You have invested years—maybe decades—into building your security company. Deciding to sell something you have spent so much time building is one of the most significant choices you will make.
A well-planned sale can be the difference between securing your company’s legacy or leaving value on the table. Preparing your company financially, operationally, and structurally for an acquisition will position you to maximize value and attract the right buyer.
With over 40 acquisitions in 20 years, we at Paladin Security have seen that the best deals happen when both parties are organized, motivated, and have established a sense of trust. If you are considering selling a security company, it is never too early to prepare for a potential sale—ensuring you do not miss out.
Factors that Influence the Value of Your Security Company
There are several key factors that will influence the appeal of your company, including businesses that offer a smooth transition and demonstrate strong growth potential:
Revenue Stability
Stable, consistent income and a history of year-over-year growth gives buyers confidence in future profitability and a stable, more likely return on investment. A reliable growth track record combined with solid profitability increases the likelihood of a higher offer.
High profitability alone does not guarantee a higher offer. Buyers will assess profitability levers such as overhead costs or customer lifetime value and adjust their valuation based on expected costs and revenue potential.
Paladin Acquisition Tip: In the security guarding world, there are three main factors an owner/operator can control when managing expenses that will directly affect the bottom line: competitive wage-to-bill rates (margins), overhead and overtime.
Operational Efficiency
Buyers look for businesses that maximize their resources while keeping costs in check. When operational expenses are managed efficiently, you will have a healthy profit margin. In a security guarding business, this involves optimizing resources, managing personnel effectively, and ensuring streamlined service delivery without unnecessary expenses.
Demonstrating to buyers how well you manage costs, deliver security services, and scale operations will improve your business’s valuation.
Workforce Expertise
A proven leadership team has a track record in strategic decision-making and client management. These result in high-performing operations that support growth — something that is attractive to potential buyers.
Beyond leadership, skilled, stable workers signal that new owners can expect consistent, high-quality service upon acquisition. Low turnover also indicates a positive work culture that new owners can rely on for longevity and a stable return on investment.
Client Contracts
Long-term client contracts with a demonstrated history of predictable revenue will directly impact a security company’s business value—this is strengthened further by having signed service agreements. Having signed agreements in place, preferably multi-year agreements, can reduce your business's risk profile, making it more attractive to potential buyers.
Paladin Acquisition Tip: Including scheduled, competitive wage and bill rate increases in client contracts enhances predictability in future revenue and profitability. It also adds value by showing buyers that you prioritize your people, run your business efficiently and have predictable base business revenue growth.
Ready to sell your security company? Discover how Paladin can assist you in preparing for your sales process. As a strategic buyer with over 30 offices in Canada, we may be the perfect partner to acquire your security guarding company.
Market Position
A well-established market position enhances your business's appeal to potential buyers. This can include:
- Strong corporate culture
- Local reputation
- Unique value propositions
- Geographic location
- Limited competition
Some buyers within the security guard industry may favour companies in markets where they lack presence or those offering security services unique to the marketplace (e.g., mobile patrol in locations where there is limited competition).
Additionally, a business that excels in a specific industry or market, such as oil and gas, can be especially appealing to buyers looking to establish a foothold in that sector. Buyers are often interested in acquiring companies that offer entry into new markets or expansion in regions where they can bolster their existing presence to create operational efficiencies.
Preparing Your Business for Sale
When preparing your security company for sale, focus on financial transparency and operational efficiency. This will allow you to present it as a well-oiled machine with strong prospects.
Financial Preparation
Clear and accurate financial statements set the foundation for a fair business valuation. The more detailed, the better. Buyers will examine your financials to understand how profitable, stable, and growth-ready your security business is.
Paladin Acquisition Tip: While not essential, it can help to have a trusted accountant prepare or audit your financial statements to add credibility and reduce the risk of deal disruptions during due diligence.
Client Contracts and Retention
Long-term contracts and a solid client base add significant value to your security company. Buyers look for businesses with recurring revenue, which indicates stability and future income potential. To make your company more attractive, focus on maintaining strong client relationships, reducing turnover, and demonstrating contract renewals.
