Security Alarm Company
The only business valued at 40x a single month's revenue
Bottom line
Strong cash-flow candidate with manageable operations.
Security alarm companies install and monitor burglar alarms, fire alarms, and cameras for homes and businesses. The monitoring contract — typically $20–$60/month per account — is the real asset. These accounts renew automatically, churn less than 5% per year, and trade at 35–45x monthly recurring revenue (MRR) — a valuation model unlike any other industry. A company with 300 monitored accounts at $35/month is worth $370K–$470K, even if it's a one-person operation.
How It Works
The company installs alarm systems at residential or commercial properties, often at low or no upfront cost, then charges a monthly monitoring fee. Monitoring is outsourced to a central station ($3–$8/account/month), so the owner pockets the spread. Revenue scales with account count. Acquisitions are typically priced at 35–45x MRR, meaning 1,000 accounts at $35/month = $35,000 MRR = worth $1.2M–$1.6M to a buyer.
BizBite verdict
Worth underwriting
Security Alarm Company maps to the Security Alarm Company model. The category can work for acquisition buyers, but the right answer depends on source freshness, verified economics, and the specific red flags below.
Why it may work
- +Attractive 55% estimated margin profile
- +Category usually has strong acquisition-financing fit
- +SBA dataset shows 6 recent comparable loans
- +5 clear operating upside levers identified
Be careful
- !Source link status has not been verified yet
- !No last-checked date yet
Category operating model
Security Alarm Company
Revenue drivers
- • Recurring monthly revenue (RMR) per monitored account
- • Account count, attrition, and contract term
- • Installation gross margin and service-call billing
- • Commercial/fire mix versus residential burglar-only accounts
- • Central-station wholesale cost and platform fees per account
Key risks
- • RMR value evaporates when attrition is measured casually or excludes non-pay cancels
- • Dealer-generated accounts can be less loyal and lower multiple than self-generated accounts
- • Central-station contracts may require consent and pricing resets on transfer
- • Old panels, landline communicators, and unpaid service issues create churn after close
What you need to believe
- The account base has low enough attrition to behave like an annuity, not a melting ice cube
- Contracts and central-station relationships transfer without triggering churn or repricing
- Install/service labor is fully costed, so RMR margins are not subsidized by owner truck rolls
- The buyer can keep replacing lost RMR at a creation cost below the value of acquired accounts
Unit economics
How one unit makes money
Modeled per one local alarm-monitoring account book with outsourced central-station monitoring and in-house install/service capability. Every line shows its arithmetic — rebuild any number yourself.
Revenue build-up
| Line | Low | Base | High |
|---|---|---|---|
| Recurring monitoring revenue400-1,200 monitored accounts × $30-$40 average RMR × 12 months; base case is 650 accounts × $32/month × 12 | $144K | $250K | $576K |
| New installs and upgrades40-160 installs/upgrades/yr × $750-$1,375 average revenue, before hardware and technician cost | $30K | $80K | $220K |
| Service calls, inspections, and small commercial add-ons150-500 billable events/yr × $65-$140 net service/inspection revenue after waived warranty calls | $10K | $20K | $70K |
Where it goes — cost structure
- Central-station/platform fees7–16%
Wholesale monitoring is the COGS line buyers can verify account by account; it should not be buried in overhead.
- Technician labor, vehicles, hardware leakage, and warranty calls13–26%
RMR looks gorgeous until old panels create unpaid truck rolls. Service history tells you whether the book is clean.
- Sales, dealer commissions, and attrition replacement7–18%
The business has to replace lost RMR every month. Creation cost is the shadow capex of alarm monitoring.
- Licensing, insurance, false-alarm admin, billing, and support5–10%
Small, but not optional. Licensing and municipal false-alarm rules are where sloppy operators leak reputation.
- Owner/operator management and office overhead3–8%
If the seller personally handles cancellations, angry customers, and commercial bids, normalize the replacement seat.
What actually swings the deal
- Average RMR per account
$3/month across 650 accounts equals $23.4K annual revenue, and most of it drops through if central-station cost does not move.
- Annual gross attrition
5pts of extra attrition on $20.8K monthly RMR destroys ~$12.5K annualized RMR and can cut RMR valuation by 10-15 turns.
- Wholesale monitoring cost per account
$2/account/month across 650 accounts is ~$15.6K SDE swing — small invoice lines compound like rent.
- Billable versus warranty truck rolls
Two unpaid service calls/day at $95 fully loaded cost for 240 days is ~$45.6K of hidden labor leakage.
