Selling a security services business: how guarding and monitoring companies are valued

This guide is general information, not legal advice. Licensing, labor, and government contracting rules turn on your state, your contracts, and your deal structure, so confirm anything here with your own attorney. Nothing here is a valuation of your company.

How do buyers value a guarding business compared with a monitoring business?

A guard company sells hours. Revenue is billable hours times bill rates, the largest cost is officer wages plus payroll taxes, insurance, and benefits, and profit is the spread between the two after supervision and overhead. Buyers value that profit as a multiple of adjusted EBITDA, with the multiple reflecting how likely the earnings are to hold once you step back.

Across all industries, the IBBA and M&A Source Market Pulse Survey for the second quarter of 2026 reported multiples of 4.0 times EBITDA for deals valued at $2 million to $5 million and 5.8 times for deals from $5 million to $50 million (Market Pulse Q2 2026). The survey does not report multiples for security businesses and does not publish sample sizes by deal size, so read it as a picture of how size moves the multiple, not as a price for your company. EBITDA multiples explained covers what moves the multiple, and what is my business worth covers how a buyer gets from your tax return to normalized earnings.

Guarding margins are thin even at scale. Securitas reported an operating margin of 9.4% for its North America segment in 2025, up from 9.1%, and described the segment’s 10.0% fourth-quarter margin as a record (Securitas, full year 2025 presentation). That segment includes technology and solutions, 37% of its fourth-quarter sales, alongside guarding. At single-digit margins, a small change in the hourly spread on a large post is a large share of profit.

Monitoring is underwritten on recurring revenue instead. ADT, a publicly traded alarm and monitoring company, defines RMR as the contractual recurring fees for monitoring and other recurring services, and uses it to measure revenue under contract at a point in time (ADT Form 10-K for 2025). It measures how fast that revenue leaves as gross customer revenue attrition: RMR lost to cancellations over a trailing twelve months, net of reinstatements and dealer charge-backs, divided by average RMR. ADT reported 13.1% at the end of 2025, up from 12.7%, and estimates that each percentage point of attrition moves its annualized recurring revenue by about $40 million. Its customers are mainly homes and small businesses, so its rate is not a benchmark for a commercial portfolio. The point is the method: a buyer will rebuild your attrition the same way, from your own cancellation records.

The same filing lists what affects the price ADT pays when it buys accounts in bulk: the recurring revenue the accounts have historically generated, competition for them, its experience with that seller’s past accounts, geography, the number of accounts, customer credit scores, and the equipment or platform customers use. That list works as a checklist for any monitoring seller. If you do both guarding and monitoring, expect a buyer to value them separately.

What drives value in a guarding and patrol book?

Contract terms and termination rights

The termination clause matters more than the stated term. If a client can cancel on 30 days’ written notice, a three-year agreement tells a buyer little, and the account’s value rests on tenure, service quality, and the relationship. Buyers read every agreement for notice periods, termination for convenience, assignment and change-of-control language, rate adjustment mechanics, and the indemnity and insurance obligations you have accepted.

Bill rate versus wage

Buyers rebuild the spread post by post, looking for sites where wage increases were absorbed instead of passed through. Minimum wage schedules make the risk concrete. Florida’s constitution raised the state minimum wage by $1.00 every September 30 until it reached $15.00 an hour on September 30, 2026, with annual inflation adjustments from 2027 (Fla. Const. art. X, section 24). A Florida contract priced without a wage pass-through clause absorbed each of those steps. Federal work adds a layer: under the McNamara-O’Hara Service Contract Act, a contractor on a successor contract for substantially the same services generally may not pay service employees less than the wages and fringe benefits under the predecessor contract, including increases negotiated in a collective bargaining agreement (41 U.S.C. 6707(c)). Overtime is the other leak. Sustained overtime to cover open posts means billable hours are being worked at a premium cost, and a buyer will assume that margin does not survive its own staffing standards.

Customer concentration

One client with a large share of billable hours puts much of the business into a single rebid decision. Concentration rarely ends a deal, but it commonly moves part of the price into an earnout or holdback tied to that account staying.

Client retention and officer turnover

Buyers measure retention by account and by revenue over several years. For scale, Securitas reported a client retention rate of 89% for North America in 2025, up from 87%, as the company calculates it. Officer turnover is the other side of the same coin. Security guards held about 1.3 million jobs in 2025, 58% of them in investigation, guard, and armored car services firms, at a median annual wage of $38,020 in May 2025. The Bureau of Labor Statistics projects about 157,200 openings a year from 2025 to 2035 for security guards and gambling surveillance officers, mostly to replace workers who leave (BLS Occupational Outlook Handbook). Each replacement carries recruiting, screening, licensing, training, and uniform cost, so a buyer will want your turnover by site and what it costs.

If clients stay because they deal with you personally, a buyer has to price the risk that some leave when you do. Selling an owner-dependent business covers how to build an account and branch management layer before a sale.

What drives value in an alarm or video monitoring portfolio?

