How to Value a Security Company: The 2026 Owner's Guide
RMR Multiples, EBITDA Valuations & What Buyers Actually Calculate
Last Updated: January 2026
Two security companies. Both generate $2 million in annual revenue.
One sells for $1.2 million. The other sells for $4.8 million.
Same industry. Similar top-line numbers. Four times the difference in sale price.
The gap comes down to factors most security business owners don't track, but every buyer calculates precisely. We've been on both sides of these conversations, and this guide shows you exactly what buyers look for, how they run the numbers, and what you can do about it.
Want to know where your company falls? Get a confidential valuation range in a 30-minute call. No fees, no pressure.
The Current M&A Landscape: Who's Buying and Why
Before diving into valuation mechanics, understanding today's buyer landscape helps contextualize the numbers.
Private equity interest has intensified. The security sector's recession-resistant characteristics and recurring revenue models have attracted significant PE capital. New entrants are targeting lower-middle-market investments to benefit from the arbitrage of consolidating smaller companies into middle-market platforms.
Strategic acquirers remain aggressive. PE-backed platforms like Pye-Barker Fire & Safety, Summit Companies, and Pavion continue executing tuck-in strategies, completing dozens of acquisitions annually.
The fragmentation opportunity persists. With over 10,000 companies in commercial systems integration alone and 50,000+ in commercial security alarm, consolidators still see significant runway.
Technology convergence is reshaping valuations. Companies with software-anchored RMR trade at 12x-15x EBITDA. Legacy hardware installers trade at 4x-6x EBITDA. That's a 300% valuation arbitrage for the same-sized business.
Why Security Company Valuations Confuse Owners
Most owners estimate value using rules of thumb from industry events or peers who sold years ago. The problem: multiples vary dramatically based on your specific business characteristics.
Example: A residential alarm company with 14% attrition and aging equipment might trade at 25x RMR. A commercial monitoring business with 7% attrition and cloud-based systems might command 50x RMR. Same valuation methodology, double the outcome.
The Three Valuation Methods Buyers Use
Method 1: RMR Multiples
Best for: Monitoring-centric businesses, live video monitoring, remote guarding operations
Buyers multiply your monthly recurring revenue by a factor determined by size, quality, and growth characteristics.
2026 RMR Multiples by Company Size:
| Monthly RMR | Multiple Range | Key Drivers |
|---|---|---|
| Under $50K | 32x-36x | Attrition rate, account mix, owner dependency |
| $50K-$100K | 35x-40x | Commercial vs. residential split, contract terms |
| $100K-$500K | 38x-48x | Customer concentration, management depth, technology stack |
| Over $500K | 42x-55x | Growth trajectory, infrastructure quality, platform potential |
Key benchmark: The industry average cost to create $1 of RMR is 28.7x (SDM Magazine). Buyers paying above this expect your accounts to retain better than average or carry higher margins.
Worked Example:
$100K monthly RMR + 9% attrition + commercial-heavy = 42x = $4.2M
$100K monthly RMR + 14% attrition + residential = 32x = $3.2M
That $1M spread represents the premium for account quality.
Method 2: EBITDA Multiples
Best for: Systems integrators, fire and life safety, access control, mixed revenue streams
2026 EBITDA Multiples by Business Type:
| Business Type | Tuck-In (<$2M) | Platform ($2M-$8M) | Scale (>$8M) |
|---|---|---|---|
| Guard Services | 3.0x-4.0x | 4.0x-5.5x | 5.0x-6.0x |
| Systems Integration | 4.0x-6.0x | 7.0x-9.0x | 9.0x-12.0x |
| Commercial Alarm | 6.0x-8.0x | 8.0x-11.0x | 11.0x-14.0x |
| Live Video Monitoring / Remote Guarding | 7.0x-9.0x | 10.0x-13.0x | 12.0x-16.0x |
| Access Control (Cloud/ACaaS) | 5.0x-7.0x | 10.0x-14.0x | 13.0x-17.0x |
| Fire & Life Safety | 6.0x-8.0x | 8.0x-12.0x | 11.0x-15.0x |
Why tiers matter:
Tuck-in = absorbed into existing platforms, minimal standalone infrastructure value
Platform = attracts PE interest as anchor investments, management team retained
Scale = commands strategic premiums due to market position, potential IPO candidate
Method 3: Revenue Multiples
Best for: Project-heavy businesses, quick comparisons, or when EBITDA is unreliable
Guard services: 0.4x-0.8x revenue
Technology-enabled integrators: 0.6x-1.2x revenue
Monitoring/RMR-heavy: 1.5x-3.0x revenue
Caveat: Less precise because they don't account for margin differences. A $5M integrator at 5% EBITDA margin is worth far less than one at 15%.
