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AlarmForce is a Canadian home alarm company. With close to 30 years in business, they have approximately 100,000 customers in Canada. Once regarded as a growing, successful company, AlarmForce has seen its growth stop and profits lower.

Last month AlarmForce announced they sold 30,000 US customer accounts to Select Security. They sold it at 12x RMR (recurring monthly revenue). This is notable as it is an incredibly low value. Why were they looking to sell these customers? Why were they willing to take such a low price for them? Did they need the money?

Or perhaps this is the start of something bigger. One has to wonder that if things are going well, why would they want to sell accounts for such a minimal amount? Is AlarmForce going out of business?

AlarmForce hasn’t seen significant growth in years. The years following the firing of Joel Matlin (which happened in 2013) has seen constant turnover with management and with the board of directors. Every year Joel Matlin was at AlarmForce, the company had positive growth. The years since they have not. The account numbers have shrunk, the brand stalled and the layoffs have been common.

Do they have a plan to turn things around? Are they needing money? Or since they’re no longer growing is AlarmForce looking to sell the entire company?

Most likely AlarmForce isn’t going out of business. AlarmForce has 100,000 each paying monthly, so there is a nice amount of ongoing revenue coming in. They continue to reduce overhead and cut marketing dollars. But if the customer base continues to shrink, how long can this plan work? Will they have to look for new options? Raise prices? Sell customer accounts?

This is important to potential customers. AlarmForce makes customers sign a 3-year contract. They reserves the right to raise prices at any point of this contract. If times are tough, guess what they’ll most likely do? Raise prices! Plus, if AlarmForce is sold then the customer base gets transferred to the acquiring company. That means that the customer won’t be serviced by AlarmForce. And also the new company can raise prices! The customer is trapped, because of the signed contract.

Use caution when thinking of signing a new contract with AlarmForce. Or current AlarmForce customers should weigh options before continuing with AlarmForce. There are better options out there with lower prices and no contract.