Benchmarks to memorize
A 650-account book at $32 RMR is only $20.8K of monthly monitoring revenue. The magic is not “passive income”; it is keeping attrition low enough that every 100-account acquisition or sales push stacks onto the base instead of refilling a leaky bucket.
Market analysis
Who owns these & where demand comes from
Security alarm monitoring is one of the few Main Street niches where the asset is not a truck, route, or lease; it is a monthly billing file. SBA enrichment shows a smaller but real change-of-ownership sample: 27 deals, $630K median loan, and $741K implied median deal under NAICS 561621.
Tailwinds
- ↗ Recurring revenue is lender- and acquirer-friendly when attrition is documented
- ↗ Commercial/fire accounts have better durability than low-end DIY residential security
- ↗ Small operators can acquire tuck-in books and spread support/admin cost across more RMR
Headwinds
- ↘ DIY smart-home options compress residential acquisition economics
- ↘ Old communicators and panel sunsets create forced upgrades that customers may not accept
- ↘ Clean books attract strategic buyers who understand RMR math and can outbid hobby buyers
Demand drivers
- Homes and small businesses want intrusion, fire, video, and access-control monitoring with a local service option
- Insurance, lender, landlord, and code requirements support commercial and fire-alarm demand
- Installed equipment creates switching friction once the customer is onboarded
- Aging local dealers create small account books too small for national platforms but interesting to disciplined buyers
Regulation
State alarm-contractor licensing, municipal false-alarm rules, insurance, background checks, UL-listed central-station requirements for some accounts, and contract/auto-renew rules all matter. Transferability of licenses and central-station consent is a closing condition, not paperwork trivia.
Who you bid against
Regional alarm companies, national consolidators, and PE-backed platforms buy RMR. First-time buyers can still compete for subscale local books, but only if they diligence attrition like a lender rather than admiring the monthly billing total.
Competitive advantage
What protects the good ones
- strongRecurring contracts and account history
Transferable contracts with low attrition are literally the valuation unit. Nothing else in the business matters as much as durable RMR.
- moderateSwitching costs and installed hardware
Customers can switch, but replacing panels, sensors, service history, and emergency contacts is annoying enough that competent service retains accounts.
- moderateLicensing and central-station relationships
Licenses and station contracts do not create monopoly power, but they screen out casual operators and matter at transfer.
Who wins — and who loses
The winner owns a boring, low-attrition local account book with clean contracts, small-commercial/fire mix, and service calls that are billed or prevented. The loser buys “RMR” that is actually month-to-month residential accounts, old panels, unpaid receivables, and a seller who has been personally saving cancels with charm.
How this niche degrades
- ↘ DIY security and smart-home platforms pressure low-end residential burglar accounts; commercial/fire and code-linked accounts are more durable.
- ↘ Cellular upgrades, old panels, and platform sunsets create hidden capex or churn events.
- ↘ Dealer-account quality can decay faster than self-generated accounts because the customer relationship starts weaker.
- ↘ Large consolidators can bid up clean books, but they will punish sloppy attrition data ruthlessly.
Active. Strategic acquirers and PE-backed platforms buy monitoring assets because RMR is financeable and portable. That raises competition for clean books, but it also gives small buyers a clear exit path if they buy account quality rather than raw count.
SBA 7(a) data
Real acquisitions in this category
Change-of-ownership loans · NAICS 561621 · Security Systems Services (except Locksmiths)
Deal size distribution
Deal flow over time
Financing profile
Recent comparable deals
| Closed | State | Loan | Implied deal |
|---|---|---|---|
| Feb 2026 | FL | $542K | $638K |
| Feb 2026 | OK | $999K | $1.2M |
| Nov 2025 | MS | $245K | $288K |
| Jan 2025 | TN | $3.3M | $3.9M |
| Jan 2025 | MS | $540K | $635K |
| Dec 2024 | CO | $400K | $471K |
| Dec 2023 | AZ | $1.1M | $1.3M |
| Oct 2023 | AR | $1.6M | $1.9M |
| Jul 2023 | PA | $630K | $741K |
| Nov 2022 | AR | $3.5M | $4.1M |
Source: SBA 7(a) FOIA dataset, filtered to acquisitions (loans where business age is "Change of Ownership"). Implied deal size assumes an 85% loan-to-purchase ratio, a common SBA change-of-ownership structure. Charge-off rate shown only when 10+ loans have resolved (paid in full or charged off). Interest rates reflect last 24 months only. Actual deal values vary with equity injections, seller financing, and working capital terms.
