How to Value a Security Company in 2026

Security is one of the most misunderstood industries in M&A valuation because the word "security" covers businesses with wildly different economics. A guard services company with 500 employees and $12M in revenue might sell for $1.5M. An alarm monitoring company with 5,000 subscribers and $3M in RMR might sell for $15M. Same industry label, ten times the multiple. Understanding why requires understanding the fundamentals of each segment.

The Four Segments and Their Valuations

I break the security industry into four distinct segments, each with its own valuation methodology and buyer universe. Treating them interchangeably is the single most common mistake I see sellers make.

Alarm Monitoring: The Gold Standard

Alarm monitoring is valued on a metric unique to this industry: multiples of RMR (Recurring Monthly Revenue). The standard range is 30-45x RMR, making it one of the highest-valued recurring revenue streams in any industry.

Let me put that in perspective. A monitoring company with 5,000 subscribers paying $45/month has $225,000 in monthly recurring revenue. At 35x RMR, that's a $7.875M valuation — for a business that might only have 3-5 employees managing the monitoring platform and customer service. The economics are extraordinary: 90%+ gross margins, predictable cash flows, and attrition rates typically running 5-8% annually.

The recurring revenue premium in alarm monitoring is so strong because of the compounding dynamics. Once a system is installed, the monitoring revenue continues month after month with minimal incremental cost. Customer acquisition costs are high (equipment, installation, sales commission), but lifetime value is exceptional.

What drives where you fall within the 30-45x range:

• Attrition rate: Below 8% annual attrition commands 38-45x. Above 12% drops you to 30-34x. Every percentage point of attrition matters enormously at these multiples.
• Contract type: Accounts on proprietary monitoring platforms (where the customer can't easily switch) are worth more than accounts on alarm.com (where migration is simpler). That said, alarm.com accounts are increasingly the standard, and buyers have adjusted expectations.
• Average RMR per subscriber: Higher ARPU (interactive services, video verification, smart home) signals a more engaged customer less likely to cancel. Companies with $50+ ARPU outperform those at $30 ARPU on both retention and multiples.
• Account creation cost: Accounts created through dealer programs at $600-800 per account are valued differently than organically generated accounts at $300-400 per account. Lower creation cost means faster payback for the buyer.
• Mix: Commercial accounts (higher ARPU, lower attrition) are worth more than residential. A 40/60 commercial/residential split will trade at a premium over pure residential.

ADT (Apollo-backed), Brinks Home, and several PE platforms (Safe Haven, Guardian Protection) are the most active acquirers. Larger monitoring books ($500K+ monthly RMR) attract direct PE interest.

Guard Services: Commodity Economics

Guard services sits at the opposite end of the valuation spectrum. This is a labor-intensive, low-margin business that trades at 2-4x SDE for smaller operators and 4-6x EBITDA for larger regional or national firms.

The margins tell the story. Guard companies operate on 5-12% net margins. The guards themselves earn $15-22/hour, and the company bills them out at $20-35/hour. After payroll taxes, workers' comp insurance (which is extremely expensive in security), uniforms, supervision, and overhead, there isn't much left. It's a volume game.

What makes some guard companies more valuable than others:

• Specialized vs. commodity: Companies providing cleared personnel (government/defense), healthcare security, or executive protection command 30-50% premiums over general commercial guard services.
• Contract quality: Long-term contracts with government agencies or Fortune 500 companies are worth more than month-to-month commercial arrangements. A 3-year federal contract provides the kind of revenue certainty that justifies a higher multiple.
• Technology integration: Guard companies that have integrated technology (access control, CCTV monitoring, mobile patrol verification) into their service offering earn higher margins and higher multiples than pure manpower providers.
• Employee retention: Guard turnover in the industry averages 100-200% annually. Companies that have figured out how to retain guards (better pay, benefits, career paths) have a genuine competitive advantage and buyers recognize it.

Securitas, Allied Universal (owned by SOS International), and GardaWorld are the dominant strategic acquirers. They're buying market share and geographic coverage, typically at 5-7x EBITDA for companies with $10M+ revenue.

Systems Integration: The Middle Ground

Security systems integrators — companies that design, install, and service access control, video surveillance, intrusion detection, and fire alarm systems — occupy the middle ground at 3-6x EBITDA.

The valuation hinges on one question: how much of your revenue is recurring? An integrator that installs systems and walks away has project-based revenue that trades at 3-4x EBITDA. One that installs and then provides ongoing monitoring, maintenance, and service contracts can trade at 5-7x because of the recurring revenue component.

The most valuable systems integrators I've seen have built a service contract base representing 30-50% of total revenue. These contracts ($200-2,000/month per site for enterprise clients) provide baseline revenue that smooths out the project-based volatility. Buyers — particularly PE firms building platforms — actively seek integrators with strong service contract portfolios.

The convergence of physical security and IT (access control moving to IP-based systems, video analytics, cloud-managed security) is creating opportunities for integrators who can bridge both worlds. Companies with IT/network competency alongside physical security expertise are commanding premium multiples because they solve a growing pain point for enterprise customers.

Cybersecurity Consulting: The Growth Segment

Cybersecurity consulting and managed security services (MSSPs) are the highest-growth segment, trading at 6-12x EBITDA and sometimes higher for companies with strong ARR (Annual Recurring Revenue) from managed detection and response services.

This segment behaves more like a technology/managed services business than a traditional security company. Valuations are driven by ARR growth rate, net revenue retention, and the mix between project-based consulting (penetration testing, compliance audits) and recurring managed services (SOC-as-a-service, managed EDR, continuous monitoring).

MSSPs with $5M+ ARR growing at 20%+ annually and net revenue retention above 110% are attracting significant PE and strategic interest at 8-15x ARR depending on growth profile and margin structure.

The Hybrid Model: Where Value Gets Created

The most valuable security companies I've advised on aren't pure plays in any one segment — they're hybrids that combine installation, monitoring, and service into an integrated offering. A company that installs alarm and access control systems, monitors them for a monthly fee, and provides ongoing service contracts creates three revenue streams with compounding customer lifetime value.

These hybrid models can generate blended multiples that exceed what any single segment would command alone. The monitoring RMR provides a valuation floor, the installation revenue funds growth, and the service contracts deepen customer relationships and reduce attrition.

If you're currently a pure installer, the most value-accretive thing you can do is build a monitoring and service contract base. Even 12-18 months of growing RMR changes how buyers perceive and value your business.

Key Metrics Buyers Analyze

Regardless of segment, these are the metrics I see in every buyer's diligence checklist:

• RMR and monthly attrition rate — for any monitoring or service contract business, this is the first thing buyers model.
• Gross margin by service line — buyers want to understand the profitability of each segment (installation, monitoring, service, guard).
• Customer acquisition cost vs. lifetime value — particularly in monitoring, where the payback period on account creation is critical.
• Contract backlog and pipeline — for systems integrators, the 12-month project backlog provides revenue visibility.
• License and insurance compliance — security companies operate in a heavily regulated environment. Expired licenses or inadequate insurance coverage can kill deals.

The Bottom Line

Security company valuation is entirely segment-dependent. A guard company and a monitoring company might both call themselves "security companies," but they're valued on completely different metrics at completely different multiples. The path to maximum value is clear: build recurring revenue (monitoring, service contracts, managed cybersecurity), reduce attrition, and create operational systems that demonstrate the business runs independently of the owner. The buyers are there — the security industry is one of the most active M&A markets in the services economy — but they reward businesses built on predictable, recurring economics.