Newsletter · July 15, 2025

Newsletter Summer 2025

By Victor Harding

Our Mission Statement at Harding Security

Harding Security was formed in 2009 to make it easier for buyers and sellers in all sectors of the Canadian security industry to complete deals. We focus mostly on the security industry in Canada because that is what we know best. Directly linked with this M & A help, we realize owners of security companies, particularly those with recurring monthly revenue, need someone to value their company accurately because other valuators were not getting the valuation right at times.

The services we offer:

All our services listed below are now being offered to owners of Alarm, PERS, Integration, Fire, Guard, Audio-Visual, Security Equipment Distribution and cabling companies. We have just expanded to offer the same services to Internet Service Providers across Canada including Quebec.

Selling your company? If you have decided to sell and want help through the entire process, we can look after you. This is what we are best at.
Selling your company and already have a buyer in mind? We can provide an opinion on the Buyer and their offer, and help you close the deal.
Need a valuation done? We are performing more valuations every year. Although we are not Chartered Business Valuators, we are often more accurate when valuing the Recurring Monthly Revenue (RMR) in security companies. Moreover, unlike many valuation firms, we have the experience of actually selling the companies we value.
Expert Opinion or Witness We have been retained several times by dealers and their law firms to provide an expert opinion on various security industry issues or disputes.
Looking for a company to buy? We can help you perform the search and close the deal. We charge a one-time small monthly retainer to do the search and a success fee if we close a deal.
Looking to buy and already have a company in mind? We can help you value the target, and structure and close the deal. We can also provide some of the required forms.

Comments on myM &A Activity

By far the biggest driver of deals being done across all industries in Canada these days is owners retiring.
It is hard to find any pattern as to why one year is busier for deals than others. An example is 2021 which was a very good year for me for deals despite being right in the middle of the pandemic.
Most of my deals are done with existing industry players as buyers and some private equity. That compared to general business brokers y who tend and resort to having to advertise to individual buyers.
Existing Industry buyers are called “strategic” buyers and are to be contrasted to “financial buyers” such as individual investors or Private Equity.
The security industry continues to be a very attractive industry to both existing industry players and outsiders. There is growth happening in most parts of the industry continue to get calls from private equity groups and search funds asking me about the industry.
Although getting financing to do deals still is somewhat more difficult than it was pre-covid, it is better than it was.
If your buyer does not have their financing in place, the deal could take at least 3 months longer to do just to secure to the financing.
Most brokers will tell you it is almost always easier doing a deal with a buyer who has experience buying and has done deals. I tend to favor doing a deal with a buyer who has done deals.
Using an experienced broker to help you sell is usually worth the broker’s fee. A good broker can generally cover their fee with an increased price for your business. They will also help you through the deal and make sure it closes.

Here is how I generally try to help owners as a broker:

At the outset, I give the owner an assessment of what his business is worth. This is important in setting expectations on price.
Most importantly I take the owner through the entire selling process, what information buyers are going to want to see, and what terms they should expect to see in the Letter of Intent and final Purchase Agreement.
In marketing a deal, I try to make sure that most of the better buyers are contacted. Without contacting these buyers, the owner will never know if he got the best deal.
With me there, the owner had someone in his corner the whole way. Let’s remember that most buyers have a team of people working for the buyer.
Almost every deal has a glitch in it to be overcome. It is my job to step in and try to clear the glitch.

Each newsletter I am going to answer a question that I get the previous month on my AI generated "Ask Victor" Module that is on my website at www.hardingsecurity.ca

This month’s question is:

Why Alarm Companies are valued Differently from Guard or Fire companies?

When security and fire protection companies change hands, their valuation is often approached differently depending mainly on the nature of their revenue streams.

Alarm companies, particularly those with significant Recurring Monthly Revenue (RMR), are typically valued based on a multiple (# of months) of their RMR. Fire protection companies and guard service providers, on the other hand, tend to be valued based on a multiple of adjusted earnings or EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

This distinction isn’t arbitrary — it reflects fundamental differences in how revenue is generated, how predictable the cashflow is, and how risk is assessed in each business model.

For alarm companies, RMR is the defining asset that sets them apart from other security and fire-related businesses.

Recurring revenue represents contracted, predictable and highly profitable cash flow, which is attractive to buyers because it continues generating revenue over time with minimal additional effort. This makes RMR a stable and measurable asset for valuation purposes.

The multiple applied to an alarm company’s RMR varies mainly based on the following characteristics:

Total number of accounts: The larger the account base, the lower the risk of major revenue disruption.
Average RMR per account: Higher-value accounts command better multiples primarily because they produce higher gross margins.
Annual attrition rate: Low attrition means more higher long-term revenue, driving up valuation.
Percentage of signed contracts: Buyers prefer accounts with signed contracts which have the proper waiver of liability of the back on the contract.
Percentage of accounts programmed to seller’s lines: Accounts all programmed to the seller’s lines and call-forwarded versus those programmed directly to the station’s lines are easier to transfer and therefore looked upon as more valuable.

Alarm companies that score well on the above factors can typically sell for multiples of 30 to 40 times their RMR or even more.

In comparison, other businesses in the security sector are often valued based on entirely different metrics. Unlike alarm companies, fire protection and guard service companies rely more on one-time or project-based revenue streams rather than predictable RMR. This means that their cashflow is inherently more volatile, making earnings-based valuation models (such as EBITDA multiples) more appropriate.

