What Is My Security Company Worth in New York?

New York's security industry is consolidating fast. Three major regional PE platforms have opened offices in Manhattan in the last two years, and search funds backed by six-figure capital are actively hunting for established alarm, patrol, and access control operations across the state. If you've built a security company over two decades in New York, you're sitting in a market where buyers are competing hard and valuations are climbing. But knowing what your business is actually worth requires understanding what these buyers see when they look at your P&L, and how New York's tax environment shapes deal structure.

What Drives the Value of Security Companies in New York

Security buyers in New York are looking for the same fundamentals everywhere, but they weight them differently in a dense, high-cost metro like this one. Recurring revenue from monitored accounts, multi-year contracts, and long customer tenure are the backbone of valuation. A company with 70 percent of revenue locked into 3-year monitoring agreements will command a premium over one where clients can cancel month-to-month. Customer concentration matters critically: if your top five customers represent more than 40 percent of EBITDA, buyers will apply a discount because losing even one contract damages value materially. Owner dependency is the second big swing factor. If you personally close 80 percent of new business or manage the only relationship with your largest account, a buyer will worry that your departure tanks revenue. They'll knock 15 to 25 percent off the price until you prove the business can run without you. Employee bench strength, documented processes, and a management team in place push valuation up. Finally, contract quality matters: formal signed agreements with renewal language, service level guarantees, and clear pricing beats handshake deals every time. New York buyers have seen enough contract disputes to price that risk in aggressively.

EBITDA Multiples: What to Expect in New York

Security companies with strong recurring revenue and customer stickiness typically trade at 4.5x to 6.5x EBITDA in the current market. National benchmarks sit around 5x to 6x for recurring-revenue-heavy players, but New York often commands a small premium because buyer density is higher and integration into regional platforms is easier. A company with 80 percent recurring revenue, low customer concentration, documented management, and clean financials might fetch 6x to 6.5x EBITDA in New York right now. One with 60 percent recurring revenue, higher turnover, or owner-centric operations will land at 4.5x to 5x. The gap between top quartile and bottom quartile is real: it's not uncommon to see a $5 million EBITDA business command $2 million more at exit because of how it's structured. New York's high state income tax (8.82 percent top rate for corporations, plus city taxes pushing combined rates above 13 percent in some cases) affects deal terms more than headline multiples. Buyers factor in the tax burden when modeling returns, so they sometimes structure deals with earnouts or seller notes to defer income recognition and reduce your overall tax hit. This can actually improve your after-tax proceeds if structured well, but only if you understand the mechanics upfront.

What Drags Your Valuation Down

• Owner as sole salesperson or relationship manager. If the owner closes all new business or owns the relationship with top accounts, buyers see execution risk. You'll lose 15 to 25 percent of value until you step back and prove the business grows without you.
• Verbal or informal customer agreements. A buyer needs signed contracts. Handshake deals, email confirmations only, or agreements older than three years trigger renegotiation risk. Plan on a 10 to 20 percent discount.
• Inconsistent or tax-aggressive bookkeeping. If your tax returns don't match operational records, or if add-backs are vague or hard to document, buyers will normalize conservatively and value a lower number than you expect.
• Key-man dependency on operations or service delivery. If one technician or manager runs critical functions, you've created a cliff risk. Buyers will discount unless you cross-train and document that knowledge.
• No non-compete or restrictive covenant from departing owners or key employees. If a founder or manager who left is now soliciting customers or starting a competitor, the business is damaged goods to a buyer.
• Customer concentration above 40 percent in top five accounts. Losing one contract becomes material to enterprise value. Buyers will use a concentration haircut even if your top accounts are solid.

How to Get an Accurate Valuation in New York

Two valuation methods dominate the security M&A market: EBITDA multiple and seller's discretionary earnings (SDE). For security companies with strong recurring revenue and a management team in place, EBITDA multiple applies. It takes your normalized earnings (taxes added back, non-recurring items stripped out, owner compensation normalized to market rate) and multiplies by the range above. For smaller operations still heavily dependent on owner effort, SDE adds back owner salary, owner perquisites, and one-time costs, then multiplies by a lower multiple. Most New York buyers want to see three years of audited or reviewed tax returns, normalized P&L statements with clear add-backs, a detailed customer list with contract terms and renewal dates, and three years of gross margin by service line. Online calculators that promise instant valuations are entertainment; they ignore contract quality, customer concentration, and owner dependency. A real valuation takes four to eight weeks and requires a CPA familiar with security industry norms to normalize your books. Before you approach a buyer or list your company, invest 3 to 6 months in tightening your financials. Move verbal contracts to paper. Cross-train your team so the business doesn't depend on you. Document all add-backs. This work can add 10 to 20 percent to your exit price.

What Buyers Are Actually Paying Right Now in New York

A well-run auction in New York typically closes in 6 to 12 months from first confidential information memorandum to signed purchase agreement. Strong security businesses (those with 70 percent-plus recurring revenue, clean contracts, and predictable growth) attract 4 to 7 qualified bidders in the New York market because buyer appetite is real. Typical deal terms run 75 to 85 percent cash at closing, with the remainder in a seller note (usually 12 to 36 months at 3 to 5 percent interest) or an earnout tied to customer retention or revenue growth. The earnout period is typically 12 to 24 months, and it usually runs 5 to 15 percent of purchase price. New York's proximity to major PE hubs (Boston, Philadelphia, and the broader Northeast corridor) means you'll see both regional and national buyers compete for quality targets. That competition tightens spreads between offers and reduces buyer leverage in negotiations. Transition services are typically four to eight weeks, during which you train the buyer's team, introduce them to key customers, and ensure a smooth handoff. Some buyers ask for a seller note with performance conditions, which gives them some downside protection. Negotiate that carefully with an M&A attorney who knows New York deal norms.