8 Tips for Selling Your Alarm Business

The process of selling a business can be emotional and complicated, especially if you are unfamiliar with what to expect or do. With over 50 years of experience in the security alarm industry, Egan Security Group has compiled these helpful tips for selling your alarm business:

  1. Make sure that you are selling for the right reason: Are you ready to retire or looking to pursue another business opportunity? Finding a meaningful reason to sell will lead to greater satisfaction than selling just to make a quick profit.
  2. Get proper advice and help when selling your company: Far too often, security alarm dealers sell their businesses to other alarm companies with much more experience, giving the buyer the upper hand. While accountants and lawyers can provide advice on taxes and terms of a sales agreement, hiring an experienced broker trained on the selling process will help you determine your company’s value, negotiate the best price with interested buyers, and help you facilitate a swift, hassle-free transaction.
  3. Learn as much about the selling process as you can: Utilizing a broker, they can explain the entire sale process ahead of time. Make sure you understand the steps of the sale process, how long it will take once an offer is accepted, and what the market value of your assets are. The more you know about the selling process the better off you will be when it comes time to sell.
  4. Prepare for the sale: First, selling a business will take time, but the better prepared you are, the less time it can take to execute. Buyers will want to see financial statements from the past couple years and the status of your accounts.  Make sure you know exactly what you have to offer in a sale,  that your books are in order, and that your number of accounts and RMR are accurate. Leave a great impression on potential buyers, and increase your chances at being offered a higher sale price by being organized and prepared. Secondly, have a plan for what you want to do after you sell your business. Are you going to spend more time with family, vacation, start a new business venture, or stay with the buyer?
  5. Be realistic about your sale price: Small to medium sized businesses cannot be compared to large companies that demand a premium in multiples. Remember that while the multiplier on RMR is important, buyers will be concerned about cash flow. How much money your accounts can generate them. This means considering your monitoring charges, service fees and bill costs.
  6. Market your company properly: One of the key reasons to hire a broker is to make sure the right people are seeing that your company is for sale and what the specifics are. Your broker will highlight your strengths and market to as many potential buyers as possible.
  7. Get multiple bidders on your company: The bottom line when it comes to selling your company is that the more interested bidders you have the better offers and terms you will see. As a seller you will have more of an upper hand with multiple offers when it comes to the sale of your company. Remember, it’s important not to write off any potential buyers until you have a fully executed Letter of Intent from your number one choice.
  8. Focus on more than just the sale price: While these are very important when accepting an offer, there are several other terms that can affect the deal drastically and come into play with your purchase price:  What are the payment terms? How much is paid upfront? How much are they holding back? What value have they given to installation, service, and maintenance revenue?  Is there a non-compete clause? Consider hiring an experienced broker who can help navigate all these questions.

In closing, selling a business can be an emotional and complicated process for everyone involved. As a business owner, deciding to sell your entire company or even a portion of your business is one of the most important decisions you will make. If you are selling for the right reasons, have realistic expectations, and the proper tools & advice from an experienced broker, you should be set for a hassle-free transaction. At Egan Security Group, we understand the complex array of considerations and can guide you through the process to achieve a successful exit because we’ve been there.

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