The multiple applied to a fire or guard company’s EBITDA depends on:

Size of the company in terms of annual revenue: Companies with larger annual revenue are generally valued at higher multiples than smaller companies.
Profit margin is important: Companies making a higher percentage of sales in net profit will trade for more than those making lower percentages.
Revenue concentration: Companies with diversified revenue sources tend to secure higher multiples as they represent less risk to the buyer.
Growth trajectory: Fast-growing companies are more attractive and receive stronger valuations.
Operational structure: Businesses with management teams fully independent of the owner and scalable operations are more valuable.
Customer contracts and retention: Higher retention and contract stability increase valuations.

Generally, smaller fire and guard companies sell for 3 to 5 times their EBITDA, while larger, well-structured businesses with strong recurring service contracts may command 5 to 7 times EBITDA.

While alarm companies are often valued using RMR multiples, it’s important to remember that underlying all valuations is a company’s free cashflow. At the end of the day, a business is only worth what it can consistently generate in excess cashflow after operational expenses. Buyers ultimately care about the sustainability and predictability of cashflow, whether it’s coming from monitored alarm accounts, service agreements or ongoing guard contracts.

It’s worth noting that some fire inspection and service companies are now adopting RMR-based pricing structures, which changes how they are valued. Fire system monitoring and recurring inspection contracts are increasingly treated similarly to alarm RMR, albeit at lower multiples than traditional alarm monitoring revenue because their margins are lower.

This shift reflects the broader industry trend toward securing long-term, contract-driven revenue streams, which provide more stability for both buyers and sellers in the market.

If you are buying or selling a business in the security industry, understanding valuation models is critical.

Note: As part of Security Summit Canada, presented by SP&T News in February, I moderated a panel discussion on Artificial Intelligence and what it can do for the security industry. In that session I indicated I was already using AI to help me in my business. It is noteworthy that most of this article was produced with the assistance of AI.

Recently Completed Deals

As of June 2025

SOLD – Canadian-based video monitoring company to a large Canadian alarm company.
SOLD – Niagara-based alarm company with 350 accounts to another Canadian alarm company.
SOLD – 3 small Ontario-based alarm companies to larger players.
ACTED – Twice as an expert witness in 2 lawsuits brought by one alarm company against another.
HELPED – One larger security company to buy out a local competitor eastern Ontario.
Done several valuations of alarm and integration companies in the last year.

HSSI is currently working on the following

As of June 2025

We are working on the sale of a GTA-based alarm company with 700 alarm accounts.
We are working on the sale of a successful alarm and lock company in northwestern Ontario.
We have a signed LOI to sell a medical alert/PERS company in Eastern Ontario.
We are selling a smaller medical alert company based in the GTA.
We are selling a medium sized security integrator based in southwestern Ontario.
We have the contract to sell a medium sized fire and security company based in the GTA.
We will be selling a small fire and alarm dealers based in the GTA.

What else you should know about Harding Security (HSSI)

We are a fully independent M & A Advisory firm based in Toronto, Ontario.
We work across the country and have been in business now for 16 years.
Before starting Harding Security, Victor Harding worked for VOXCOM and Protectron, two of the major alarm companies in Canada at the time, helping them buy small alarm companies.
Before that, Victor owned the security firm Alliance Security with a partner, which was a security franchise network.
Victor is a CPA by training and had many years of large and small company experience before getting into the security industry in 1994.
Harding Security is the only M & A advisory firm doing deals across Canada in all sectors of the security industry.
We also do valuations of all types of security companies.
Harding Security has aligned itself with a larger M & A Advisory firm, to help us.
We will pay a Finder’s Fee of 10% of the Success Fee we get from a sale to anyone who refers a lead to us that we did not already have.
Although HSSI is primarily focused on the security industry (alarm, integration, fire and guard companies), recently we have been taking deals in other industries.
To see more details on Harding Security go to our website at www.hardingsecurity.ca or visit our LinkedIn page at https://www.linkedin.com/in/cmvharding.

Harding Security stays in touch with the security market

We are members of the following security related organizations – Canasa (Canadian Security Association), CFAA (Canadian Fire Alarm Association), and CASA (Canadian Automatic Sprinkler Association).
We are also members of the following M&A-related organization – ACG (Association for Corporate Growth). We constantly attend seminars put on by these organizations.
We usually attend at least 2 of the Annual Security Trade Shows in Canada, including the various regional Canasa Shows and ISC West.
We usually attend 2 of the Annual Security Conferences each year, including Barnes-Buchanan, Security New Ground, & Conference or SPT’s Security Summit.
We write a regular bi-monthly article for SPT News on M & A issues in the security industry.
We have been the moderator and the main speaker on several webinars connected to M & A deals in the security industry in Canada, sponsored mainly by SPT.

You are receiving this newsletter because you are in a senior position of a security company in Canada or I have talked to you or we have conducted business in the past. Alternatively, we may have connected through LinkedIn or you are a member of one of the following organizations: Canasa, CFAA, CASA, SIA or ASIS.

If you would like this newsletter delivered to another email address or if there is someone else in your organization who should be receiving this newsletter, please email me at victor@hardingsecurity.ca.

If you are a seller or buyer of a security company and/or wish to have your business valued . . . Please contact Victor Harding at (416) 925-7474 or via email: victor@hardingsecurity.ca