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Buying a Security & Alarm Systems business
Published · Reviewed by The Diligence Standard Team · Updated
a Security & Alarm Systems business can look attractive on a summary P&L while the operating details underneath it change the cash flow, transferability and capital a buyer will actually own. Diligence should connect the reported earnings to the business-specific drivers that create them.
How the business works
Recurring monitoring revenue, attrition, installation gross margin and central-station/vendor relationships determine value.
Risks to test
- Subscriber churn
- Monitoring-vendor dependence
- Contract assignability
- Owner-led commercial sales
- Technology obsolescence
- Licensing
Evidence to request and reconcile
- Subscriber roster/contracts
- Attrition cohorts
- Monitoring agreements
- Install job history
- Licenses
- Sales/lead data
Decision questions
- How many subscribers remain after 12/24 months?
- Are contracts assignable?
- What does it cost to create one new RMR dollar?
- Which technologies are becoming obsolete?
- Who owns commercial relationships?