The Cost Stack and the Value Stack: Guarding and Systems in Late 2026

For many security business owners, September is the month the diary fills back up. Summer cover is behind you, autumn tenders and dark-season demand planning are in front, and the accounts start to show what the year is really doing. It is a good moment to look at the business the way a buyer would, because in 2026 the sector has quietly split into two economies that are moving in opposite directions.

On one side sits the guarding book, where the cost of fielding a licensed officer keeps rising and the margin does not stretch to absorb it. On the other sits systems and monitoring, where recurring revenue and accreditation are drawing steady buyer interest and firmer multiples, the numbers yearly profit is multiplied by to set a price. I think of it as a cost stack and a value stack, and the gap between them is wider now than it was a year ago. This briefing works through four parts of that picture: the 2026 cost stack on a guarding book, the workforce as the scarce asset, what this year's deals show, and recurring monitoring revenue under the switch-off. Every figure here comes from the body that produced it.

The 2026 Cost Stack on a Guarding Book

Manned guarding has always been a thin-margin business, and 2026 has added to the fixed cost of putting a licensed officer on a site. Two changes landed this year that owners feel directly. From April 2026 an individual SIA licence application costs 204 pounds, after the temporary 20 pound rebate scheme ended at the end of March, and a renewal costs the same as a first application. Then, from June 2026, the Approved Contractor Scheme fee payable per licensable individual deployed rose from 15 pounds to 25 pounds, described as the first rise in the annual registration fee in the history of the scheme.

A two-thirds increase in the per-operative ACS fee sounds small in isolation. Across a workforce of dozens or hundreds of deployed officers, renewed on a rolling basis, it is a real addition to the cost of simply being compliant. A related tightening sits alongside it: from June 2026 the 50 per cent discount on an additional licence applies only where the second application is made on the same day on the same form, where previously it was available at any time. None of these is a headline event. Together they lift the floor under a guarding operation's fixed costs.

The bigger cost pressure is pay. Officer pay in guarding is usually at the National Living Wage, the SIA's 2022 sector profile found, and it names warehouse, delivery, logistics and supermarket work among the jobs officers leave for, offering higher pay, better benefits or more sociable hours. That combination, a rising statutory floor and competition for the same people from outside the sector, means labour costs move up while the ability to reprice contracts lags behind. In a business where wages are the overwhelming share of the cost base, that is the number that governs the margin.

This matters for value because guarding earnings are labour-dependent and lightly protected. Manned guarding businesses typically transact on a multiple of EBITDA, their profit before interest, tax, and the write-down of equipment, vehicles and other assets. When fixed costs rise faster than contract rates, the EBITDA that multiple is applied to gets thinner, and the same business is worth less even though nothing about its contracts has changed. For a guarding owner, the practical response before a sale is to look hard at contract terms, indexation clauses and the mix of work, because that is where a rising cost stack is either passed on or absorbed.

Rising licence and pay costs do not just squeeze this year's margin. They compress the earnings figure a buyer's multiple is applied to.

The Workforce as the Scarce Asset

The cost stack has a twin: the people it pays for are getting harder to find. First-time SIA licence applications fell around 15.8 per cent year on year, from 94,315 in 2024 to 79,449 in 2025, and the SIA's own business planning projected roughly 75,000 for 2025-26, so fewer new entrants are coming into the sector. There were 517,144 active SIA licences as at February 2026, held by around 458,000 individuals, with door supervision the largest category at 368,546 licences, but the pipeline behind those numbers is thinning.

For a buyer, that changes what they are actually acquiring. When you buy a guarding business, you are buying the people who deliver the contracts, not just the contracts themselves. If new entrants are scarce and the workforce is held together by renewals, then a retained, BS 7858-vetted and SIA-licensed team becomes the part of the business that is hardest to replace and most expensive to rebuild. A buyer who takes on a contract book with high staff turnover inherits a recruitment problem in a market where recruitment is getting harder.

So the workforce moves from a cost line to an asset line. The businesses that will present best in a sale are the ones that can evidence a stable, vetted, licensed team: low attrition, current BS 7858 screening records, licence currency across the workforce, and the kind of retention that lets a buyer keep the contracts on transfer day. Whether the buyer takes on the company, staff and all, or buys the business's assets and brings the staff across under TUPE, the team comes with the deal, so a buyer is paying for a workforce they can rely on to stay. In a tightening labour market, a well-retained team is not a soft feature of the business. It is part of what the offer is built on.

The honest read for owners is that this cuts both ways. If your team is stable and your vetting is in good order, the scarcity works in your favour and you should document it clearly before going to market. If your attrition is high and your records are patchy, that is a fixable problem, but it is better fixed a year before a sale than discovered in due diligence, the buyer's detailed check of the business.

