Acquisition Strategy for a Regional Security Alarm & Monitoring Business Using SBA 7(a), RMR Analysis, and Licensing Continuity Protections

Regional Security Alarm & Monitoring Business

August 01, 20256 min read

This acquisition opportunity involves a regional provider of security alarm installation, monitoring, access control, and low-voltage systems integration. The company services both residential and commercial clients, with a particular strength in small to mid-sized retail, healthcare, and school accounts across a three-county area in the southeastern U.S. With a 28-year track record, the business combines alarm hardware sales, installation labor, monthly recurring monitoring contracts, and technical service revenue.

The company has built a base of over 1,200 monitored customers, including nearly 400 commercial accounts with multi-zone monitoring. It generated $4.1 million in total revenue in the trailing twelve months, with approximately $1.15 million of that derived from contracted recurring monthly revenue (RMR). Adjusted EBITDA was $815,000. The remaining revenue comes from new installations, retrofits, annual inspections, and repair service tickets.

Security alarm companies with a strong RMR base and minimal customer churn are highly SBA-financeable assets. However, licensing, central station integration, subscriber contract assignment, and regulatory oversight require strict attention in deal structuring. Any misstep in transferring customer monitoring agreements or loss of the central station relationship can materially impact the continuity of revenue.


Sample SBA 7(a) Transaction Structure

A properly protected SBA acquisition structure for this deal may look like:

  • Purchase Price: $3.2 million (3.9x EBITDA)

  • SBA Loan: $2.4 million (75%)

  • Buyer Equity Injection: $320,000 (10%)

  • Seller Financing (Subordinated): $480,000 (15%), amortized over 5 years with an 18-month interest-only period

Key clawback provisions on the seller note:

  1. 20% reduction if more than 10% of RMR is canceled or disrupted within 120 days post-close

  2. 15% reduction if central station vendor contract cannot be assigned or must be renegotiated at materially higher rates

  3. Additional reduction tied to loss of specific commercial contracts marked as “key accounts” in due diligence

The seller should be retained under a 12-month consulting agreement and remain on record with the state licensing board until the buyer secures successor licensure.


Licensing and Regulatory Oversight

Security system businesses are subject to state licensing requirements for low-voltage installation and alarm monitoring sales. In most states, this includes:

  • Qualifying agent licenses for low-voltage or electrical systems

  • Background checks and fingerprinting for ownership and technicians

  • Local alarm ordinances for municipalities that track false alarms and permit compliance

  • Insurance and bonding minimums, often exceeding standard GL policies

The current owner is the qualifying license holder and must remain on file until a replacement is designated.

The buyer must:

  1. Hire or promote a licensed technician who meets state qualifying agent criteria

  2. Apply for a license transfer or new license at least 60–90 days pre-close

  3. Structure a management services agreement with the seller, allowing him to remain the qualifying party during the transition

Many RMR contracts reference the specific license number of the selling entity—failure to transition licensing properly could result in notice-of-termination rights by customers.


Recurring Monthly Revenue (RMR) Breakdown

The company has approximately 1,200 monitored accounts, with 70% on ACH/autopay and average life-of-customer tenure exceeding 7 years. RMR totals approximately $95,000/month, made up of:

  • Residential monitored accounts: 510 customers, avg. $29/month

  • Commercial intrusion and fire systems: 410 customers, avg. $84/month

  • Integrated access control and cameras: 180 customers, avg. $110/month

  • Legacy takeover monitoring (resold systems): 100 customers, avg. $25/month

Contract terms typically include:

  • 3-year auto-renewal with annual CPI escalator

  • 60-day cancellation notice post-initial term

  • No refund for prepayment upon cancellation

  • Automatic late fee and suspension clauses

Buyers should perform an RMR roll-forward analysis to confirm:

  • Customer status (active, suspended, canceled)

  • Collection rate and delinquency history

  • Monitoring station billing and margin split (usually 15–30% of monitoring fee)

  • Equipment ownership (leased vs. sold outright)

Post-close, the buyer can optimize RMR through:

  1. Upgrading older customers to smart panels with camera integration and higher ARPU

  2. Introducing bundled offerings (e.g., alarm + access control + video)

  3. Selling annual prepay monitoring at a discount to improve working capital


Technician and Staff Structure

The company employs:

  • 6 W-2 field technicians (install, service, inspections)

  • 2 lead techs trained in access control and fire systems

  • 1 monitoring coordinator and 1 admin/CSR

  • 1 part-time bookkeeper (outsourced payroll and AR)

Field techs are paid hourly with job bonuses for upsells or installs completed ahead of schedule. Turnover is low, and two junior techs are currently studying for low-voltage license exams.

