Buying or selling a security and access control business: what buyers pay, who is buying, how to sell

If you are buying or selling a security and access control business, know this first: buyers pay most for recurring revenue, the monitoring and service contracts that keep paying after the owner leaves. The active buyers are national integrators, private equity platforms and fire-and-security companies, plus individual buyers using SBA loans for smaller firms. This page is for owners thinking about a sale and buyers looking at the sector. By the end you will know what buyers pay for, who is buying, what moves the price, and how a sale works.

What does a buyer pay for in a security and access control business?

A buyer pays for future cash flow. In this trade, cash flow comes in two kinds, and buyers value them very differently.

Project revenue. Installing cameras, card readers, intercoms and alarm panels. It can be good money, but each job ends. Next year depends on winning new jobs.

Recurring revenue. Monthly monitoring, service agreements, inspections, cloud video and hosted access control fees. These renew on their own. Buyers often call it RMR, recurring monthly revenue.

A company with a large base of monitored accounts and service contracts is worth more per dollar of profit than one that lives job to job. The installed base also feeds the next project: customers who already trust you call you when they add a door or a building.

Buyers also pay for licensed technicians, a clean record with customers and the local fire or police alarm rules, and relationships with large commercial clients.

How big are the security businesses that sell?

Deal sizes run from small local alarm dealers to billion-dollar carve-outs. Most small deals never publish a price. The table shows recent public examples and what each source says about size.

The one large deal with a stated multiple is Stanley Security. Security Sales & Integration reported the Securitas deal at about 16 times trailing adjusted EBITDA, according to Stanley Black & Decker's announcement. That was a global business with $1.7 billion in revenue. It is not a guide for a local dealer, and nobody should price a small firm off it.

We do not publish a sector multiple here. Our own asking-price data only gives a number for a sector once we have enough listings to make it fair. Where the sample is small, we say so rather than guess.

Who is buying security and access control businesses?

Four groups show up again and again.

1. National integrators. Everon bought Scarsdale Security Systems to grow its national account work. Security 101 bought Silverstrand to add a team in southern California. These buyers want local crews and commercial clients they can plug into a bigger service network.

1. Private equity firms buying a platform. Investment firm Knox Lane took a majority stake in SAGE Integration. The announcement named complementary acquisitions as part of the plan. A platform like this then buys smaller add-ons. Our glossary explains platform versus add-on deals.

1. Fire and life safety platforms. Pye-Barker Fire & Safety bought Union AlarmTronic, a New Jersey alarm, access control and video company. Fire and security share customers and technicians, so these buyers cross over. See our hub on buying or selling a fire and life safety business.

1. Regional and global security companies. Guardian Security, which already runs a central station in Yakima, bought Keyhole Security's electronic security operations in central Washington. At the top end, Securitas bought Stanley Security.

Below these sit individual buyers. A first-time owner with an SBA loan can buy a small alarm dealer or integrator, often with the seller staying on for a while. Which buyer fits you depends on your goals; our guide to strategic versus financial buyers covers the trade-offs.

What moves the price up or down?

The same few things come up in almost every deal.

Owner dependence is the big one. In the Silverstrand deal, the founder stayed on as general manager. In the Keyhole deal, a long-time general manager who was also a minority owner had run the business for years. Buyers like a company that runs without the founder.

Structure matters too. Keyhole split its locksmith business from its security business and sold them to different owners. If part of your company does not fit the likely buyer, selling it apart can make both deals easier.

How do you sell a security business?

Most sales follow the same path. Plan on preparing for a year or more if you can.

1. Clean the books. Separate recurring revenue from project revenue on your profit and loss. Buyers will ask for it first.

1. List your contracts. For each monitoring or service account: monthly fee, start date, term, and whether it can be assigned. Have a lawyer read your standard contract.

1. Track cancellations. Show how many accounts you lost each year and why.

1. Fix owner dependence. Put a manager in place. Make sure more than one person holds the licences your state requires.

1. Get a value range. Know the range before you take a call from a buyer.

1. Run a process. Talking to several buyers at once gives you choices on price and terms.

1. Sign a letter of intent and go through diligence. Expect buyers to test every contract and every add-back.

1. Close and hand over. Sellers usually stay for a transition period. Some also keep a stake in the buyer.

Ask a CPA about asset versus stock sale tax, and a lawyer about contract assignment and licences before you sign anything. If you might keep a stake, read about rollover equity first. Owners who want a second opinion can book a free call.

How do you buy a security business?

Start with a buy box: size, location, residential or commercial, and how much of the revenue must be recurring. Then check four things.

• The contracts. Read a sample. Can they pass to you? How long do they run? What do customers pay each month?

• The licences. Many states license alarm and low-voltage contractors. Find out who holds the licence and whether it stays after closing.

• The monitoring. Does the company run its own central station or pay a third party? Either works, but the cost and the contract terms matter.

• The people. Lead technicians carry the customer relationships. Find out if they plan to stay.

Most buyers finance a smaller deal with an SBA loan, a seller note and investor money combined. For the full process, read our guide on how to buy a business. Buyers who want help finding and checking deals can start at /buy.

Where does Acquisitions.com fit?

I have advised buyers and sellers of small and mid-sized businesses since 2016. Our AI scans 15+ business-for-sale marketplaces every day, and we also see off-market deals through advisors and brokers. We work on established, profitable businesses, typically $500K to $50M in revenue. Brokers and advisors who work with security owners can join us.