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What Is My Alarm Monitoring Business Worth?
The short answer
Security and alarm monitoring companies are talked about two ways in the industry, and it helps to understand both. Buyers of pure monitoring accounts often price the recurring monthly revenue (RMR) itself, commonly in the 20x to 40x RMR range depending on attrition, contract quality and how the accounts are billed and serviced. But when you value the whole company — installation crews, a service department, a brand, staff and all — the more useful yardstick is a multiple of seller's discretionary earnings or EBITDA, and our calculator uses a 5x to 9x range for that. The two are not in conflict: a company with excellent RMR (low attrition, long contracts, owned accounts rather than dealer-financed ones) tends to land toward the top of the SDE range too, because the same qualities that make RMR valuable — stickiness, low churn, clean contracts — also make the earnings behind them more reliable. Think of the RMR multiple as pricing the accounts alone, and the SDE multiple as pricing the whole operating business those accounts sit inside.
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RMR as the core value driver, and how RMR multiples work
Recurring monthly revenue — the monitoring fee you collect every month from each account — is the heart of an alarm company's value. It is small individually, often $30 to $60 a month per residential account and more for commercial fire and access-control systems, but it compounds into a predictable, high-margin revenue stream once the upfront installation cost has been recovered.
In the alarm industry, buyers of account portfolios often quote price as a multiple of RMR rather than of earnings, because RMR is easy to compare across sellers of very different sizes. A multiple of 20x to 30x RMR is typical for a mixed book of accounts with average attrition and contract terms; strong portfolios with low attrition, long remaining contract terms, and owned equipment can reach 35x to 40x or more. A book with high attrition, month-to-month terms, or a large share of price-sensitive promotional accounts can fall well under 20x.
That RMR pricing convention values the accounts in isolation, as if they were being transferred into someone else's existing monitoring operation. When you are selling the whole company — the office, the technicians, the truck fleet, the brand and the customer relationships that come with running the business day to day — buyers instead apply a multiple to SDE or EBITDA, because that figure already reflects the RMR net of the cost of servicing it, running the office and monitoring it.
It is worth calculating both numbers before you go to market. If your RMR-based estimate and your SDE-based estimate point to very different values, that gap usually reveals something about cost structure — for example, an unusually lean or unusually bloated operation relative to the size of the account base — and it is better to understand why before a buyer raises it first.
Attrition rate and contract terms
Attrition — the percentage of RMR lost each year to cancellations, non-payment and relocations — is the single number buyers ask for earliest. Industry-wide attrition commonly runs in the 8% to 12% range annually; below that is a real asset, and above 15% invites a lower multiple on both the RMR and SDE basis, because it means the company is running hard just to stay in place.
Contract term length and structure matter almost as much as the attrition percentage. A three- to five-year initial term with automatic renewal gives a buyer a defensible legal basis to keep billing and pursue collections if a customer tries to cancel early. Month-to-month arrangements, or contracts that have quietly rolled onto no fixed term after the original period lapsed, are worth much less per dollar of RMR.
Assignability is a related but separate issue: some monitoring contracts, particularly older ones or those tied to a specific dealer agreement, require customer notification or consent before they can be transferred to a new owner. Buyers will want a sample of the contract language and an estimate of what share of the base falls under each version used over the company's history.
Whether accounts are owned outright or financed through a third-party monitoring or capital provider changes who actually owns the RMR stream at sale, and that needs to be untangled early rather than discovered during diligence.
Monitoring in-house versus contracted to a central station
Some alarm companies run their own UL-listed central monitoring station; most, especially smaller ones, contract monitoring out to a third-party wholesale central station and simply hold the customer relationship and billing. Neither model is inherently better, but they price differently.
A company with its own central station has a real operating asset — the facility, redundant power and communications, trained dispatchers — and captures the full monitoring margin rather than paying a per-account wholesale fee. That can support a higher SDE multiple, but it also means more fixed cost, more regulatory obligation, and a harder integration for a buyer who already outsources monitoring.
