Security patrol guard business diligence

by a searcher from Princeton University

3 years ago

Fellow searchers, I was wondering if anyone has looked at security patrol guard businesses for acquisition and what risks one should watch for when going into this.

I see on BVR Dealstats and Peercomps that the multiples for $3M-$8M revenue businesses is around 2x, which seems lower than say a commercial landscaping business and implies a higher risk premium.

I also see on the IBIS report that the industry is in a declining phase because of security alarm systems, so it appears similar to the print industry in some ways, except for being asset light.

I would appreciate any thoughts! Thank you.

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8 comments

searcher from Georgia Institute of Technology

I haven't done any diligence in this area, but this seems like a business that may also have been disrupted by COVID (A lot of commercial office space scaling down, which may result in less need of security guards).

3 years ago | like reply | 0 likes

searcher from Massachusetts Institute of Technology - MIT Sloan School of Management

Key diligence area is hourly pay rate for the guards. If it's in the low teens ($12-15 / hour) - they are most susceptible to disruption from alarms / other technology (you'll also run into turnover issues). At higher hourly wages ($30+) - you're typically providing more high end service that requires in-person presence of a guard.

3 years ago | like reply | 0 likes

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