Has anyone completed a transaction in the security alarm space?

February 02, 2021

by a searcher from Northwestern University in Melbourne, FL, USA

I am trying to figure out the current EBITDA multiple. I could not find it on the deal benchmarks and comps file that I came across.

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Reply by an investor
from New York University in Nashville, TN, USA

I've dealt with a number of owners in this space, and their valuation expectations are usually based off a multiple of the monthly monitoring fees, not the EBITDA###-###-#### x monthly monitoring fees is the range I'm most often quoted. Unrelated to valuation - if you're looking at transitioning into this space, I'd recommend targeting companies that maintain their own call centers. End users in this space are sticky; given how hard it is to convert customers, and given how saturated the competitive marketplace is, how do you grow? By hosting your competitors calls. Low overhead, easily scalable model.

Reply by a searcher
in Charlottesville, VA, USA

To supplement what Austin has said, I would also focus on companies that serve high-end homes (i.e. less transient and care less about the cost), which also tend to offer higher-end services (--> higher margins), or companies that service businesses (tend to be stickier, longer-term contracts, etc.)

Pay attention to the sub creation costs and attrition - basically two factors that can kill or make this investment. Make sure sub creation cost over time (expressed as multiple of recurring monthly revenue) is lower than the multiple that you paid for the business

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