What 2026 Deals Show

If you want to see where value is accruing in the sector, look at what is actually being bought. In 2025, 70 per cent of UK fire and security deals involved private-equity-backed corporates, meaning companies owned by investment firms that buy companies to grow and sell on, up from 57 per cent the year before, and one market count, which gives no split by country and takes its examples from the US, recorded 242 security transactions across the year, an increase of around 24 per cent. That momentum has carried into 2026, and the clear weighting is towards systems and fire-and-security platforms. Manned guarding trades more thinly and more slowly.

The names put dates on it. Ranger Fire and Security, a private-equity-backed buy-and-build group, which grows by adding smaller firms to a larger business, opened 2026 by acquiring Partnership Fire and Security in Dorset in January, added Centurion Fire and Security in Huddersfield in February, and announced a double deal in late June, Scion Communications and Emerald Fire Technology, following investment from Inflexion. Complii added Nottingham-based Tay Fire and Security in December 2025, its twentieth acquisition. What these buyers screen for is instructive: recurring, contracted, accredited revenue with a transferable workforce, which is precisely the systems-and-monitoring profile rather than the guarding one.

Published practitioner guidance puts integrated electronic security businesses at 6x to 10x EBITDA and scaled platforms with high recurring revenue at 10x to 15x or more. It gives no range for manned guarding. Monitoring books are frequently valued on a different basis entirely, as a multiple of monthly recurring revenue rather than on profit. On the systems side, revenue tier matters too: larger businesses typically command higher multiples than smaller ones.

Buyers separate the guarding book from the systems book before they price anything. Owners of mixed businesses should do the same, because that is where the value actually sits.

This is why a mixed business is priced line by line rather than on a single blanket multiple. If you run guarding and systems under one roof, blending them into one number hides what each part earns on its own. The largest recent deal illustrates the direction of travel: Mitie completed its acquisition of Marlowe in August 2025 in a deal reported at around 350 million pounds, described in one market note as close to 11 times Marlowe's adjusted earnings. That multiple applies to a listed compliance platform and is no guide to what an owner-managed firm would fetch, but the pattern it sits within, capital chasing recurring, accredited, systems-weighted revenue, is the one shaping the value stack across the whole sector.

Recurring Monitoring Revenue Under the Switch-Off

The most valuable line in an electronic security business is recurring monitoring revenue, and it is worth understanding why buyers pay so much for it and what can dent it. Monitoring and alarm receiving centre books are frequently valued on a multiple of monthly recurring revenue, rather than on profit alone, because contracted, renewing income is durable and predictable in a way that project work is not. That premium is really a premium on quality of earnings, and in late 2026 the quality of a monitoring book is being tested by one specific thing.

The analogue PSTN network that has carried alarm signals for decades is being switched off at the end of January 2027, a date Openreach has confirmed and says is locked. By late September 2026 it put the lines still on the old network at around 1.2 million, including around 350,000 business premises, and the cost of standing still is rising: a further 40 per cent increase on legacy line rental lands in October 2026, one of three staged rises that roughly double the cost of a legacy line across the year. Legacy alarms, fire systems and CCTV still signalling over copper need upgrading before the switch-off.

Read those two facts together and the point for owners is clear. A monitoring book still signalling over copper is not clean recurring revenue; it is a re-signalling liability sitting inside the income a buyer values most. In diligence, a buyer will want to know what proportion of the monitored base is already on IP or cellular signalling, ideally dual path, what remains on legacy lines, and whether there is a credible schedule and the engineering capacity to finish before the deadline. Cellular and IP-signalled accounts are the ones buyers want, because they read as durable earnings that will survive the switch-off. An unmigrated base reads as a discount the buyer will price in.

The constructive way to see this is that migration upgrades the asset. Moving an account from a copper line to a modern signalling device turns a one-off compliance task into an upgraded, often higher-value, recurring signalling contract. Owners who get ahead of the October cost step and the January deadline protect their recurring revenue and present a more defensible valuation. Those who leave it hand the buyer a reason to pay less for the very income that carries the multiple.

Two Stacks, One Decision

Set the four parts side by side and the shape of late 2026 is clear. The cost stack under a guarding book is rising, through licence fees, ACS fees and a pay floor that competes with logistics and retail. The workforce that book depends on is getting scarcer, which turns a retained, vetted team into an asset rather than an assumption. The value stack, meanwhile, is accruing on the systems and monitoring side, where deal flow, accreditation and recurring revenue are drawing buyer interest. And the quality of that recurring revenue is being tested by a switch-off that rewards owners who have migrated and discounts those who have not.

None of this says you should sell now. It says the split between the two stacks is the first question any buyer asks, so it should be the first question you answer. If you run a mixed business, understand what each part is worth on its own basis rather than as a single blended number. If you run guarding, know where your cost stack is heading and where your contracts let you pass it on. If you run monitoring, get your signalling base migrated and documented before the deadline does it for you.

None of it commits you to anything. It simply tells you what your options look like, and options are the one thing you cannot create in a hurry once a buyer is at the table.

Nick Hunt leads the work on raising what a business is worth before a sale, from margin to owner dependence, how far the business relies on you personally.