[IPVM Note: Kirschenbaum has objected to this member's comment and title. We are citing his May 18, 2018 post to explain Kirschenbaum's current position:
Fortunately for the alarm industry, the multiple has been fairly constant for a long time. Depending on how you have run your business, particularly which contracts you use and how you get them signed, you can expect 35 times, give or take 5 times. That leaves a 10 point spread, and if you're on the lower end, you deserve it. If you're on the higher end, you deserve it too. Being smart should have its advantages, and in this business it’s measurable, 10 times.
IPVM Note End]
Ken Kirschenbaum, who writes a newsletter that is closely read by many in the industry, sent out a new article today entitled Issues that concern buyers of alarm accounts are matters you need to deal with now.
The relevant passage is here:
If a buyer is paying 35 times plus for your alarm contracts the buyer has some confidence that the accounts are worth buying; they have value, and that value is measurable by the multiple the buyer is willing to pay. Conversely, if a buyer isn't willing to pay anything for an account, or less that the other accounts, it stands to reason that the buyer does not think those accounts are worth much, if anything. In fact, these identified accounts are probably worth nothing and will only be a potential liability, unless they can be turned into accounts that measure up to the full value of the other accounts, the 35 times.
In other words, Ken Kirschenbaum, one of the canniest observers of alarm industry trends, thinks that the most a buyer would ever pay for a highly profitable monitoring account with an airtight contract and no problems is 35x. This is bad news for ADT or anybody else hoping to cash out on their accounts anytime soon. I remember not long ago when 38-42x was the standard and 35-32x was what you could expect to pay for accounts with problems. Even accounts with equipment problems could expect to go for 22-24x, as long as the subscriber's credit was good.
The time is coming when the bottom is going to drop out of the residential alarm industry's business model. If you rely on residential alarms for a significant portion of your revenue, either figure out a way to be profitable on the install, or sell your accounts the second you get your hands on them. The volume resi business is not sustainable.