Selling a commercial security company

Commercial security has the traits investors look for in a services business. Customers pay monthly for monitoring and service, systems need care for years, and most integrators are local and founder-run. ADT, a public company serving homes and small businesses, tells investors that most of its revenue comes from recurring sources¹⁰.

New buyers keep arriving. In September 2026, Springdale Industries launched Eagle Security Alliance to partner with commercial security integrators and committed more than $100 million to it¹. Morgan Stanley Capital Partners bought Security 101, an integrator with more than 50 U.S. locations, in February 2026². Cobalt Service Partners said its February 2026 purchase of Dallas integrator STS360 was its 18th acquisition since it launched in December 2023³. In October 2025, Lightview Capital invested in FSS Technologies, a Michigan fire and security integrator, with more acquisitions as part of the plan⁹.

Established platforms are adding smaller firms as well. Cobalt bought a family-founded Tennessee integrator and a Massachusetts one in August 2025⁴. Perimeter Security Partners acquired Shore, a Long Island installer of cameras and access control for retail and financial services customers, that same month⁷. NextGen Security, a Dunes Point Capital portfolio company, added Florida integrator Micro Security Solutions in December 2024⁸.

Monitoring is consolidating too. Becklar, a Graham Partners portfolio company, announced the purchase of wholesale monitoring provider Dynamark Monitoring in September 2025 and of Legacy Security Services in June 2026. Graham called Legacy Becklar's 11th add-on since 2021 and pointed to a continuing shift toward outsourced monitoring⁵⁶.

Whether a buyer sees you as a platform or an add-on shapes the process. A platform buyer pays for managers and systems that can absorb more companies. An add-on buyer pays for your accounts, technicians and territory. Guard and patrol companies are a different business, built on labor hours, and mostly draw different buyers.

The buyers you are likely to meet:

• Private equity backed integrator platforms adding cities, technicians and customer relationships. For most owner-run firms, this is the likeliest buyer.
• Long-term holders. Springdale describes itself as an operating company with permanent capital¹.
• Monitoring companies and larger alarm dealers buying accounts or whole companies.
• Sponsors starting a new platform, regional competitors and independent sponsors who raise money deal by deal. Test their financing early.

Buyers start with recurring monthly revenue, or RMR. ADT defines it as contractual recurring fees for monitoring and other recurring services, and says it shows the revenue under contract at a point in time¹⁰. Installation and project revenue still counts, but it has to be won again each year, so buyers separate the two and pay closest attention to the recurring part.

Attrition is the second number. ADT measures it as the RMR lost to cancellations over the trailing twelve months, divided by its average RMR under contract¹⁰. SDM Magazine's 2025 outlook on security M&A describes the RMR roll forward as an essential report: each month's starting RMR, the amount added, the amount lost and the ending balance¹¹.

Many commercial integrators are mostly project businesses with little RMR. For them, the same article points to gross margin on closed projects as a key measure¹¹, and buyers lean on earnings. Service and maintenance agreements, test and inspection work, and cloud video or access control sold by subscription all move you toward the recurring side.

You will hear alarm accounts priced as a multiple of RMR. This guide gives no multiples, because we found no independent, dated public source for current figures, and any number depends on attrition, contract terms and account mix.

Running your own central station is not required. Many dealers use a wholesale provider, and Dynamark alone served a dealer network with about 145,000 end subscribers⁶. If you do run a station, expect questions about UL listing. UL Solutions lists stations that meet UL 827, its standard for central station alarm services, after an on-site examination and audits them every year. Listed full-service stations can issue alarm certificates that insurers and code officials often require¹².

Expect early requests for these:

• RMR by type: monitoring, service agreements, managed video and access control, and fire alarm testing, by month for three years.
• Attrition: RMR and accounts lost each year, with reasons, plus price increases and upgrades on existing accounts.
• Contracts: the share of accounts on signed agreements, remaining term, renewal, assignability and who owns the installed equipment.
• Customer and system mix: commercial versus residential, national accounts, and the split of intrusion, video, access control and fire alarm work.
• Concentration: your top 10 customers as a share of RMR and of project revenue.
• Margins by line: installation, service and monitoring, with technician time charged to each.

Owner dependence comes first. If you still sell every large project, design the systems and hold the relationships with your biggest accounts, a buyer has to price in what happens when you step back.

Contracts come next. RMR is only as good as the agreement behind it. ADT's standard contracts run two, three or five years and renew automatically, for a year at a time in the case of small business customers¹⁰. Accounts billed with no signed agreement, or on an expired one, are worth less to a buyer.

Equipment can be a problem if you sell to federal agencies or their contractors. A standard federal contract clause bars contractors from providing the government any system that uses covered video surveillance or telecommunications equipment as a substantial or essential component, and its definition names specific manufacturers¹⁷. Buyers with government customers will ask which brands are in your installed base.