What Buyers Actually Calculate (That Most Sellers Don't Track)
When we evaluate a company at NextGen, here's what we calculate that most owners don't track:
Lifetime Value per Account (LTV)
Formula: Monthly RMR × (1 ÷ Monthly Attrition Rate) × Gross Margin %
Example: $150/month RMR × (1 ÷ 0.008) × 75% = $14,063 lifetime value per account
Customer Acquisition Payback Period
Formula: RMR Creation Cost ÷ Monthly RMR Contribution
Benchmark: Industry average is 28.7 months. Under 24 months is excellent. Over 36 months signals pricing or efficiency problems.
Management Depth Score
We score each critical function: Sales, Operations, Finance, Customer Service, Technical
Score 3: Function runs independently without owner
Score 2: Owner involved but not critical
Score 1: Owner-dependent
Impact: A total score below 10 (out of 15) typically triggers a 0.5x-1.5x EBITDA discount.
Deferred CapEx Assessment
What equipment needs replacement in 24 months?
Panel/equipment age distribution
Vehicle fleet condition and age
Software/platform end-of-life dates
Facility and tooling requirements
Contract Value Decay
What percentage of RMR is in the final year of contract? High concentration (>30%) signals renewal risk and typically reduces RMR multiples by 3-5x.
Recent Transaction Snapshots
Names withheld for confidentiality. Represents NextGen's market observation and industry intelligence.
Company A: Pacific Northwest Live Video Monitoring
$85K monthly RMR | 6.2% attrition | 100% commercial | Cloud-native platform
Sold at 48x RMR ($4.08M)
Premium factors: Low attrition, pure commercial, technology-forward, strong operations team
Company B: Midwest Systems Integrator
$4.2M revenue | $680K EBITDA | 18% RMR | Owner-operated
Sold at 5.2x EBITDA ($3.5M)
Discount factors: High owner dependency, limited management depth, low RMR density
Company C: Southeast Fire & Security Integration
$8.5M revenue | $1.4M EBITDA | 35% RMR | 3-person management team
Sold at 9.5x EBITDA ($13.3M)
Premium factors: Platform scale, management continuity, diversified customer base, fire inspection RMR
The Factor That Matters Most: RMR Density
Your recurring revenue percentage drives valuation more than any other single metric. The data shows a clear step-function:
| RMR % of Revenue | EBITDA Multiple | Business Profile |
|---|---|---|
| Under 10% | 3.5x-6.0x | Project-heavy, cyclical, construction-dependent |
| 10%-25% | 5.0x-8.0x | Transitional, service revenue emerging |
| 25%-40% | 6.0x-10.0x | Balanced mix, service contracts established |
| 40%-60% | 7.0x-13.0x | Service-led, strong customer relationships |
| 60%+ | 10.0x-18.0x | Monitoring/SaaS, premium valuations |
The math: Moving from 20% RMR to 50% RMR can double your valuation multiple.
Quality of RMR matters too:
Managed Services RMR (cloud access, remote monitoring, VSaaS): 5x-8x revenue
Traditional break/fix RMR: 1x-2x revenue
How Attrition Affects Your Valuation
Attrition directly determines account lifetime value and what buyers will pay.
