Current valuations rate commercial fire accounts worth the most (40X multiple), while residential security accounts can earn 35X and service contracts are worth 30X. But what are the 3 big mistakes that can hurt your multiples?

We talk a lot about the value of recurring monthly revenue (RMR) in building your business valuation and developing an exit strategy. But right now, how much are your accounts really worth?

According to legal expert Ken Kirschenbaum of Kirschenbaum & Kirschenbaum, who is also a columnist for CE Pro‘s sister publication Security Sales & Integration, monitored commercial fire security accounts right now will earn 40 times multiple. In other words, if you receive $100 per month from a commercial fire account, you will be paid $4,000 for that account.

Kirschenbaum says the going rate for monitored residential security/home automation accounts is 35X. Meanwhile, the value of service contracts appears to have grown tremendously. In past years, industry experts rated service agreements as low as 12X, but Kirschenbaum says the current valuation is 30X. That’s great news for integrators… many of whom do not do security systems… but instead are focused on getting signed service agreements.

3 Big Mistakes to Avoid

Meanwhile, Kirschenbaum points out three big mistakes that dealers make that hurt their valuations.

Read the full article on CE Pro

Article Published By Jason Knott of CE Pro, September 30, 2014

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