The multiple is where your work shows up. Two companies with the same RMR can get very different offers. The buyer lowers the multiple for every risk they find and raises it for every risk you have already removed.

So the useful question is not "what multiple will I get?" It is "what would a buyer find wrong with my accounts?" Fix those things before a buyer finds them.

Why does attrition matter more than total RMR?

Attrition is the share of your accounts that cancel each year. A buyer uses it to guess how long your revenue will last once it belongs to them.

Here is a round example. Two dealers each bill $20,000 a month. Dealer A loses 8% of accounts a year. Dealer B loses 16%. Stop all new sales for three years and see what is left:

• Dealer A: about $15,570 a month
• Dealer B: about $11,850 a month

Same starting RMR, and Dealer B loses nearly twice as much monthly revenue. A buyer sees that difference and prices it in.

Track attrition every month, and track why people leave. Moves, deaths and non-payment are different problems from customers who left for a cheaper offer. Buyers ask for this breakdown, and a dealer who has it ready looks like someone who runs a tight shop.

If you want to see what your own cancellations take off the monthly number, run it in our Recurring Revenue Growth Planner.

Do monitoring contracts still matter to a buyer?

Yes. A signed agreement tells the buyer the customer has agreed to pay for a set term, and it gives them something to enforce.

Three things buyers commonly check in your agreements:

1. Can the contract be assigned? If your agreement does not let you transfer it to a new owner, the buyer may not be able to take over the account cleanly. Have your attorney read this clause before you talk to anyone.
2. Is it signed and on file? A buyer may ask to see a sample of your agreements. Missing or unsigned paperwork lowers trust in the whole book.
3. Does it renew automatically? Agreements that roll over keep the customer on paper after the first term ends.

Month-to-month accounts still have value, but buyers usually treat them as riskier than accounts under a signed term. If you sell month-to-month on purpose, that is fine. Just expect your attrition numbers to carry more weight in the conversation.

How clean do your books need to be?

Clean enough that your billing system, your central station and your bank deposits all tell the same story.

A common gap: the central station shows 640 accounts on monitoring, but billing shows only 600 paying customers. That is 40 accounts you pay to monitor and never bill. At $40 a month each, that leak costs $1,600 a month, and a buyer will find it in the first week of looking.

Run this check before anyone else does:

• Match every monitored account to a paying customer.
• List every account that is past due more than 60 days.
• Separate one-time charges from true recurring revenue.
• Know your monitoring cost per account, so you can show what each account earns after the central station is paid.

That last point matters. A $40 account that costs you $10 to monitor earns $30 a month. Buyers look at what is left after costs, not just the top line.

What else raises or lowers the price?

A few other things come up in almost every review of a book of accounts.

How customers pay. Accounts on automatic card or bank payments usually collect better than accounts that get a paper invoice. If 30% of your customers still pay by check, moving them to auto-pay is one of the cheapest fixes you can make.

How concentrated your revenue is. If one commercial customer pays $3,000 of your $20,000 RMR, that single account is 15% of the business. Lose it and the book drops overnight. Buyers notice that kind of risk.

What equipment and platforms you use. Accounts on equipment that is out of date, or tied to a communication path that is being shut down, will need upgrades. Buyers count that cost before they make an offer.

How you get new customers. A company that wins its own accounts every month, through referrals, reviews and being found online, has a growth engine a buyer can keep running. A company that depends on one owner's personal network is harder to hand off.

Why are growth and selling the same conversation?

Every fix above makes your company worth more to a buyer. Every one also puts more money in your pocket this month if you never sell.

Lower attrition means more customers paying you longer. Clean billing stops leaks. Auto-pay improves collections. A steady stream of new accounts keeps RMR climbing instead of sliding.

Thad Paschall, who founded AI Security Edge, started Protect America with one truck in 1992, created over $600 million in revenue, and sold the company. His advice to dealers: build the company you would want to buy, and you will have something worth selling whenever you decide to.

Where should you start?

Start with the number a buyer will look at first: what you lose every year.

1. Pull your cancellations for the last 12 months and sort them by reason.
2. Match your central station account list against billing.
3. Read the assignment clause in your monitoring agreement.
4. Check whether people in your area can find you when they ask ChatGPT or Google for a local alarm company. Our free ChatGPT naming check shows you in a few minutes.

For more on the monthly side of this, read how to grow recurring monthly revenue without buying accounts and how to price security service contracts.

Frequently asked questions

When should I start getting ready to sell my alarm company?

Start now, even if a sale is years away. The fixes that raise your value, like lower attrition and clean billing, take months to show up in your numbers. Buyers usually want to see a track record, not one good quarter.

Do buyers pay for my installation business?

Mostly no. Buyers in this industry focus on recurring revenue. Install revenue helps show you can create new accounts, but the offer is usually built on RMR.

What is the biggest thing that lowers an offer?

High attrition is usually the biggest one, because it tells the buyer the revenue will not last. Messy records come close behind, because they make the buyer doubt every other number you show them.

Should I sign every customer to a contract before I sell?

Talk to your attorney first. Signed, assignable agreements usually help, but how you move existing customers onto new paper depends on your current agreements and your state's rules.