Security systems now sit on customer networks. Security 101 says customers increasingly need integrated systems that run securely on modern IT networks². Expect questions about how you store customer passwords and who has remote access.

Other issues that come up often:

• High or unmeasured attrition, or a jump in cancellations after a price increase.
• Contracts that cannot be assigned to a buyer without each customer's consent, or that leave equipment ownership unclear.
• One customer, one general contractor or one national account that makes up a large share of revenue.
• A large residential base inside a commercial company. It is not a flaw, but buyers value it separately.
• A history of false alarm fines, or accounts in cities that have suspended police response.
• A state license that rests on you personally, with nobody else qualified to hold it.

Alarm and security contractors are licensed by states, and sometimes by cities, and the rules differ widely. We checked two states. For any other state, ask your licensing board or your attorney.

Florida defines an alarm system contractor as someone who installs, maintains, repairs, monitors or services alarm systems for pay. Its alarm system contractor I category covers every type of alarm system, and category II covers all but fire¹³. A company qualifies through a qualifying agent, who must be an officer or supervising employee. If the only qualifying agent leaves, the company has 60 days to qualify someone else, or the board will find it no longer qualified to contract¹⁴.

North Carolina requires a license for any security systems business, which includes selling, installing, servicing or monitoring alarms, monitored access control and cameras. The company must employ a licensed qualifying agent who is a full-time employee in a management position. If that person stops serving, it must replace them within 90 days, which the board's director may extend by 30 days for good cause¹⁵.

If the qualifying agent is you and you plan to leave after closing, the buyer inherits a licensing problem on a short clock. Qualify a second person well before a sale.

Certifications matter for the same reason. NICET's Fire Alarm Systems certification has four levels, requires exams and documented work history, and must be renewed every three years¹⁸. Keep a current list of who holds what, including manufacturer certifications and any low-voltage licenses your state requires. Greymont's fire protection and commercial door guides cover those trades in more depth.

Local false alarm rules affect both cost and service. Sandy Springs, Georgia, has required since June 19, 2019 that an intrusion alarm be verified by audio, video or private guard response before police are dispatched, and it bills false alarm fines to alarm companies, not to their customers. The city says more than 99 percent of calls from alarm companies are false alarms¹⁶. Rules differ by city.

An offer is a package. Judge it by the total you are likely to collect and by how much of it depends on things you will not control after closing.

Ask every buyer what changes for customers and technicians: the name, the product lines, the monitoring provider, pay and local decision-making. Practices differ. Eagle Security Alliance says its partner companies keep their brand, leadership and team, and that owners keep equity in their own business¹. Security 101 said it would keep its brand and the same local teams². Shore's founder stayed on as president and became an equity partner in Perimeter Security Partners⁷. Get the answers in the letter of intent.

The pieces you will usually see:

• Cash at closing, adjusted for debt, cash and working capital. Agree early how monitoring billed in advance and customer deposits on unfinished projects are treated, since buyers often count them as liabilities.
• Rollover equity: many platforms ask you to reinvest part of your proceeds. Contributing property to a partnership in exchange for an interest in it is generally not taxed at that time¹⁹, one reason rollovers are often set up that way. Get your own tax advice.
• RMR holdbacks: part of the price may be held back and reduced if accounts cancel in the months after closing. ADT charges cancellations back to its dealers for a period that is generally thirteen months¹⁰. Define exactly which cancellations count and who controls pricing in the meantime.
• Earnouts: more common for project-heavy integrators, usually tied to gross profit or to keeping named accounts.
• Consents: in an asset sale, customer contracts, dealer agreements and your wholesale monitoring agreement may need consent to assign. In a stock sale they usually stay with the company, though change-of-control clauses can still apply.
• Your role: plan to stay through a transition, longer if you lead sales or hold the license, with title, duties, pay and time in writing.

Buyers review two or three years of history, so start early. Most of these steps pay off even if you never sell:

• Build an RMR roll forward by month, with a reason for every cancellation, and reconcile it to your billing system.
• Paper every account: signed agreements that state the term, renewal, price increases, assignment rights and equipment ownership.
• Separate your revenue: installation, service, monitoring and other subscriptions as their own lines, with labor and materials charged to each.
• Sell service agreements on systems you installed, and raise underpriced accounts early so the new RMR has a track record.
• Step back from sales: put a sales lead and an operations manager in place, and give them a full year to prove it.
• Qualify a second license holder, and keep technician licenses, registrations and certifications in one file.
• List the equipment brands in your installed base, and note any government or regulated customers.
• Lock down customer credentials: a password vault, no shared logins and remote access limited to the people who need it.
• Tighten the financials: accrual accounting, monthly closes, job costing on every project and documented add-backs.