Valuation of security monitoring business

searcher profile

March 25, 2021

by a searcher from EMLYON Business School in London, UK

Would anyone have good precedent transactions comps in the physical security monitoring sector. I am looking at a business involved in CCTV security monitoring. They are outsourced the installation and maintenance of the CCTV but keep the monitoring contract which generates high level of recurring business . Any valuation benchmark on similar transaction would be helpful to help educate the vendor.

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commentor profile
Reply by a professional
from Portland State University in Portland, OR, USA
Like ^redacted‌ mentioned, the multiples from www.searchfunder.com/bvr are derived from purchases of private companies. It's a great source of pricing/valuation multiples. If you want to pull your own comparable companies using any custom parameters, just reach out to us and we can walk you through the full DealStats platform: https://www.bvresources.com/products/demo-request/dealstats
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Reply by a searcher
from Massachusetts Institute of Technology in Boston, MA, USA
The key is to understand the steady state cashflow. These businesses lose cash on every new sale (and usually take###-###-#### months to breakeven) and they typically have a decent amount of churn, so they need to burn cash just to stay flat. As a result, EBITDA is often overstated (the upfront expenditure on a new installation is capitalized).
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