• Attrition history. Cancellations by year and by reason (non-payment, moves, competitors, dissatisfaction), calculated the same way every period.
• Contract terms. ADT describes its standard terms as two, three, or five years, renewing automatically for 30-day periods for residential customers and annual periods for small business customers unless canceled, with a termination payment owed on early cancellation. A buyer will compare your initial terms, renewal mechanics, early termination rights, and whether you can assign the contracts without customer consent.
• Equipment and communication path. ADT flags a heightened attrition risk among legacy subscribers whose systems need significant hardware upgrades to work with its newer platform. Expect questions about how many of your accounts would need new panels or communicators, and who pays.
• Central station. Your own monitoring center or a third party’s, and whether that agreement can move to a buyer.
• Mix. Commercial and residential, burglary, fire, and video, tracked separately.

Will your security licenses transfer to a buyer?

Often not automatically. State rules differ, and structure matters. Four examples:

• California guard companies. The Bureau of Security and Investigative Services says private patrol operator licenses cannot be transferred or reassigned to new entities, and treats a change of ownership as a new entity that needs a new application and fees (BSIS PPO FAQ).
• California alarm companies. An alarm company operator license is not assignable, except with the bureau chief’s consent to an entity wholly owned by the same direct and indirect owners immediately afterward. That covers an internal reorganization, not a sale to an outside buyer (Cal. Bus. & Prof. Code section 7593.15).
• Texas. Guard companies and alarm systems companies both need a security services contractor license, and a company license is not assignable unless the Department of Public Safety approves the assignment in advance. A separate provision lets the business continue temporarily, on terms set by rule, when the individual whose qualifications support the license leaves (Tex. Occ. Code sections 1702.102, 1702.103, and 1702.122).
• Florida guard companies. Even when the licensed entity stays the same, an agency must notify the state within five working days when partners or officers are added, removed, or replaced, file complete applications for them, and its good standing depends on the state approving them (Fla. Stat. section 493.6112).

In practice, a stock purchase usually keeps the licensed entity but still triggers approvals for new owners and officers, while an asset purchase may require the buyer to hold its own licenses before closing. If your experience qualifies the license, a successor has to be approved, and that often sets the deal timeline.

How do buyers look at liability, insurance, and claims history?

Security work produces claims that can surface long after the incident: negligent hiring, retention, and supervision, assault, and premises incidents at client sites. Buyers review several years of loss runs, policy limits and exclusions, whether policies are occurrence or claims-made (and who pays for tail coverage), the indemnities you have given clients, and whether screening files, training records, post orders, and incident reports would hold up in litigation.

Workers compensation history follows you, too. Under the National Council on Compensation Insurance plan, the experience modification is generally based on three years of payroll and loss data, drawn from policies that took effect 21 to 57 months before the rating date, so the current policy is not used (NCCI, ABCs of Experience Rating). A bad claims year shows up in premiums for years afterward, and a buyer modeling your costs will price it. Unresolved exposure is usually handled through indemnities and escrow rather than a lower headline price.

What do buyers check on labor and union obligations?

Wage and hour practice comes first: overtime, meal and rest breaks, time rounding, paid training time, and travel between posts on patrol routes, plus employment eligibility documentation.

If your officers are unionized, federal law treats guard units differently. The National Labor Relations Board may not certify a union to represent a unit of guards if the union admits non-guards as members or is affiliated with one that does (29 U.S.C. 159(b)(3)). Structure matters here as well. In a stock purchase the employer does not change, so an existing union contract stays in force. A Supreme Court case on successor employers arose from a guard contract changeover: in NLRB v. Burns International Security Services (1972), the Court held that a new contractor that hired a majority of its guards from a unionized predecessor had to bargain with the union but was not bound by the old contract, which it had not agreed to assume (406 U.S. 272). Read your agreements for successorship clauses, and ask labor counsel how they apply to your deal.

Who buys security services businesses?

Buyers fall into three broad groups. The examples below come from the companies’ own announcements and filings; naming them implies no relationship with Wraith.

• Private equity platforms. Sponsor-backed companies buy regional operators to add density. Marksman Titan Security Group announced on January 20, 2026 that it had acquired Priebe Security Services, an Austin provider of on-site security officers and mobile patrol, in a release that includes a profile of the private equity firm Quad-C (PR Newswire).
• Strategic security companies. Large guarding firms buy for density and, increasingly, technology. Securitas completed its purchase of STANLEY Security on July 22, 2022, for $3.2 billion on a debt and cash free basis, describing the deal as making it a provider of technology-enabled security (Securitas).
• Monitoring and alarm consolidators. Pye-Barker Fire & Safety announced on January 29, 2026 that it had acquired Knight Security Systems of Harrisburg, Pennsylvania, a provider of security and fire alarm installation and 24/7 monitoring (PR Newswire). ADT’s 10-K describes bulk acquisition of customer accounts as one element of its strategy, alongside an authorized dealer program in which it buys qualifying monitored accounts.

