Is January a sensible month to have a security business valued?

January works as well as any month and better than most, because the previous year is nearly closed and nothing about the exercise is public. A baseline valuation does not start a sale. It gives you a starting figure for the rest of the year and a short list of the things that would move it.

What is a security business typically worth?

Owner-managed security firms trade across a wide range of adjusted EBITDA multiples, and firms carrying a large contracted monitoring base sit towards the upper end of it. Monitoring books are often cross-checked against a multiple of recurring monthly revenue instead, because attrition and average account value show up more clearly that way. The spread reflects real differences in revenue quality rather than uncertainty about the market.

Do I have to decide to sell before asking for a valuation?

No, and many owners asking in January have no timetable in mind at all. A valuation is a measurement rather than a mandate, and knowing the figure is precisely what makes a real decision possible later, in either direction.

What moves the number most in this sector?

The proportion of income that recurs under contract, ahead of everything else. After that comes current third party approval, then the term and notice structure of the contract book. The licensing and vetting records behind the workforce sit alongside both. Those four items, and how much of the business runs without the owner in it, account for most of the gap between a good price and an ordinary one.

Why January Is When Security Owners Start Asking What It Is Worth

The decision is usually made before January starts

Security businesses do not go quiet over Christmas. The guarding rota still has to be filled on Boxing Day, the alarm receiving centre still answers at three in the morning, and the owner is usually the person who picks up when a response call goes wrong on the 27th. That is why so many owners reach January having already settled something in their own mind without saying it out loud to anybody.

The thought is rarely a decision to sell. It is the narrower one that the business ought to be worth something specific, and that nobody has ever put a figure on it. A firm running a monitoring base alongside a guarding rota is not a straightforward thing to price, and the person who built it is the worst placed to do it, because every line in the accounts has a story attached that a buyer will never hear.

January answers that question cheaply because nothing is committed by asking. A baseline valuation is private work. It is not published, it does not reach a buyer, and it starts no process at all. What it does is put a number where a feeling was, which is the only thing that turns the next step into a decision rather than a mood.

A baseline valuation puts a number where a feeling was, and that is the whole of its job.

A valuation is a measurement, not a marketing exercise

The first thing a valuation does in this sector is take the business apart into the pieces a buyer prices on different logic. Contracted monitoring and maintenance income is modelled on its own, because it arrives whether or not anybody sells anything this month. Installation and project work is treated as earnings that have to be won again next year. Guarding revenue is read differently again, on margin and on how much of the contract book survives a change of owner.

Owner-managed security firms change hands across a wide range of multiples of adjusted EBITDA, that is, the number of times a buyer will pay the yearly profit before interest, tax, and the write-down of equipment, vehicles and other assets, and the width of that range is not vagueness. It reflects how much of the income recurs under contract, and whether third party approval is current. Two firms with identical turnover can sit at opposite ends of it.

The adjustments move the answer as much as the multiple does. Owner remuneration above or below a market rate, vehicles, a property owned personally and rented back to the company, a one-off legal bill: all of it comes out before anybody applies anything. Most owners are surprised by the gap between the adjusted figure and the one in the statutory accounts, and the surprise runs in both directions.

Close to 8x

A UK security services provider, bought for £19.1m against around £2.4m EBITDA, May 2023

What the calendar actually changes this year

Business Asset Disposal Relief lets a qualifying owner pay a lower rate of tax on the gain from selling the business, and that rate is 18% today. The Autumn Budget in October 2024 raised it from 10% to 14% from April 2025 and to 18% from April 2026, against a lifetime limit of £1m of qualifying gains. The rate is normally set by the day the sale contract becomes binding, which is often completion day, and since Budget day there have been rules against signing early to catch the old rate, so a contract signed early does not do what owners assume it does.

That matters less than it sounds for anybody starting in January. A security business taken to market properly moves in months rather than weeks: preparation, a controlled approach to the right sort of buyer, offers, heads of terms setting out the main points of the deal, the buyer's detailed checks over licensing and contracts, then completion. Deciding in January that a sale has to complete by a particular tax date is how owners talk themselves into the first offer instead of the best one.

The more useful January is the unglamorous one. Establish what the firm is worth on today's figures, identify the two or three items that would move that number furthest, then decide whether this is the year or the one after it. Both answers are respectable. Only one of them is available to an owner who never asked.

Start With a Number

A baseline valuation is private work that tells you where the business stands before you decide anything. It is a conversation, not a commitment.

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Nick Hunt leads the work on raising what a business is worth before a sale, from margin to owner dependence, the extent to which the work still leans on you.