found. A clear answer calms them. A surprise late in diligence can stall the deal.
How do you keep your technicians?
Your technicians know the customers and the sites. Buyers know it, and they will ask who is likely to stay.
Where you can, put key technicians and your service manager under written agreements before you go to market. Plan how and when the staff hear the news. A leak in the middle of a sale damages trust, and a planned announcement after signing protects it.
What should you do in the months before you sell?
70% of businesses that go to market never sell. Buyers walk when they find surprises, so remove them first.
Build a customer list that ties each account to its monthly fee, start date, term and payment method.
Calculate attrition for each of the last several years, and write down the reasons customers left.
Review your monitoring arrangement, including the contract with any third-party centre and what it says about a change of ownership.
Confirm which licences apply and what a sale triggers.
Normalize your earnings. List owner expenses and one-off costs, and document each add-back.
Separate installation revenue from monitoring and service revenue in your reports.
Why run a confidential process with several buyers?
One buyer sets the terms. Several buyers set the price. A competitive process puts offers side by side and gives you room to negotiate.
Confidentiality matters in your industry, because customers and staff react to rumours. We use a code name and a short teaser, and buyers sign an NDA before they learn who you are. You approve who sees what.
Questions founders ask us
How much is my security company worth?
It depends on your recurring revenue, attrition, contract terms and earnings. Anyone quoting a number without your figures is guessing. Our free Exit Audit gives you a range built from your own numbers.
Do buyers want companies that mostly install?
Some do, but they usually pay less for install revenue than for monitoring. If installs lead your sales, the question is how many of them become monitoring accounts.
Do I need my own monitoring center to sell?
No. Some buyers prize one. Others prefer to move accounts to their own center. Either way, the contract and the transfer rules matter, so we review them early.
What if my customers find out I am selling?
Confidentiality is a procedure. We use a code name and a teaser, and every buyer signs an NDA before they learn who you are.
How long does a sale take, and what does it cost?
Most sales take months, not weeks, and anyone promising a closing date is guessing. We guarantee our method, not the market. We state our fee on the first call: a success fee at closing, with a small upfront fee credited against it.
Related reading
Security and alarm company valuation multiples: another sector where repeat revenue sets the price.
How to sell a fire protection company: a close cousin in code-driven, recurring work.
Our fire protection and life safety market report: how buyers think about code-driven, recurring work.
How to sell a business: the full process from preparation to closing.
The exit planning guide: a step-by-step checklist for preparing your business for sale.
Know your number before a buyer tells you.
Our free Exit Audit shows your number, the gaps that cost you and the buyers who would pay for your company. After $250M+ in completed transactions, we know what buyers look for. Then you decide.
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