Industry Benchmarks (SDM Magazine)
Average gross attrition: 11.3%
Commercial portfolios: 6-9%
Residential portfolios: 12-14%
Attrition by Reason Code:
| Reason | % of Total | Controllable? |
|---|---|---|
| Moves/Relocations | 42% | Partially (takeover programs) |
| Financial/Non-Payment | 32% | Signals account quality |
| Other (competitor, DIY, etc.) | 17% | Varies by cause |
| Service Issues | 9% | Highly controllable |
The Dollar Impact:
$100K RMR at 11.3% attrition = $11,300 RMR lost annually
$100K RMR at 8% attrition = $8,000 RMR lost annually
That $3,300 difference = $100,000+ in enterprise value
Valuation by Segment: Deep Dives on NextGen's Focus Areas
Live Video Monitoring & Remote Guarding
This is the fastest-growing segment in physical security and our primary acquisition focus at NextGen.
Market Dynamics:
Growth rate: 15-25% organic annually (vs. 3-5% for traditional monitoring)
RMR density: 60%+ (highest in the industry)
Value proposition: Replace $25/hr guard with $3-8/hr technology service
Market size: Only 50-120 pure-play companies nationwide
Result: Intense buyer competition, premium valuations
What Drives Premium Multiples in RVM:
Proprietary technology or AI-enhanced detection capabilities
UL-listed central station with redundancy
Multi-site enterprise accounts (logistics, retail, QSR)
Low false alarm rates and documented response protocols
Strong operator bench (not owner-dependent)
Security Systems & Access Control Integration
The access control segment is experiencing a fundamental shift that's creating valuation divergence.
The Cloud Transition Impact:
| Traditional Access Control | Cloud-Forward (ACaaS) |
|---|---|
| Revenue mix: 80% project / 20% service | Revenue mix: 40% project / 60% service |
| EBITDA multiple: 4x-7x | EBITDA multiple: 10x-17x |
| Customer relationship: Transactional | Customer relationship: Ongoing partnership |
Key Valuation Drivers:
Mobile credential adoption rate
Managed access control (ACaaS) revenue percentage
Integration capabilities (video, intrusion, elevator, visitor management)
Enterprise account concentration and contract length
Manufacturer certifications and partner status
Vertical Specialization Premium:
Generic integrators face compressed multiples due to abundant supply. Specialists in high-value verticals command 2-3x higher multiples:
Data centers: Complex compliance requirements, long sales cycles, sticky relationships
Healthcare: HIPAA compliance, infant protection, pharmacy security
Cannabis: State compliance mandates, cash-heavy operations, limited competition
K-12/Higher Ed: Budget cycles, referendum funding, multi-year relationships
Fire & Life Safety Integration
Fire and life safety is in late-stage consolidation, with active strategic acquirers driving valuations higher.
Consolidation Activity:
Major buyers: Pye-Barker Fire & Safety, Summit Companies, APi Group, Sciens Building Solutions
Transaction volume: Fire and life safety leads M&A activity (~40% of all security transactions)
Entry multiples rising: Increased competition has pushed tuck-in multiples from 5x to 7x+ over three years
Why Fire Commands Premium Valuations:
Code-mandated revenue: Inspection, testing, and deficiency repair are legally required
Predictable RMR: Annual inspection contracts create stable recurring revenue
Cross-sell opportunity: Sprinkler, suppression, alarm, monitoring, extinguisher service
Labor moat: Licensed technician requirements create barriers to entry
Valuation by Service Mix:
Inspection-heavy (>50% RMR): 9x-14x EBITDA
Installation-heavy (<25% RMR): 5x-8x EBITDA
Full-service (install + inspect + monitor): 10x-15x EBITDA
10 Factors That Increase Your Multiple
RMR density above 40% - Can add 2x-4x to your EBITDA multiple. This is the single most impactful factor.
Gross attrition below 10% - Industry average is 11.3%. Below 8% commands significant premiums.
Commercial account concentration - 6-9% attrition vs. 12-14% residential. Higher lifetime value per account.
Cloud-based service delivery - ACaaS, VSaaS, remote monitoring. Software-like margins and stickiness.
Diversified customer base - No single customer above 10-15% of revenue. Reduces concentration risk.
Strong management team - Reduces owner dependency discount. Can add 1x-2x to multiple.
