SECURITY SYSTEM: RMR IS A BALANCE-SHEET ASSET
Recurring monthly revenue now comprises 38.5 percent of security industry revenue, up from 33 percent two years prior, and the M&A market prices the two revenue types on different planets: project-only installers trade around 4x to 5x EBITDA while recurring-mix operators clear 6x to 9x, and pure monitoring books transact at roughly 28x to 60x monthly RMR depending on attrition and contract quality.
This page covers one problem. The full picture for this trade, including the other places margin leaks, is on the security system operating system page.
WHERE THE MONEY GOES.
Recurring monthly revenue now comprises 38.5 percent of security industry revenue, up from 33 percent two years prior, and the M&A market prices the two revenue types on different planets: project-only installers trade around 4x to 5x EBITDA while recurring-mix operators clear 6x to 9x, and pure monitoring books transact at roughly 28x to 60x monthly RMR depending on attrition and contract quality. The published example: a $2M-EBITDA project shop clears $8M to $10M while the same EBITDA at 40-percent-plus RMR clears $14M to $18M. Every monitoring contract signed is enterprise value, not just revenue, and most owners have never priced the difference.
THE COST, SOURCED.
38.5 percent RMR share (Security Sales & Integration, 2026); multiple frameworks and the $2M-EBITDA contrast (security M&A market guides, 2026); attrition as "the dominant valuation lever."
THE NUMBER TO MEASURE IT AGAINST.
Security System contractors run about % net profit at $1M to $5M, rising to roughly 9% at $5M to $10M. The CFOS target at $1M to $5M is10%, set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher. A problem like this one lives in the distance between those two figures rather than in a loss on any single job.
Gross margin over the same bands runs % to 24%, against a CFOS target of 10%.
THE SYSTEM THAT FIXES THIS.
What this trade should earn at this revenue, not construction as a category.
FREQUENTLY ASKED.
