Determining how much an organization is worth when it comes time to sell is a complex thing. Business valuations can be challenging for companies of all kinds, but they are especially challenging and complicated for alarm businesses, which in most cases cannot be valued based on the typical EBITDA model.
For fire alarm businesses specifically, valuations are extra complex. This is due, in large part, to the presence of service revenue, which can have a powerful impact on the amount a fire alarm company is worth.
If you are contemplating putting your fire alarm business on the market, knowing how much your company is worth is imperative. Here, we will share a few helpful tips to help you when it comes to determining the value of your fire alarm business with a fire alarm business valuation.
Tips for Fire Alarm Business Valuations
Though traditional valuation models may not provide you with an adequate estimate, don’t shy away from obtaining an accurate fire alarm company valuation. These three tips will help guide you in the right direction as you work to determine how much your business is truly worth.
Don’t Rely On A Central Station
Central stations can be tempting allies when it comes to selling your fire alarm company. Since they work with a variety of alarm companies, they are familiar with the industry and have access to a pool of potential buyers for your business.
Still, there are a number of reasons why central stations are not the best resource to turn to when it comes to determining the value of your fire alarm business. Perhaps most notably, a central station’s main interest may lie in preventing the loss of their own accounts. As a result, they may encourage you to sell your company for less than it is truly worth to a buyer that will enable them to keep your account.
Don’t Underestimate the Value of Service Revenue
Many brokers and buyers rely on specific models to calculate the value of alarm businesses. For fire alarm companies, these models may not work well as they often do not take service revenue into account.
Contrary to what some people think, service revenue is actually very valuable and can drive the value of your fire alarm business up. Because it is reliable, consistent and substantial, service revenue is a very important component to take into account when calculating how much your business is worth.
Work with An Alarm Company Broker
Business sales in most industries are overseen or mediated by a lawyer. While this is usually the case with alarm business sales as well, most sellers also wisely choose to involve an alarm company broker.
There are a number of reasons why you should work with an alarm company broker to sell your alarm business, but it is especially important to do so if you’re in the market to sell a fire alarm company. This is because experienced brokers understand the true value of service revenue and will look beyond contracted revenue when calculating how much your business is worth, giving you a more accurate valuation. They can also connect you to buyers who are willing to pay top dollar for your organization.
Find Out How Much Your Fire Alarm Company Is Worth
Calculating an accurate, fair figure to represent what a company is worth may be challenging, but it is incredibly important, both for sellers who want to earn a fair profit for the company they worked hard to build, and for buyers who want to make sure they are getting a fair deal as they purchase a new organization.
Rory has decades of experience as an alarm business broker and knows how to look at the whole picture, including service revenue and test and inspect revenue, to calculate how much your fire alarm business is truly worth. Plus, Rory has connections to buyers who recognize the value of service revenue dollar for dollar and can help you find a well qualified buyer for your organization.
Other Resources Related to Selling Your Fire Alarm Business
If you are thinking about putting your fire alarm business on the market, be sure to check out the following resources:
Service Revenue in the Fire Alarm Industry: Why It’s a Valuable Asset When It Comes Time To Sell – Service revenue may complicate fire alarm company sales and valuations, but it’s an incredibly valuable asset that can help you to earn top dollar for your business.
Your Fire Alarm Company Is Worth More Than You Think: Service Revenue and Fire Alarm Business Sales – Find out why some buyers aren’t willing to pay for valuable service revenue, and how to find the buyers that will.
Broker vs. Lawyer: Which Is the Better Option When Negotiating the Sale of An Alarm Company? – Learn about your options when it comes to advisors during the process of selling your fire alarm business, and find out why a broker might be your best bet.