Multi-year contracts with escalation clauses - Demonstrates pricing power and revenue predictability.
Geographic route density - Margin efficiency through reduced drive time and service costs.
Technician retention and certifications - Skilled labor scarcity makes trained teams highly valuable.
Modern infrastructure - Reduces post-close capital requirements. Clean tech stack signals operational maturity.
10 Factors That Decrease Your Multiple
Owner dependency - Costs 0.5x-1.5x EBITDA. If you are the business, buyers see risk.
Customer concentration - 50%+ from top accounts triggers 0.5x-1.0x haircut or earnout.
High attrition (14%+) - Expect aggressive discounts or earnout structures.
New construction dependency - Cyclical, lower-margin, and correlated with economic downturns.
Aging monitoring technology - Post-close capital requirements reduce effective purchase price.
Residential concentration - DIY competitive pressure (Ring, SimpliSafe) and higher attrition.
Below-market legacy pricing - Limits margin expansion potential. Signals fear of customer churn.
Deferred maintenance - Hidden service liabilities that emerge post-close.
Expiring contracts - Creates uncertainty and negotiating leverage for buyers.
Documentation gaps - Signals operational immaturity. Makes due diligence painful and costly.
Contrarian Perspectives Most Advisors Won't Tell You
"The best time to sell is when you don't need to"
Most guides say "sell when revenue is up." The contrarian truth: desperation kills deal terms. Buyers sense urgency and adjust offers accordingly. The owners who get premium valuations are those who could comfortably run the business for another decade, and buyers know it.
"Broker fees aren't the enemy. Bad brokers are."
Industry conventional wisdom says avoid brokers to save 5-10%. Reality: good brokers add significant value for sub-$5M transactions by creating competitive tension, managing process complexity, and preventing deal fatigue. The key is finding brokers who specialize in security industry transactions and can demonstrate recent comparable deals.
"High multiples sometimes mean bad deals"
An earnout-heavy structure at 12x can destroy value compared to a clean deal at 8x. We've seen owners celebrate "record multiples" only to miss earnout targets due to integration friction or unrealistic assumptions. Net present value of certain cash beats uncertain future payments.
"Your competitor's sale price is irrelevant"
Everyone benchmarks to the one deal they heard about at an industry event. That company's specific factors (customer concentration, management depth, technology stack, buyer motivation) likely differ dramatically from yours. Business-specific factors matter more than industry gossip.
Frequently Asked Questions:
What multiple should I expect when selling my security company?
Monitoring businesses typically sell for 35x-50x monthly RMR. Systems integrators sell for 5x-10x adjusted EBITDA. Live video monitoring companies command premiums of 42x-55x RMR or 10x-16x EBITDA due to growth rates and RMR density. Your specific multiple depends on attrition, customer concentration, RMR density, and owner dependency.
How much does attrition impact my security company's value?
Substantially. Industry average gross attrition is 11.3%. Each percentage point moves valuation meaningfully because buyers calculate lifetime customer value using your specific rate. A company with 8% attrition versus 14% attrition can see 30-40% higher valuations at the same RMR level.
What's the difference between gross and net attrition?
Gross attrition equals total RMR lost from cancelled accounts. Net attrition accounts for price increases, service upgrades, and expansions from existing customers. Some companies run 12% gross but 8% net due to strong expansion revenue. Both metrics matter to buyers, but net attrition better reflects true revenue trajectory.
Strategic vs. financial buyers: what's the difference?
Strategic buyers (like Pye-Barker, Summit, Pavion) pay for geographic fill-in or capability expansion. They realize synergies quickly through shared infrastructure and can often pay higher multiples.
Financial buyers (PE firms) focus on platform-building and typically require $2M+ EBITDA. They may offer equity rollover, letting you participate in future upside but introducing deal complexity.
How much is a fire alarm company worth?
Fire and life safety companies typically trade at 6x-15x EBITDA depending on service mix. Inspection-heavy businesses (>50% RMR from recurring inspection contracts) command 9x-14x. Installation-heavy businesses with limited recurring revenue trade at 5x-8x. Full-service operations with install, inspect, and monitoring capabilities can reach 15x+ at scale.
