2027 Security Guard Company Valuation Report: EBITDA Multiples by Revenue
By Joshua C. Harris, Senior M&A Advisor
Manned Guarding (NAICS 561612 / SIC 7381) | Transaction Benchmarks 2021–2026 | Updated September 2026 | BMI Mergers & Acquisitions
Security guard companies with $5 million to $250 million in revenue have generally sold for 3x to 12x adjusted EBITDA since 2021. EBITDA and revenue size set the range; contract terms, customer concentration, post risk, labor margins, and the owner’s role in daily operations then decide where a company lands within it.
This report is for owners and executives of guard companies considering a full sale, or a partial sale to an investor (a recapitalization), within the next five years.
Security Guard Company EBITDA Multiples by Revenue Band
Size drives value in this industry more than any other factor because it changes who is buying. Companies under $5 million sell mostly to individual buyers and local competitors. Larger companies draw national consolidators and private equity firms, either buying a first company in the sector (a platform) or adding to one they already own (an add-on or tuck-in).
| Annual Revenue | Benchmark Multiple | Typical Range | Most Active Buyers |
|---|---|---|---|
| Under $5M | 2.9x | 2x–4x | Individual buyers, local competitors |
| $5M–$10M | 4.2x | 3x–5x | Individual buyers, regional operators |
| $10M–$25M | 4.5x | 4x–6x | Regional operators, private equity platforms |
| $25M–$100M | 6.5x | 6x–8x | Private equity platforms, national consolidators |
| $100M–$250M | Limited data | 9x–12x | National consolidators, large private equity firms |
How to read this table. Multiples are enterprise value (the price of the whole business before debt is paid off) divided by trailing twelve-month adjusted EBITDA. Benchmarks are BMI estimates blended from private transaction databases, published security-industry deal data, and our own deal observations from 2021 through 2026. The revenue bands assume margins typical for the industry.
Deal Killers: Issues That Can Stop a Sale
These issues decide whether a buyer signs a letter of intent and whether the deal survives diligence. When a buyer goes ahead anyway, it protects itself through a lower price, an escrow, or a specific indemnity. Most can be fixed with enough lead time.
| Issue | Why It Matters to a Buyer |
|---|---|
| Worker classification | Guards paid as independent contractors create back payroll-tax and overtime liability, plus uninsured workers’ compensation exposure. Buyers will require an indemnity backed by escrow or pass on the deal. Misclassification is among the most common reasons labor-heavy service deals fail to close. |
| Wage-and-hour exposure | Overtime calculation, meal and rest breaks, timekeeping, and off-the-clock work each create contingent liability. A pending or recent class action can hold up a deal until it is resolved. |
| Service Contract Act compliance | Federal guard contracts carry Service Contract Act wage determinations, including health and welfare fringe payments. Underpayment creates back-pay liabilities. |
| Union obligations | Collective bargaining agreements generally stay in place through a stock sale, and asset buyers can still inherit bargaining obligations. Participation in a multiemployer pension plan can carry withdrawal liability, which buyers treat as debt. |
| Financial records | Buyers expect at least three years of accrual-basis financial statements, ideally reviewed or audited by a CPA, with support for every adjustment. The buyer will commission a quality of earnings review to test them. |
| Contract assignment | In an asset sale, customer contracts with anti-assignment clauses need customer consent, and federal contracts need government approval (novation) after closing. In a stock sale nothing is assigned, but change-of-control clauses can give customers the same exit. Either way, the buyer wants to know which accounts need approval before or after a change of control. |
| Set-aside revenue | An 8(a) contract generally must be terminated if ownership changes, unless the SBA grants a waiver. SDVOSB, HUBZone, and WOSB contracts usually run their current term but can lose options and recompete eligibility. A large buyer can also cost the company its small business status through affiliation. Corporate supplier diversity programs raise the same question with commercial customers. |
| Licensing | Most state security licenses do not transfer. An asset buyer needs its own license in each state. A stock sale usually requires notice to or approval from the licensing agency, and the qualifying agent has to stay in place or be replaced. Gaps delay closing or interrupt operations after it. |
| Insurability | A clean loss history on negligence, use-of-force, and false-arrest claims lets the buyer add the company to its insurance program at a workable cost. A poor one raises premiums, narrows coverage, or keeps the company off the program entirely. |
| Customer contract terms | Uncapped liability, slow payment terms, or broad indemnities in customer contracts shift risk onto the guard company. The buyer prices that risk or excludes the account. |
What Moves the Multiple Within a Band
Once the deal killers are cleared, buyers price a company up or down within its revenue band.
