45-Year Alarm & Monitoring Company, DC Metro Security Contractor

$1.5M

Revenue

$585K

SDE

3.9x

Multiple

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Full Editorial Writeup

This is a 45-year-old security systems company serving the Greater Washington DC metro area (the DMV) with a founder who came out of U.S. Army counter-intelligence. The business installs and monitors fire and burglar alarms, access control, video surveillance, and A/V systems for a mix of residential (80%), commercial (15%), and industrial (5%) clients, including small businesses, high-end homes, government agencies, and management companies. On roughly $1.51M in revenue it generates $584,520 in cash flow, a stated 38.7% margin, and the asking price of $2.299M includes a 3,097 square foot corner commercial property (office, showroom, and workshop).

The attractive part of this deal is the recurring base: about 1,400 monthly monitoring accounts producing roughly $110,000 in annual RMR, with management claiming 95% of revenue is contracted and 95% retention. Weekly invoicing runs $25k to $29k. This is the classic alarm-industry economics play, sticky monitoring contracts on top of installation revenue, and the seller frames 2025-2026 as continued 16-19% topline growth.

The business is currently absentee-owned (the seller lives out of state), runs Monday to Friday 9-5 with 8 W2 employees including 2 managers, and is being sold due to retirement. Seller financing is available. The listing is broker-heavy with hyperbole, so the real work is separating the durable RMR annuity from the lumpier install and A/V revenue that has to be re-won each year.

Why we like it

The earnings quality leans on a genuine recurring core: roughly 1,400 monitoring accounts generating about $110,000 of annual RMR at high margins, which is the stickiest revenue in the security world. Monitoring contracts renew by default and carry 95% claimed retention, so a meaningful slice of the $584,520 cash flow is contractual rather than project-based.
Security monitoring is genuinely recession-resistant. Once an alarm is installed, customers keep paying the monthly monitoring fee in good times and bad because canceling means losing protection, and fire/burglar/environmental monitoring is treated as an essential utility rather than a discretionary line item.
The client roster is diversified and high-quality: government agencies, judges, military, national franchises, and high-end residential across the DMV, with stated low customer concentration. A dense, wealthy metro like DC supports premium pricing and referral-driven growth without heavy ad spend.
The business is already absentee-run with a manager layer in place, so an owner-operator could immediately add capacity by working full-time and converting install leads faster. At 3.93x cash flow with real estate and seller financing included, the entry multiple is reasonable if the RMR and margins hold up under scrutiny.

How to improve it

Separate and stabilize the RMR before anything else. Audit exactly how much of the $1.51M is recurring monitoring versus one-time installs and A/V, then push customers onto auto-pay and multi-year monitoring agreements to lock renewal and raise the per-account lifetime value.
Reprice the monitoring book. $110,000 of RMR across 1,400 accounts is only about $6.55 per account per month, far below market rates of $25 to $45, which suggests either underpricing or a definitional issue. A modest, staggered price increase on legacy accounts could add high-margin recurring dollars almost immediately.
Institute a structured sales and marketing engine. Growth today is entirely word-of-mouth, so hiring or incentivizing a dedicated closer and running targeted commercial and government outreach in the DMV could convert the existing brand equity into net new install and monitoring revenue.
Expand geographically into Virginia, Pennsylvania, and Delaware as the listing notes, since the fixed monitoring infrastructure scales cheaply. Each new account added to the central station is nearly pure margin, so cross-selling and regional expansion compound the RMR annuity.
Cross-sell the existing base into higher-ticket services like managed access control, video surveillance as a service, and commercial fire inspections. With 1,400 relationships already paying monthly, upselling recurring inspection and service contracts is cheaper than acquiring new logos.
Tighten receivables and billing. With $150,000 in AR aging 30-60 days, formalizing collections and moving contract clients to card or ACH on invoice would improve cash conversion and reduce working capital drag for a new owner.
Replace the retiring founder's institutional knowledge with documented SOPs and a strengthened technical bench. Because the founder built the government and high-end relationships personally, a new owner needs to systematize account management so revenue survives the ownership transition.

Diligence notes

Reconcile the recurring revenue claims. The listing says 95% of revenue is contracted but only cites $110,000 of annual RMR against $1.51M in total sales, which implies most revenue is actually installs and service, not monitoring. Get the monitoring account list, per-account pricing, churn history, and contract terms to determine how much of the cash flow is truly durable.
Scrutinize the growth and margin narrative. Claims of 16-19% growth, 38.7% net margins, and consistent YoY increases are broker-supplied and unusually rosy for a small install-heavy security firm. Demand three years of tax returns and bank statements to verify the $584,520 SDE and the alleged margin profile.
Value the real estate separately from the operating business. The 3,097 square foot corner property is included in the $2.299M price, so pull a market appraisal and back it out to see the true multiple on operations alone, which changes the return math materially.
Assess founder and key-person risk. The high-end and government relationships were built personally by the retiring army-veteran founder over 40 years, and only 4-6 weeks of transition is offered. Confirm which contracts are assignable, whether government clients require re-bidding on ownership change, and what licensing must be re-secured under a new owner.
Verify licensing, insurance, and central-station arrangements. Alarm monitoring in Maryland requires specific licenses and often relies on a third-party UL-listed central station. Confirm all licenses transfer, whether monitoring is in-house or outsourced, and review the monitoring contract economics that underpin the RMR.

Source

Originally listed on BusinessBroker.net. View original listing →