What is a good attrition rate for a security company?
Industry average is 11.3% gross attrition. For commercial portfolios, 6-9% is typical; for residential, 12-14%. A "good" rate depends on your customer mix. Commercial-only businesses should target under 8%. Any attrition rate under 10% positions you for premium valuations.
How long does it take to sell a security company?
Expect 6-9 months from marketing to close, plus 90 days of preparation. Well-prepared sellers with clean documentation, normalized financials, and clear transition plans compress timelines significantly. Poorly prepared deals can stretch to 12-18 months or fall apart entirely during due diligence.
How are earnouts structured in security company sales?
Typically tied to RMR retention (85-90% threshold), revenue targets, or EBITDA performance over 12-24 months. Well-run businesses with low attrition and strong management negotiate smaller earnout components or none at all. High earnout percentages (>30% of purchase price) often signal buyer concerns about sustainability.
What do private equity firms look for in security companies?
PE firms focus on: (1) RMR density above 30%, (2) EBITDA of $2M+ for platform investments, (3) management team that can operate independently, (4) growth trajectory, (5) fragmented competitor landscape for tuck-in opportunities. They're building platforms, so they value infrastructure, systems, and scalability over pure profitability.
How do I prepare my security company for sale?
Start 12-24 months before your target sale date. Focus on normalizing financials, documenting RMR quality and attrition, reducing owner dependency, strengthening your management team, cleaning up contracts, and addressing any legal or compliance issues.
What is my security business worth?
Value depends on multiple factors: business type, RMR density, attrition, customer mix, owner dependency, and growth trajectory. A monitoring business might be worth 35x-55x monthly RMR. An integrator might be worth 4x-12x EBITDA. The only way to get an accurate answer is to have a confidential conversation with someone who knows the market and understands your specific situation.
How NextGen Compares to Other Buyers
| Traditional PE | Broker Process | NextGen | |
|---|---|---|---|
| Who You Talk To | Associates, analysts | Broker intermediary | CEO directly |
| Operational Understanding | Financial metrics only | Varies widely | Deep (we operate one) |
| Timeline to Offer | 4-6 weeks | 8-12 weeks | 2-3 weeks |
| Post-Close Integration | Playbook-driven | N/A | Customized to your business |
| Employee Treatment | Cost center focus | Buyer-dependent | Retention-focused |
The best buyers are operators. They know what a well-run company looks like because they've built one. When evaluating potential acquirers, ask: Have they actually run a business like yours? Do they understand your daily challenges? Will they treat your employees and customers the way you would?
Ready for a Confidential Valuation Conversation?
At NextGen Live Security, we're actively acquiring monitoring, live video, access control, and fire & security integration companies that fit our platform.
We're operators first. We've built recurring revenue ourselves and understand what it takes to run these businesses. We know what it takes to manage attrition, deliver excellent service, and build a team that performs.
When we evaluate a business, we're looking at the same metrics you should be tracking: RMR quality, customer retention, operational efficiency, and team capability.
What makes us different:
We understand your business because we run one
No pressure, no games. Just honest assessments
We speak your language
We respond to every inquiry personally within 48 hours
Whether you're ready to sell this year or just thinking ahead, understanding your valuation puts you in control. The difference between average and premium valuations isn't luck. It's understanding what buyers measure and building accordingly.
Schedule a 30-Minute Confidential Call with Rishi
No brokers. No fees. No pressure.
Reach out directly: rishi@nextgenlivesecurity.com
Sources & Methodology
Valuation multiples and benchmarks in this guide are based on:
NextGen analysis of 50+ transactions (2023-2025) from proprietary deal flow and industry intelligence
Industry benchmarks from SDM Magazine Top 100 and Annual Industry Forecast
Security Sales & Integration State of the Industry reports
GF Data and PitchBook transaction databases for comparable M&A activity
Parks Associates research on security market sizing and trends
This guide is provided for informational purposes only and does not constitute financial, legal, or professional advice. Actual valuations depend on specific business characteristics and market conditions at time of transaction.