What to Do When Selling Your Alarm Company
Whether you are considering selling some subscriber accounts or your entire alarm company, you are going to have to make very important decisions that are quite different than you typically make on a daily basis. The sale of your business may very well affect your finances and your lifestyle.
After all, there will be a transition from working daily, running a company, hustling for business while worrying about keeping that business, earning a steady income and all the perks that come with owning your own firm, to a large amount of money that you now have to think about investing, more leisure time on your hands and less stress. At least that’s the goal.
You might be just starting out in your business and think that my comments are too remote for you to think about, or you may already be in contract to sell your business (and perhaps thinking you wish you had read this sooner). Eventually every one of you will either sell or turn over your business to someone else. If you are selling, you want the best deal you can get. And why not? You’ve certainly worked hard enough to deserve it.
If you are turning your business over to your kids, it probably means you’ve built a company that provided for you and will now be able to provide for your children and their families. On the other hand, perhaps you’re turning your business over to one or more of your creditors.
There are a number of professionals that you need to engage — sooner rather than later — to guide, assist and represent you in your efforts. First, of course, is competent legal counsel, and we’ve got you covered at my firm. We handle everything from set up, organization, contracts, business relationships, employee relationships, collections, defense, acquisitions and selling your company. Your accountant will also be an integral part of your business growth and will participate in any sale or transition.
If you’re selling, it’s a good idea to engage a broker familiar with the alarm industry. Brokers have a unique perspective on pricing, marketing and assisting you with the sale of your business. I recently had a chat with perhaps the premiere and best-known broker in the alarm industry, Ron Davis. He’s a wealth of information and a good storyteller too.
After talking to him, I thought I would see how close my thinking is to Davis’ take on selling your business. Davis limits his brokerage business to representing selling companies. In one of his recent E-mail publications, he listed a bunch of alarm companies he was representing for sale. The blurbs that he disclosed for these various companies had several characteristics they shared. Here is what seems to stand out from a broker’s perspective that is important to let potential buyers know about your selling business (not necessarily in order of importance):
- Recurring monthly revenue (RMR)
- Seller and key personnel to remain for transition
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) showing profit; solid business history and good reputation
- Combination of RMR monitoring, service and leasing, or good mix commercial/residential
- Own lines to central station
- Auto pay subscribers
Davis certainly knows this industry and I don’t know many who work as hard as he does for his clients. You can reach Ron at [email protected].
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