# How to Buy a Security Business With No Money Down

Source: https://apply.grosfjeld-li.com/guides/buy-a-security-business · By Josh Li, G&L M&A Advisory · Updated 2026-10-14

**Short answer:** Buying a security business with no money down means funding the price with commercial debt secured on the business, seller finance repaid from its cash flow and seller rollover, where the owner keeps a minority stake. It works best on firms with recurring alarm monitoring and multi-year guarding contracts, licensed supervisors who run the sites, and contracts that survive a change of owner.

**Key points:**
- You are buying contracts, licences and a licensed roster, not just vans and a control room.
- Monitoring revenue is the most bankable part; ad hoc event guarding is the least.
- Check licence transfer, change-of-control clauses and wage compliance before anything else.
- Patrol route density and a shared control room are the biggest synergies with a competitor.
- Night-shift burnout and compliance load are the most common reasons owners sell.

## What do you actually buy when you buy a security business?

A security business is a bundle of promises to clients, backed by licensed people. When you buy one, you are mainly acquiring:

- **Guarding contracts.** Static guards at sites such as shopping centres, construction sites, hospitals and warehouses, usually on 1–3 year terms.
- **Mobile patrol and alarm response contracts.** Scheduled drive-bys, lock-ups and call-outs, priced per visit or per month.
- **Monitoring contracts.** Back-to-base alarm and CCTV monitoring billed monthly. This is the most recurring, lowest-churn revenue in the industry.
- **Installation and service clients.** Alarm, access control and CCTV installs that feed the monitoring book.
- **The licensed roster.** Guards, patrol officers and supervisors who hold individual security licences.
- **Company licences and registrations.** The firm's own licence to provide security services, and any accreditations it uses to win tenders.

Vehicles, radios and the control room matter, but they are rarely where the value sits. The value sits in contracts that keep renewing.

## What makes a good security business to buy?

| Feature | Strong target | Weak target |
|---|---|---|
| Revenue mix | Large share of monitoring and multi-year guarding | Mostly one-off events and short gigs |
| Clients | Many sites, no client above a fifth of revenue | One facility manager controls most of the work |
| Operations | Supervisors and a rostering lead run the nights | The owner answers every 2am call |
| Contracts | Assignable or silent on change of control | Terminate on change of control |
| Location | Sites close to yours | Sites scattered across a region you don't serve |

The best targets are usually the security firm with the sites next to yours. Overlap is what turns a purchase into a margin improvement.

## What are the due diligence risks in a security business?

Security has risks most generic checklists miss. Add these to the standard [due diligence red flags](https://apply.grosfjeld-li.com/guides/due-diligence-red-flags):

1. **Licence transfer.** Company licences may be held by the entity, a named individual, or both. Some do not transfer on a sale. Check the rules in your state/country before you choose between buying shares and buying assets.
2. **Change-of-control clauses.** Many guarding contracts let the client terminate if ownership changes. List every contract, its end date and its assignment clause.
3. **Wage and roster compliance.** Guarding margins are thin, and underpayment of overtime, night rates or breaks is a common hidden liability. Test a sample of rosters against pay records.
4. **Subcontracting chains.** If the firm subcontracts shifts, find out who is actually on site and whether those workers are correctly engaged and licensed.
5. **Legacy monitoring equipment.** Alarm communicators that rely on networks being retired need replacing. Price that cost in.
6. **Incident and claims history.** Review insurance claims, complaints and any regulator notices.

## Why do owners of security businesses sell?

Most sell because the business never switches off. The owner is often the escalation point for every late-night alarm, no-show guard and client complaint. Add rising compliance work and a tender cycle that never ends, and many owners in their fifties and sixties want out. Few have a successor, because supervisors rarely want the licence liability. Those owners care about their staff keeping jobs and their clients being looked after, which makes them open to being paid over time.

