Service revenue is one factor that tends to complicate fire alarm company sales. Why? Because many brokers don’t quite know how to accurately calculate the value of alarm companies that profit from service and test and inspect revenue, and because may buyers are hesitant to acknowledge service revenue as an asset.
For these reasons, if you are in the market to sell your fire alarm company, you may be feeling frustrated or discouraged. You’re ready and willing to hand your company over to a qualified buyer who is willing to pay a fair price for your business, but it feels like the service revenue aspect of your business is getting in the way.
Perhaps you’ve received some disappointing offers. Or maybe the broker you’re currently working with is using a traditional business valuation model that does not adequately take your organization’s service revenue into account.
You may be starting to feel like service revenue has no value when it comes to selling your alarm company.
But you couldn’t be more wrong.
Service Revenue in the Fire Alarm Industry is VERY Valuable
Because many buyers don’t fully recognize service revenue as an asset and many brokers do not utilize a business valuation model that can accurately assess the value of service revenue, fire alarm companies have gained something of a reputation for being difficult to sell or selling for less than they should.
The truth is, however, is that fire alarm companies are uniquely valuable because of the service revenue they generate.
What Makes Fire Industry Service Revenue So Valuable?
1. Service Revenue is Reliable
In the fire alarm industry, service revenue is guaranteed. That’s because it’s generated largely by mandatory equipment checks. Pull stations, sprinklers, exit signs – all of these elements and more must be routinely tested, inspected and, if necessary, repaired or replaced. As a result, service revenue in the fire alarm industry is a reliable source of income for your alarm company.
2. Service Revenue is Consistent
Besides being mandatory, test and inspect routines in the fire alarm industry are also regularly scheduled. For most facilities, equipment must be checked at least once a year. More frequent inspections are required for systems in hospitals and healthcare facilities. These requirements mean that you will consistently and predictably have service revenue coming in.
3. Service Revenue is Substantial
If you have a sizable client base, test and inspect and service revenue could be a substantial source of income for your fire alarm company. This could contribute to increasing the overall value of your business significantly, making it more profitable and more appealing to potential buyers.
Capitalize on Your Service Revenue When Selling Your Fire Alarm Business
Don’t make the mistake of assuming that that your fire alarm business’ service revenue is not valuable. It is incredibly valuable and when selling your business you deserve to be paid top dollar for it.
If your business has been valued at an amount that’s less than you believe it’s worth or you’ve received unsatisfactory offers from potential buyers, do not settle. Turn to the fire alarm sale experts at Acquisition & Funding Services.
Rory Russell is one of the industry’s top brokers in the fire alarm industry. He knows alarm company valuations inside and out and can accurately calculate the worth of your business. While other brokers may only evaluate your business based on contracted revenue, AFS looks at the whole picture including service revenue and test and inspect revenue.
Work with a broker who understands that service revenue is an important asset and you’ll be able to sell your fire alarm business for top dollar. Give Rory a call today at (800) 354-3863 (personal cell) or complete this easy online contact form to get the conversation started and qualify for a free business valuation.
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