A company that contracts monitoring out is simpler to value and simpler to transfer: the buyer largely just needs to confirm the wholesale contract terms, the per-account cost, and whether that contract itself is transferable or will need to be renegotiated at sale. Wholesale monitoring costs are usually a few dollars per account per month, and the spread between what you charge the customer and what you pay the central station is a key driver of monitoring margin.
Either way, buyers will check the central station's UL listing and reliability track record, since a company's ability to sell and retain commercial fire-alarm accounts often depends on it.
Installation revenue versus monitoring revenue
Alarm companies typically earn money two different ways: one-time installation and equipment revenue, and ongoing monitoring RMR. Buyers price these very differently, and mixing them together in a single revenue or earnings number obscures what is actually being sold.
Installation revenue is transaction-based, project-like, and only as good as the next sale — it looks more like a construction or trades business, with margin dependent on labor efficiency, material cost and sales volume in a given period. Monitoring RMR is recurring, high-margin once the account is established, and does not need to be re-sold every month to keep earning.
A company that is mostly an installation business with modest RMR on the side will value closer to a general trades business — think a multiple driven mainly by SDE with limited credit for recurring revenue. A company with a large, well-documented RMR base and a smaller installation department built mainly to service and grow that base will value closer to the top of the range, because more of its earnings are predictable.
When presenting numbers to a buyer, separate installation revenue and gross margin from monitoring RMR and monitoring gross margin. It is one of the clearest ways to show a buyer exactly what they are paying for.
Account quality: credit, alarm type, and commercial versus residential
Not all RMR is equal. Buyers weight account quality by several factors: the creditworthiness of the customer base (are accounts on autopay with a clean payment history, or is there a pattern of past-due notices and disconnections), the type of system (basic burglar alarm versus fire alarm, access control, or video monitoring), and whether the customer is residential or commercial.
Commercial accounts, especially fire-alarm and access-control contracts tied to code-required inspections, tend to carry higher RMR per account, longer contract terms, and lower price sensitivity than residential burglar-alarm accounts, since a business often cannot legally operate without a functioning, monitored fire system. That makes a commercial-heavy book generally worth more per dollar of RMR than a residential-heavy one, all else equal.
Geographic density matters too. A tightly clustered account base in one or two service areas is cheaper to service, easier for technicians to reach quickly for false-alarm or trouble-signal calls, and more attractive to a buyer who already operates nearby. A book scattered across a wide territory costs more per account to service and is harder for a buyer to absorb into an existing route structure.
Buyers will often ask for an aging report on past-due accounts, a breakdown of alarm type and commercial-versus-residential mix, and a map or list of service areas before putting a number on the table.
Licensing, false-alarm ordinances, insurance and liability limitation
Alarm companies operate under state and, often, municipal licensing requirements, and technicians frequently need individual licenses or registrations to install and service systems. Buyers will confirm the company's license is current, in good standing, and — critically — transferable, or that the buyer's own principals can qualify to hold a new license without a gap in operations.
Most cities and counties require alarm permits for monitored accounts and impose fines or service suspension for excessive false alarms. A company with a poor false-alarm record across its customer base faces higher customer churn, regulatory friction, and sometimes direct fines, all of which a buyer will want quantified before closing.
General liability and errors-and-omissions coverage are standard expectations, but the more important document in this industry is the monitoring contract's limitation-of-liability clause. Courts have generally upheld well-drafted clauses that cap an alarm company's liability if a monitored event — a burglary, a fire — results in loss, but poorly drafted or missing clauses expose the company to open-ended lawsuits. Buyers, and their insurers, will want to review the current contract template and confirm it has been used consistently across the active customer base, not just on paper for new customers.
A history of claims or lawsuits tied to alarm failures or false confidence in monitoring response is a serious flag in diligence and can affect both price and deal structure, sometimes pushing a buyer toward an asset purchase that leaves historical liability behind.
Owner dependence, technician staffing, and who the buyers are
As in most owner-operated service businesses, how dependent the company is on the owner personally affects where it lands in the range. If the owner is the one selling every new system, handling every escalated service call, and personally holding the vendor and monitoring relationships, the business is harder to hand off cleanly, and buyers price that risk in.