Post-close staffing priorities:

  • Offer stay bonuses for lead technicians

  • Cross-train junior techs in IP camera installation and access systems

  • Upgrade job ticketing to FieldEdge or similar software for job profitability tracking

  • Set up a recurring training program on fire code updates and NFPA standards


Customer Base and Revenue Breakdown

Total revenue composition:

  • RMR: $1.15M (28%)

  • New system installs: $1.4M (34%)

  • Service calls and repairs: $620K (15%)

  • Access control and commercial integration: $930K (23%)

Client composition:

  • Commercial: 59%

  • Residential: 36%

  • Government/municipal: 5%

Commercial clients include medical clinics, logistics warehouses, daycares, multi-unit office buildings, and retail chains. Several clients are multi-site accounts with central billing.

Buyers should identify the top 20 clients by revenue and meet with them pre-close to confirm continuity. A commercial client relationship manager can be added post-close to grow these accounts.


Central Station Relationship

Monitoring is outsourced to a UL-listed central station under a private-label agreement. The current contract provides:

  • Tiered pricing ($5.50–$7.75 per account/month)

  • Branded call-in support using seller’s company name

  • Customizable event reporting

  • Redundancy across two call centers

Buyers must negotiate:

  • Assignment of existing contract

  • Confirmation of continued branding and account management

  • SLA compliance history (missed signals, false alarm calls)

Buyers can also evaluate in-sourcing monitoring in the long term or switching to a lower-cost monitoring partner if sufficient margin lift exists.


Sales and Marketing

The business does not currently employ a dedicated sales team.

New accounts come from:

  • Online search traffic and Google Ads ($2,500/month)

  • Referrals from builders, contractors, and property managers

  • Customer referrals and reviews (high retention, 4.8+ rating)

  • Direct RFP invitations for commercial systems

There is significant upside in:

  1. Hiring a commercial sales rep focused on multi-site retail, clinics, and warehouses

  2. Expanding into new construction through builder and GC relationships

  3. Launching bundled “security + access + video” offerings for Class B commercial


Assets and Inventory

The company owns:

  • 4 branded vans with secure shelving and stock inventory

  • Low-voltage tools, testers, cable stock, and fire system inspection gear

  • $80K of inventory: control panels, keypads, PIR sensors, batteries, cabling

No material CapEx is needed in the first year. Lease: 3,000 sq ft office with tech bench, dispatch room, and inventory storage. $3,900/month gross. Lease assignable.


Compliance and Legal Considerations

Buyers must diligence:

  • State licensing: low-voltage and alarm certifications current

  • Local municipal alarm permits (several jurisdictions require vendor registration)

  • Insurance: $2M GL, $1M E&O, $1M cyber, $1M auto

  • Bonding capacity for public or school jobs

  • Subscriber agreement enforceability and terms

There are no material lawsuits, license violations, or insurance claims in the past 5 years.


Working Capital Needs

  • Payroll: $55K–$65K biweekly

  • Monitoring pass-through: $25K/month

  • Inventory refresh: $25K–$35K

  • Software upgrades: $10K

  • Seller consulting: $20K–$30K over 6–12 months


Ideal Buyer Profiles

  • Low-voltage or security operators seeking regional expansion

  • Entrepreneurs with telecom or networking background

  • Trade consolidators (e.g., fire, HVAC, cabling) layering on RMR

  • PE-backed roll-up platforms targeting recurring subscriber bases


Post-Close Execution Plan

  1. Assign subscriber agreements and monitor RMR retention

  2. Meet all key commercial and government clients

  3. Retain lead techs and qualifying license holders

  4. Upgrade CRM and job ticketing for profit tracking

  5. Launch commercial outbound sales strategy


Conclusion

This security and alarm monitoring company presents an ideal blend of recurring RMR cash flow, defensible licensing structure, and commercial client density. With an SBA-structured deal, buyer protections around licensing and RMR continuity, and a modest CapEx profile, the business offers a high-ROI path to stable income and long-term scalability. For buyers focused on telecom-adjacent services, commercial B2B routes, or blue-collar businesses with tech leverage, this acquisition is a strong platform with immediate cash flow and systems in place to scale.

Co-Founder and COO of Eagle Dawn Capital

Danny Carlson

Co-Founder and COO of Eagle Dawn Capital

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