What should I check before buying a security services company?

A security services company sells reliability, and a buyer is really buying the promises already made to clients. That makes the checklist practical rather than clever. You want to know who the clients are, how firmly they are tied in, who does the work on the ground and what has gone wrong before. Work through the points below in order and ask for documents at each step.

Client contracts and cancellation notice

Read every client agreement. Note the term, how renewal works, and how much notice a client must give to leave. Compare clients who can leave on short notice with those signed for a fixed term. Ask whether any contract needs the client’s consent before it can pass to a new owner. Your lawyer can tell you what that means for the structure of the purchase.

Concentration in a few sites

List the sites and the share of revenue each one supplies. A company that depends on one property manager or one large site faces a different risk than one spread across many. This answer on a roofing company that depends on one builder walks through the same question in another trade, and the thinking carries over.

Guards, scheduling and monitoring accounts

Ask how long guards usually stay, who builds the schedule, and who the clients phone when a shift is missed. For alarm monitoring, ask how accounts and equipment are held and how a change of owner is handled with the central station and each subscriber. A buyer who loses the supervisors often loses the clients with them.

• Incident reports and any client complaints
• Insurance claims and the policies in place
• Training records and equipment lists
• Any dispute with a former employee or client