Brand Reputation and Customer Reviews
A strong reputation in the security industry is a valuable asset when selling your business. Buyers pay close attention to client feedback, online reviews, and overall brand perception, as a positive reputation can drive growth and client loyalty.
Invest time in maintaining excellent customer service and addressing any issues promptly; showcasing a history of positive reviews and testimonials will only improve your company’s attractiveness to potential buyers.
Negotiating and Closing the Deal
When negotiating, be prepared to justify your valuation with financial data. Many factors must be considered when preparing to negotiate key terms, such as sale price, payment structure, and post-sale organizational structure.
Flexibility in negotiations, along with experienced advisors, can help secure the best outcome.
- Stay objective: Avoid becoming overly attached to the business, which can cloud judgment. Focus on aligning the sale terms with your long-term goals.
- Clarify liabilities and terms of the sale: Clearly define which liabilities transfer with the sale to avoid unexpected obligations later.
- Bring in advisors: Engage experienced advisors, such as legal counsel, to guide you through complex issues and maintain objectivity.
Paladin Acquisition Tip: Be careful when considering legal counsel or a broker. If you choose this route, you should choose a representative who is familiar with the security industry and ideally has experience with security guard-related acquisitions.
Letter of Intent (LOI)
The Letter of Intent (LOI) outlines the terms and conditions under which the buyer intends to purchase your business. It typically includes key details such as the proposed purchase price, payment terms, and contingencies including due diligence obligations.
Due Diligence Process
After signing the LOI, buyers will conduct thorough due diligence. To streamline the process, prepare financial records, client contracts, employee data, and legal documents in advance. Depending on how well-prepared you are, this stage can take weeks to months.
Organize your records digitally, ensuring everything is easily accessible and securely stored. Address any potential red flags—like expiring contracts or unresolved liabilities—ahead of time to present your business as well-prepared and trustworthy. This can help build buyer confidence and keep the sale process on track.
How do you Value a Security Company?
Valuing a security company typically involves assessing its financial performance and intangible assets. Some of the significant factors in a valuation include:
- Revenue
- Wage & bill rates
- Profit margins
- Client base
- Types of clients serviced (markets serviced)
- Services offered
- Contract stability
Paladin Acquisition Tip: Demonstrating a consistent history of recurring, predictable revenue accompanied by competitive wage and bill rates is a key indicator that buyers use within their process to estimate value.
Buyers will also evaluate the company’s growth potential, industry reputation, and operational efficiency. Long-term client contracts, especially in sectors that require highly trained and skilled guards that are well-paid, like commercial office buildings or post-secondary institutions, will increase value due to their stability, especially if there are multiple years remaining on those contracts.
Regulatory compliance, employee retention, and the quality of internal processes—such as training and scheduling—are also extremely important.
How Do You Market Your Security Business?
To market your security business, it is wise to create a compelling sales package highlighting key strengths like long-term contracts, a diversified client portfolio, demonstrated consistent revenue over a long period of time, and operational efficiency.
It is not a requirement, but it may be helpful to engage a knowledgeable broker or Mergers & Acquisitions (M&A) advisor experienced in the security guarding industry. They can leverage their specific industry knowledge and relationships to help sell your security business.
Ready to Sell Your Security Company?
At Paladin, we are defined by our above-and-beyond approach to security. We specialize in acquiring mobile patrol and security guard companies while preserving the seller’s legacy, employees, and impact on their local community.
With over 49 years of experience in the security industry, we are a privately owned, owner-operated, strategic buyer capable of executing sales quickly and favourably. Our approach ensures a smooth transition, preserving core values and minimizing disruption.
If you are considering selling, Paladin offers the ideal partnership to achieve your financial goals while safeguarding your company’s legacy and giving you peace of mind as a seller.
Contact us today if you are interested in learning more about Paladin’s strategic acquisition process and how we can work together to determine if there is an ideal fit for a strategic acquisition.