Valuation framework
How these actually get priced
Small deals can be quoted on SDE for BizBite comparability, but sophisticated buyers also cross-check the monitoring book at a multiple of RMR. Installation and guard/project revenue receive lower multiples; clean monitoring RMR with low attrition receives the premium.
What moves the multiple
- ▲ PremiumAttrition and account vintage
Sub-5% attrition and seasoned accounts support premium RMR turns; 10-15% attrition pushes the book toward the bottom.
- ▲ PremiumCommercial/fire mix
Commercial and fire accounts are stickier and can command materially higher RMR multiples than commodity residential burglar accounts.
- ▼ DiscountContract transferability and receivables quality
Month-to-month, non-assignable, or 60+ day past-due accounts should be haircut before SDE or RMR multiples are applied.
- ▼ DiscountOld hardware and unpaid service burden
Panels and communicators near obsolescence create post-close churn and truck rolls that the seller may not have expensed properly.
Worked example
The BizBite midpoint is $350K revenue at a 55% margin, or $192.5K SDE. At the profile range of 2.5-4.0×, that implies roughly $481K-$770K. Cross-check the same company on RMR: if $250K of revenue is monitoring, that is about $20.8K RMR; at 25-50×, the book alone suggests ~$520K-$1.04M before installation/service adjustments. If attrition is messy, trust the lower number.
Common buyer mistakes
- ✕ Using total revenue multiples when only monitoring RMR deserves premium treatment
- ✕ Accepting annual attrition math that excludes non-pay cancels and moves
- ✕ Paying full price for dealer accounts without separating self-generated account quality
- ✕ Ignoring central-station transfer consent and wholesale monitoring cost resets
Deal Calculator
Priced off $193K SDE — can this deal service its own debt?
SDE = revenue × margin estimate for this niche; it includes owner compensation, so budget your salary out of cash flow. Excludes working-capital injection, capex reserves, and taxes. Actual SBA terms vary by lender and borrower.
Due diligence checklist
Before you sign anything
- 01
Calculate monthly gross attrition, net attrition, and account-count attrition by vintage for 36 months.
Attrition is the driver that determines whether RMR compounds or melts.
Red flagAttrition is only shown annually, excludes non-pay cancels, or cannot be tied to starting RMR. - 02
Export the account-level RMR file: customer type, contract date, term, monitoring rate, central-station cost, panel type, signal path, and delinquency.
This verifies average RMR, wholesale cost, hardware risk, and collectability in one dataset.
Red flagThe seller can show billing totals but not a clean account-level file. - 03
Separate self-generated, dealer-generated, residential, small commercial, and fire accounts and calculate margins/attrition for each cohort.
Different cohorts receive different RMR multiples and have different churn risk.
Red flagDealer accounts are blended with self-generated accounts to hide weaker retention. - 04
Review customer contracts, auto-renew language, assignment rights, cancellation rights, and central-station consent requirements.
The moat only transfers if contracts and the station relationship transfer.
Red flagMaterial accounts are month-to-month, non-assignable, or dependent on seller-held licenses. - 05
Audit service-call history: billable calls, warranty calls, repeat trouble signals, technician hours, and truck-roll cost.
Unpaid service calls are the hidden cost line behind high reported RMR margin.
Red flagAging panels create frequent free truck rolls or cancellation threats. - 06
Age receivables and suspend/discount accounts over 60 days past due before calculating RMR value.
Uncollectible RMR is not RMR; it is a vanity metric.
Red flagThe seller counts past-due or suspended accounts at full multiple value.
Pros
- +35–45x MRR valuation — the most premium exit multiple of any small business
- +Sub-5% annual churn on monitored accounts — customers rarely leave
- +Monitoring is outsourced — no 24/7 operations overhead
- +Recurring revenue is easy to forecast and finance against
Cons
- -Licensing required in most states (alarm contractor license)
- -Initial customer acquisition cost is high ($200–$500 per account installed)
- -Thin margins per account — requires scale to generate meaningful income
Best For
Patient operators focused on building an MRR base for a premium eventual exit; buyers of existing account books
Operating Costs
Key costs: central station monitoring pass-through ($3–$8/account/month), technician labor for installs, licensing/insurance ($3K–$8K/year), and customer acquisition. At 300+ accounts, the business becomes meaningfully profitable. At 1,000+ accounts, it becomes an acquisition target.
Where to Buy
Security Industry Association — industry contacts and M&A resources for alarm company deals
Security alarm company listings across the US
Buyer's Toolkit
Essential tools to get started
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SBA loans and business acquisition financing — get funded fast
ROBS financing — use retirement funds to buy a business tax-free
Bookkeeping for small business owners — hands-off financials
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