Licensed, trained technicians who can install and service systems without the owner present, and a scheduler or office manager who runs day-to-day dispatch and billing, make the business transferable. Because licensing can be tied to specific individuals, buyers also want to know whether key technicians are likely to stay through a transition, since losing licensed staff at closing can create a real operating gap.
Buyers in this space range from private individuals and other local alarm dealers looking to add RMR to their own base, to regional consolidators and larger security companies actively acquiring smaller dealers to grow monitoring revenue at scale. Strategic buyers already running a central station and back-office billing system will often pay more for RMR alone, since they can absorb the accounts without duplicating overhead — which is part of why RMR-multiple offers and whole-company SDE offers can look different even for the same business.
A hypothetical example
Say an alarm company has 900 active monitored accounts averaging $42 in monthly RMR, for total RMR of about $37,800, or roughly $453,600 annualized. Annual attrition has run about 9% over the past three years, most accounts sit under three-year contracts with automatic renewal, and 25% of accounts are commercial fire or access-control systems. On an RMR basis, a book like that — decent attrition, solid contract terms, a meaningful commercial share — might attract a multiple in the 28x to 32x RMR range, or roughly $1.06M to $1.21M for the accounts alone. Looking at the whole company, total revenue including installation work is $1.1M, and after add-backs for owner salary and a few personal expenses, SDE comes to about $210,000. A working service manager handles scheduling and most customer escalations, technicians are licensed and have been with the company two-plus years on average, and the false-alarm record is clean. That profile might support something like 6x to 7x SDE, or roughly $1.26M to $1.47M for the whole business — a range that sits close to, and slightly above, the standalone RMR estimate once the installation department and trained staff are factored in. If the same company instead had 15% annual attrition, mostly month-to-month contracts, and the owner personally handling all service escalations, both estimates would fall meaningfully, likely toward 5x SDE and the low-20s on RMR. This example is illustrative only and is not a prediction for any specific business.
Multiple ranges reviewed September 2026. They are a guide, not a quote or a formal appraisal — see how the process works.
Common questions
What multiple do alarm monitoring businesses sell for?
Whole-company sales typically price at 5x to 9x SDE or EBITDA. Pure account portfolios are more often priced as a multiple of recurring monthly revenue (RMR), commonly 20x to 40x depending on attrition and contract quality.
Why are there two different ways to price the same business?
RMR multiples price the monitoring accounts alone, as if absorbed into an existing operation. SDE multiples price the whole company — staff, installation department, brand and all. The two usually align: better RMR quality tends to produce better SDE quality too.
What attrition rate is considered good?
Industry-wide attrition commonly runs 8% to 12% annually. Below that supports a stronger multiple on both an RMR and SDE basis; above 15% typically pulls the multiple down.
Does it matter if I monitor in-house or use a central station?
Both models are common. An owned, UL-listed central station is a real operating asset that captures full monitoring margin but adds fixed cost. Contracting to a wholesale central station is simpler to value and transfer, provided that contract itself is transferable.
Why is commercial fire and access-control RMR worth more than residential burglar-alarm RMR?
Commercial fire and access-control accounts usually carry higher monthly fees, longer contracts, and lower price sensitivity, partly because code requirements can make monitoring effectively mandatory for the customer.
How much does the limitation-of-liability clause in my contracts matter?
A great deal. Courts generally uphold well-drafted limitation clauses when a monitored event leads to loss, but weak or inconsistently used clauses expose the buyer to open-ended liability, which affects both price and deal structure.
Do false-alarm ordinances affect value?
Yes. A poor false-alarm record can mean fines, service suspensions, and customer churn, all of which buyers factor into price once they see the company's history with local ordinances.
How can I raise the value before selling?
Tighten contract terms and get more accounts onto multi-year auto-renewing agreements, drive attrition down, document your false-alarm and claims history, and build a technician team and service manager who can run day-to-day operations without you. Most of this takes one to two years to show up clearly in the numbers.