Our page on M&A advisory for security services businesses covers what each group tends to underwrite.

How are security services deals usually structured?

Many buyers prefer asset purchases to leave historical liabilities behind, but licensing and contract assignment often push security deals toward a stock purchase. Federal contracts add rules of their own. A government contract cannot be transferred to a third party without the government recognizing the buyer as successor through a novation agreement, which is unnecessary when ownership changes through a stock purchase and the contracting entity stays the same (FAR 42.1204). A small business contractor that is acquired generally must recertify its size within 30 calendar days, and if it is no longer small, its eligibility for some set-aside awards and options changes (13 CFR 125.12).

Part of the price is often contingent. In guarding, that usually means an earnout or holdback tied to keeping named accounts. In monitoring, the logic resembles ADT’s dealer program, where a dealer refunds the purchase price of any account that cancels during a charge-back period ADT describes as generally thirteen months; a buyer of your accounts may ask for a holdback or an attrition guarantee that works the same way. Expect an escrow or indemnity for pre-closing claims and wage and hour exposure, and a working capital target that reflects paying officers before clients pay you. Seller financing and earnouts explained covers how those terms work and what to negotiate.

What should you prepare 12 to 24 months before a sale?

• A complete contract file. Every client agreement and amendment, with term, notice, assignment, escalation, and pass-through language summarized. Renew expiring agreements with pass-through and assignment terms where clients will accept them.
• Post-level economics. Bill rate, pay rate, burden, and overtime by site, monthly.
• Retention records. Accounts won and lost by year and why. For monitoring, an RMR roll-forward (beginning RMR, additions, cancellations by reason, price changes, ending RMR) and attrition calculated the same way every period.
• A licensing map. Every company license and officer registration by state, who the qualifying individual is, and a successor who can qualify.
• Insurance and claims. Loss runs, open claims, experience modification worksheets, and policy forms.
• Labor compliance. A wage and hour review, an employment eligibility audit, and any union agreements with their successorship terms.
• Normalized financials. SDE or adjusted EBITDA with every add-back documented, guarding and monitoring reported separately.

For a first read on where companies your size tend to land before any of that work is done, try the valuation calculator.

So what is your security business worth?

Start with normalized earnings, split guarding from monitoring, and test each against what a buyer will examine: termination and pass-through terms, post-level spread, concentration, retention and attrition, and whether your licenses, contracts, and workforce will move with the business.

If you would like that worked through on your actual contracts and numbers, start with a confidential valuation. It is a private conversation about what your company is worth and why, with no obligation to sell.

Sources

• IBBA and M&A Source, “Market Pulse Survey Q2 2026 Highlights,” August 2026 (all industries; per-band sample sizes not disclosed). ibba.org/wp-content/uploads/2026/08/mp-highlights-q2-2026.pdf
• Securitas AB, Full Year Report January to December 2025, results presentation, February 2026 (Securitas North America operating margin, technology and solutions share of sales, client retention rate). securitas.com
• ADT Inc., Annual Report on Form 10-K for the year ended December 31, 2025 (RMR and attrition definitions and figures, contract terms, dealer program, bulk account purchases). sec.gov
• U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, “Security Guards and Gambling Surveillance Officers,” accessed October 26, 2026. bls.gov
• Constitution of the State of Florida, Article X, Section 24 (Florida minimum wage). flsenate.gov
• 41 U.S.C. 6707(c), McNamara-O’Hara Service Contract Act, successor contracts. law.cornell.edu
• California Bureau of Security and Investigative Services, “Frequently Asked Questions: Private Patrol Operator,” accessed October 26, 2026. bsis.ca.gov
• California Business and Professions Code section 7593.15 (Alarm Company Act, assignment of license). codes.findlaw.com
• Texas Occupations Code sections 1702.102, 1702.103, and 1702.122 (Private Security Act). texas.public.law
• Florida Statutes section 493.6112 (notification of changes of partner or officer). leg.state.fl.us
• National Council on Compensation Insurance, “ABCs of Experience Rating” (2025 edition). ncci.com
• 29 U.S.C. 159(b)(3), National Labor Relations Act, guard units. law.cornell.edu
• NLRB v. Burns International Security Services, Inc., 406 U.S. 272 (1972). law.cornell.edu
• Federal Acquisition Regulation 42.1204, Applicability of novation agreements. acquisition.gov
• 13 CFR 125.12, Recertification of size and status. law.cornell.edu
• Marksman Titan Security Group, “Marksman Titan Security Group Acquires Priebe Security Services, Expanding Presence in Central Texas,” PR Newswire, January 20, 2026. prnewswire.com
• Securitas AB, “Securitas has completed the acquisition of Stanley Security,” July 22, 2022. securitas.com
• Pye-Barker Fire & Safety, “Pye-Barker Fire & Safety Announces Knight Security Systems Acquisition in Pennsylvania,” PR Newswire, January 29, 2026. prnewswire.com