## How do the three no-money-down structures fit a security business?

Every structure here combines up to three parts: senior (commercial) debt from a lender, seller finance (the owner is repaid over time) and seller rollover (the owner keeps a minority stake).

- **[70/20/10](https://apply.grosfjeld-li.com/guides/70-20-10-deal-structure)** suits firms with a healthy monitoring book. Lenders understand monthly monitoring revenue, so they will often lend the 70%. The 20% seller note covers guarding contracts that renew over the next few years, and the 10% rollover keeps the owner engaged with key clients.
- **60/40** suits guarding-heavy firms where the owner's relationships with facility managers drive renewals. A 40% rollover gives the seller a real reason to introduce you and stay through the next round of tenders.
- **100% vendor finance** fits smaller patrol or alarm businesses where the owner wants a steady income and a buyer who will keep the team.

Whatever the mix, we structure deals at a [DSCR](https://apply.grosfjeld-li.com/guides/dscr-explained) (debt service coverage ratio) of around 1.5x. That means cash flow is roughly one and a half times the total yearly repayments, so a lost contract does not sink the business.

## What synergies come from buying a competing security firm?

- **Patrol route density.** More clients on the same patrol runs means more visits per hour of driving.
- **One control room.** Monitoring two client bases from one control room is close to pure margin.
- **Shared rostering and relief.** A bigger pool of licensed guards makes it easier to fill sick shifts without overtime.
- **Cross-selling.** Guarding clients often need monitoring and CCTV, and monitoring clients often need patrol response.
- **Tender eligibility.** A larger firm can bid for contracts that require scale, references and insurance levels a small firm cannot show.

This is why we usually suggest owners [buy a competitor](https://apply.grosfjeld-li.com/guides/buy-your-competitor) before looking further afield.

## Illustrative example: a $1.2M patrol and monitoring firm

*Illustrative only.* A guarding business turning over $3M buys a nearby patrol and monitoring firm for $1.2M. The target earns $420k a year before owner wages and debt.

| Part | Amount | How it's paid |
|---|---|---|
| Commercial debt (70%) | $840k | Lender, secured on the business's assets |
| Seller finance (20%) | $240k | Paid to the owner over four years from cash flow |
| Seller rollover (10%) | $120k | Owner keeps a 10% stake |

If yearly repayments on the debt and seller note come to about $280k, coverage is roughly 1.5x. The lender adds a working-capital line for payroll. Merging the control rooms and patrol routes then lifts margin beyond the target's standalone profit.

## What should you do first?

Start with the security firms whose sites sit next to yours, then read [how to buy a business with no money down](https://apply.grosfjeld-li.com/guides/how-to-buy-a-business-with-no-money-down) for the full process.

> This guide is general information, not financial, legal or tax advice.

If you own an established security business doing $1M+ in revenue and want a signed LOI within 90 days, [see if you qualify](https://apply.grosfjeld-li.com/security) for an acquisition strategy call.

## FAQ

### Can you buy a security company without a security licence?

Usually the business, and often a named person in it, must hold the right licence, so a buyer without one needs a licensed manager or a structure that keeps the licence valid. Check the rules in your state/country before signing.

### Is alarm monitoring revenue worth more than guarding revenue?

Often yes, because monitoring is billed monthly, rarely churns and needs few staff. Guarding revenue depends on contracts that can be retendered and on thin wage margins.

### Do guarding contracts transfer when a security business is sold?

It depends on each contract. Some are silent, some need consent and some let the client terminate on a change of control, so review every one before you sign the LOI.

### How do you value a security business?

Buyers commonly start from maintainable profit, then adjust for the share of recurring monitoring, contract length, client concentration and any wage compliance exposure.

### Will a bank lend to buy a security company?

Lenders are generally more comfortable with recurring monitoring and long contracts than with event work. No lender approval is guaranteed, which is why deals also use seller finance and seller rollover.

### What is the biggest risk when buying a guarding business?

Hidden wage underpayment and contracts that end on a change of owner are the two that most often destroy value after settlement.