You can read all of our articles on our website. Having trouble getting our emails?   Change your spam controls and white list 


Comments on Whats your alarm company worth  
October 4, 2021
Comments on Whats your alarm company worth from article on October 1, 2021
          The article October 1, 2021 on what is your business worth is concise, direct and full of great information from your many years of insight.  I mostly enjoyed the EBITDA discussion because this is the basis that most businesses outside of the alarm industry are traded, such as commercial real estate.  But what is very absent in not only this article, your previous articles and from all of the so called professional brokers who specialize in selling alarm companies, is any discussion of EBITDA of the purchasing company. Of course this information is not the business of the seller, but the seller should be concerned about the health of the purchasing company, unless it is a full cash deal.
          At issue is that accounts are not worth more than the purchaser can forecast to earn on the additional RMR. It has nothing to do with the ego of the seller, because all sellers think their accounts are worth the top end of your range, 44X. In fact the seller may have great margins, but if the buyer has low EBITDA in its operations it is more likely that the newly acquired accounts will not perform any better than the buyers company did the day before the acquisition.
          The advice I don’t see being provided to the buyers is that buyers should know their existing EBITDA before they go buying any accounts or for that matter making any long term business decisions. There is no reason to believe that adding strong margin accounts to a low earnings company is going to change the poor business habits of the buyers company.
          Additionally, a buyer who is acquiring accounts that I call a “fold in”, meaning that the vast majority are within the current service area of the buyer, should not increase the purchase price for this reason. It’s the buyer’s benefit from the result of years of hard work and not a benefit conveyed to the seller.
          Let’s look at “fold in” a little bit closer. There is the geography but it does not end there. If your service staff is maxed out the acquisition could require the need for one or more service tech’s, which also requires another truck, more tools, etc . If your office manager is just slipping a little behind on completion dates for the daily, weekly or monthly tasks, the acquisition could require hiring another person in the office. Does your office even have room for another person? Then of course any additional personnel means more benefits, etc.
          Business brokers or your attorney will be of little help or guidance here. In the end, it’s not business brokers or attorneys that are the buyer’s best source for guidance or information, it’s the buyers accountant. It’s the accountant that has watched your business grow and flourish and is an independent source of non-bias information and observation.
          In the end, it’s not about what the seller thinks his RMR is worth, it’s about what someone is willing to pay for it.
Bart A. Didden, President
U.S.A. Central Station Alarm Corp.
Port Chester, NY
Milford, CT
St. Paul, MN
          Well written comment and pretty good advice.  You raise a few salient issues.  Let’s get specific:
1.       Does a seller need to be concerned about the buyer’s financial strength?  You suggest yes, but not if it’s an all cash deal.  I think the better advice is that a buyer does need to be concerned with a buyer’s financial wherewithal, and should also be concerned with a buyer’s reputation for operating an alarm business utilizing best business practices, alarm industry specific.  Even in a cash deal, with no guarantee or post-closing payout, a seller usually has an interest [perhaps concern is better word] that the accounts are properly taken care of.  A broke-ass buyer probably can’t do that.  A well-to-do buyer who runs its operation on a shoe string trying to cut every corner, squeezing the nickel until the buffalo shits, isn’t likely to properly service the customers.  Even when the seller hasn’t arranged to have his own home alarm and his relatives’ home alarms monitored and serviced for free, there should be some concern.  Of course if the buyer has to make a payment to the seller the seller’s information on the buyer’s financials is vital.
2.       It would be ultimately accurate to say that the contracted accounts are only worth what someone is willing to pay.  On the other hand, not many will pay more than the asking price.  A seller needs to know, or at least have an informed opinion, what the accounts are worth.  A buyer will certainly be trying to determine the account portfolio value, which implicitly means, worth to the buyer.  The focus of the article on October 1, 2021 wasn’t so much on how to value the accounts, but on the need to be and remain aware of the account base, best practices to maximize value and what the general value is.