| Factor | ▲ Supports a Higher Multiple | ▼ Pulls the Multiple Lower |
|---|---|---|
| REVENUE QUALITY | ||
| Contract terms | Signed multi-year contracts, especially those that can only be terminated for cause. | Short-notice cancellable contracts with no retention history to offset them. Cancellable terms are the industry norm, so buyers focus on how long accounts actually stay. |
| Customer concentration | No customer above roughly 20% of revenue. | One customer above 20%, especially if the contract is cancellable or up for rebid. |
| Account retention | Three or more years of account history, with a documented reason for every loss. | Repeated losses to competitors, or losses with no explanation. |
| Organic growth | Steady growth from new accounts and existing customers at stable margins. | Flat or declining revenue from the existing book. |
| Revenue mix | Technology-enabled revenue such as remote video monitoring, drone patrol, or systems integration, at margins above hourly guarding. | Low-margin work won on price, including government contracts rebid on a fixed cycle. |
| Post risk profile | Mostly unarmed posts at lower-risk sites such as offices, corporate campuses, and industrial or logistics facilities. | A large share of armed posts, cannabis dispensaries and grows, cash handling or transport, hotels and motels, gas stations and convenience stores, or bars and nightlife. These posts drive higher insurance costs and more use-of-force and premises liability claims, and some carriers will not write them. |
| LABOR AND MARGINS | ||
| Wage-to-bill ratio | Base hourly wage under 66% of the bill rate. Leaves room to cover payroll taxes, insurance, overhead, and a buyer’s target margin. | Above 66%. Often little spread for a buyer to earn its target margin. |
| Non-billable overtime | At or below the low end of the typical 4%–7% range, which shows control over scheduling and supervision. | Near or above 7%. A scheduling and supervision problem the buyer will have to fix. |
| Workers’ comp experience mod (EMR) | Below 1.0. The EMR is the multiplier on workers’ comp premiums, so a lower number means lower cost and a better safety record. | Above 1.0. Higher premiums, and questions about what is driving claims. |
| Labor sourcing | Posts staffed by the company’s own employees, which gives it control over service quality and keeps the full margin in-house. | Heavy use of subcontractors, which weakens quality control and splits the margin with a third party. |
| OPERATIONS AND PEOPLE | ||
| Management depth | A management team that runs daily operations and holds customer relationships without the owner. This also makes an earnout or transition period workable. | The owner holds the key customer relationships with no management layer beneath. Buyers seek to mitigate the risk of losing customers when the owner ultimately leaves. |
| Workforce | A steady recruiting pipeline, consistent training, competitive pay and benefits, and low officer turnover. | High officer turnover, which leads to unfilled posts, overtime, and billing gaps. |
| Systems | Integrated billing, payroll, and scheduling that catch billing leakage and shorten integration after closing. | Manual or disconnected systems the buyer has to replace. |
| Geographic density | Concentrated operations in a few established markets, which helps recruiting, supervision, and branch economics. | The same revenue spread thin across many markets. |
| FINANCIAL HYGIENE | ||
| Owner and related-party expenses | The owner’s personal and business finances kept separate. | Personal expenses or related-party transactions run through the company. They complicate the EBITDA recast and add to the buyer’s uncertainty. |
| Receivables | Current receivables and disciplined billing and collections. | Aging or uncollected receivables. They usually reduce the seller’s proceeds through the working capital adjustment and raise questions about billing discipline. |
Frequently Asked Questions
How much is my security guard company worth?
Guard companies usually sell on a multiple of adjusted EBITDA. A company with $15 million in revenue and $1.2 million in adjusted EBITDA, at the 4.5x benchmark for its band, implies an enterprise value of about $5.4 million. The factors above move that figure. Revenue multiples are sometimes quoted as a shortcut, but they ignore margin differences between companies, and serious buyers rarely rely on them.
What is adjusted EBITDA?
Earnings before interest, taxes, depreciation, and amortization, adjusted for one-time and owner-specific items. Common add-backs include personal expenses and one-time legal costs. Owner compensation is reset to what it would cost to hire a replacement, which can raise or lower EBITDA. Buyers test every adjustment, so each one needs documentation.
Is the enterprise value what I take home?
No. Deals are usually priced cash-free and debt-free: the seller keeps the company’s cash and pays off its debt from the proceeds. The price also assumes a normal level of working capital and is adjusted at closing if the actual figure differs. Part of the price may be paid later through an earnout tied to future performance, a seller note, or equity the seller keeps in the buyer’s company (rollover). Taxes come last and depend heavily on how the deal is structured.
Should I expect an asset sale or a stock sale?
Most lower middle market buyers prefer to buy assets, because they get a tax benefit and leave unknown liabilities behind. Sellers often prefer a stock sale for tax reasons. The choice also affects which contracts need customer consent and whether the buyer needs new licenses. There are many exceptions to these generalities, and the structure is usually settled in the letter of intent.
Why do larger security companies sell for higher multiples?
Larger companies draw more buyers with more capital. A $100 million company attracts national consolidators and large private equity firms paying for density and a management team to build on. Larger companies are also seen as less risky than smaller ones. A $3 million company draws a smaller pool, often individuals using SBA-backed loans, where lender coverage requirements limit how much they can pay.
Do month-to-month contracts hurt my valuation?
The benchmarks above already assume them, because they are the industry norm. Buyers look at how long accounts actually stay. A documented record of long-tenured accounts on cancellable terms supports value, and frequent losses reduce it.
Considering a Sale?
If you own a security guard company with $5 million to $250 million in annual revenue and are weighing a sale, recapitalization, or other transaction, contact Josh Harris at BMI for a confidential conversation about what your company is worth.
Josh is an M&A Advisor, trained attorney, Army veteran, and former guarding company owner/operator. He built his company to more than $30 million in annual revenue and has recently been through multiple industry transactions, both as a seller and on a buy-side team.
At BMI, we know the major players and buyers of guard companies, many of them personally. When the right buyer is not among them, BMI’s database of 34,000+ strategic and financial buyers, including 25,000+ private equity groups and family offices, brings more to the table. BMI has spent more than 25 years buying, selling, and managing business acquisitions nationwide, and we are ready to put that experience to work for you.
Joshua C. Harris
Senior M&A Advisor | BMI Mergers & Acquisitions
jharris@bmimergers.com | (484) 302-2747 | www.bmimergers.com
Philadelphia · New York · Charlotte
Some Associates of BMI are registered representatives of, and securities transactions are conducted through, StillPoint Capital, LLC, Member FINRA and SIPC.
This report is general information for business owners. It is not legal, tax, accounting, or investment advice, and reading it does not create an attorney-client or advisory relationship. Valuing a specific company requires a review of its financials and contracts.