3.       Who should get the increase price value for “folded-in” accounts?  Well that’s an interesting point.  A seller offering a bunch of accounts in a territory where the buyer wants accounts and wants the type of accounts offered for sale, will pay a premium.  A seller likely knows that the accounts can catch a premium.  So these premium accounts will end up on the higher scale of multiple, though the multiple could just as easily have reductions for other reasons [poor or not contracts, shoddy workmanship, not on own lines, 3G, etc].  But even a “knock-down” in a great neighborhood is going to fetch more money than a similar house in a less desirable neighborhood; same with alarm accounts.
4.       Bart thinks your accountant should be your best source for advice because he knows your business.  Really?  Sorry, I disagree.  If your accountant has become your unofficial business partner, your Rasputin guru, your life coach, then you shouldn’t own a business.  I really have to laugh [to myself, though I rarely keep it to myself] when someone says I want to buy a car or something, anything, else, but I have to ask my accountant if I can afford it.  Are you kidding?  Don’t you know what’s in your pocket, your bank account, your receivables and payables, your debt service, what you expect to make this year and what your personal expenses are?  Well you should.  Your accountant should be reviewing your books, doing bank reconciliations and preparing tax returns.  If you can’t figure out what your paycheck is or what you can expect in distribution, you’re in trouble.  Running your business is more than scheduling your men, selling accounts and performing other administrative functions, though I can’t understand how you could be doing that and not know the financials.  I can’t understand a business owner needing the accountant to tell him what money is available and what can be spent.  You need to know that stuff.  Sure your accountant is needed to know what tax expenses you might be facing, but you should have a pretty good idea what those dollars are going to be.
Another comment
          Your article on October 1, 2021, as always, was most interesting.  As a Business Broker and a “Life safety” Business owner, I have enjoyed buying 31 alarm security businesses in 17 cities nationwide.  I loved to buy a small company for $100,000; in 3 years I would add a 1,000 monitored accounts and then sell for a million dollars.
          Today as always, IT IS A SELLERS MARKET.  Today I have about 18 Life Safety Businesses FOR SALE --  It is easy to find about 15 Buyers for any good business, but only about 3 can get to the settlement table. The other 13 our bottom fishing, do not have the DOLLARS or they are dreamers.  Your Followers should know that many of the Largest BUYER are not the best buyer.  There are new buyers that know and understand the Life Safety businesses and pay better prices to the SELLERS. They also offer better terms and conditions.
          Your Readers who are BUYERS should consider buying Fire extinguisher companies.  A small fire Extinguisher Company with 4 trucks on the road may sell for $4400,000, they would have about 5,000 customers they service and inspect each year. When the Alarm Security Company new owner “cross markets” those 5,000 about 20% in 18 months will have purchased your RMR. monitoring services;  that would be 1,000 accounts that are worth more than $ one million dollars --  I help people buy fire protection companies. 
          When your readers are working on their ‘exit strategy’, we have a list of about 20 “things” they should do to make their life safety business much more valuable.
 Dennis V. Riley 
Cell 240-462-8220
          Thanks for the comment.  I am not sure I agree with “Today as always, it’s a sellers market”.  It’s true that alarm accounts, properly contracted, are very salable.  I like to say that the contracts trade like government issued negotiable instruments and there is a lot of truth in that.  But sellers do need buyers and I think some of the “traditional” buyers are less active or interested, so on the buyer’s side the market is a bit slower.  However, buyers can’t do much without sellers, so I guess it’s a seller’s market.  Be smart and take steps to make sure you are doing all that you can to maximize the equity in your business, which means your alarm accounts.

To order up to date Standard Form Alarm /  Security / Fire and related Agreementsclick here:
You can check out the program and sign up here: or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
NOTICE:  You can always read our Articles on our website at
THE ALARM EXCHANGEalarm classifieds alarm security contracts

    This area is reserved for alarm classifieds, alarm company announcements, solicitations, offers, etc. 
    There is no charge to post a listing here.Include your contact information, phone, email and web site.  If you would like to submit a post, please send an email to  To create a reciprocal link to our website, click here.

Getting on our Email List / Email Articles archived: 
    Many of you are forwarding these emails to friends or asking that others be added to the list.  Sign up for our daily newsletter here: Sign Up.  You can read articles and order alarm contracts on our web site
Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301