Creating an Exit Strategy: How to Develop an Exit Plan for Your Security Business

Businessman with maze concept of decision making when approaching an alarm business exit strategy

When you’re in the midst of running a successful and profitable alarm or fire protection business, chances are developing an exit strategy is not top of mind. However, many alarm company owners learn the hard way that they should have spent time devising a strategy for ultimately leaving the business long before they did so. 

So what do you need to do to craft a successful exit strategy? How can you put together a plan that will enable you to exit your business smoothly and transition into the next stage of your career – new endeavors or retirement – without putting your business or yourself under stress? 

We have a handful of tips and suggestions to help you create an exit strategy you can feel confident about, whether you’re planning to hand over the reins to new management in the near future or down the road.

Developing an Exit Plan: Preparing to Sell Your Security or Fire Protection Business

There are a handful of important steps to take when it comes to making preparations for exiting a security business. 

Explore Your Options

Understanding your options when it comes to exiting your organization is very important, and is something you can begin working on long before you’re planning to leave. 

Mergers and acquisitions are common options for alarm business owners who are ready to step down. Appointing new leadership within your organization, or passing the company to a family member are also options. You’ll want to thoroughly analyze what will be best both for you and for your company so you have a strong sense of the direction you’d like to go in when it comes time to make your exit. 

Understand the Industry

In addition to exploring your options for exiting, you’ll also want to have a solid understanding of the current state of the industry, as well as where things are headed. 

Is now a good time to sell your business? Should you stick it out for a bit longer so you can sell for a higher profit margin? Is it worth it to upgrade your business at this point, or is it more advantageous to exit? These are things definitely worth considering as you weigh your options and develop an exit strategy – and getting the perspective of an industry expert can be hugely advantageous.

Connect with a Security Business Broker

Speaking of industry experts, it’s never too early to bring in a security industry business expert to help you gain a solid understanding of the industry and your options. An alarm business broker can be a great ally, even ahead of when you’re planning to sell. 

Another benefit of working with an alarm company broker is that he can share insider insight regarding what’s going on in your industry, plus let you know what’s going on in the world of acquisitions and mergers. Additionally, he can connect you with potential buyers and help you find a good fit for a sale or merger when the time comes.

You can learn more about the advantages of working with an alarm business broker here.

Assess Your Goals (For Yourself and Your Company)

Why are you planning on exiting your business? What are you hoping to accomplish on a personal level? What are your hopes for your business after you’ve handed over the reins? Are you hoping to take care of your employees after your business has sold?

Additionally, what financial goals do you have – again, both personally and for your business? 

Take stock of your goals for yourself personally and for your organization to really understand how they will align with and inform your exit plan.

Discuss with Shareholders & Investors

When it comes to both establishing goals and setting up an exit plan, you’ll want to connect with shareholders and investors, if you have them, to make sure that everyone is on the same page. 

It’s also important to keep these parties informed of your plan to exit the business. You don’t want to blindside key stakeholders with the announcement that you’ll be stepping down. It should not come as a surprise, so do your best to be transparent and honest with shareholders, investors and others with a vested interest in your alarm or fire protection business business on an ongoing basis. 

Continue Growing Revenue & Profitability

If you want a profitable and successful sale, you’ll want to be sure that you continue to focus on company growth and profitability, even though you know you’ll ultimately be handing over company control to another individual. 

In addition, you’ll want to be sure you’re continuing to keep your business up to date despite the fact that you’re also devising an exit strategy. 

You can learn more about the advantages of keeping your company up to date even when planning to sell here.

Get Your Finances in Order

With your goals in mind, you’ll want to take stock of the current financial situation, both personally and within your organization. On the business side of things, you’ll want a thorough understanding of your business’ current financial status as well as a solid sense of the value of your organization.

Need help with an alarm business valuation? This resource about calculating the value of your security business, along with a valuation from AFS, is a good place to start. Contact AFS at 800-354-3863 or contact AFS online to get the valuation process started.

Still not convinced you need a valuation at this point? Find out why accurate business valuations are so important for organizations in the alarm security industry.

Keep a Finger on the Pulse of Your Organization

Once you have an understanding of the value of your organization, as well as your goals both financial and otherwise, you’ll want to keep a finger on the pulse of your company. How are you doing in terms of keeping profitability and growth up? Are you making progress towards the goals you’ve established? Is your company generally healthy – and will it likely stay that way as you’re moving towards exiting?

Regular reporting can really help with this. Learn more about how solid reporting habits can benefit your alarm business now and in the future.

Select New Leadership and/or Find a Buyer

This seems like a given, but finding new leadership or keeping an eye out for a well qualified buyer is something that should be top of mind well before you’re ready to make the move to exit your organization. 

Working with a broker can help you to begin developing relationships with potential qualified buyers earlier, which can help you to feel more comfortable and confident as you’re approaching your exit. 

Curious about how to go about finding qualified alarm business buyers? We share suggestions for finding buyers for your alarm or fire protection business here.

Ready to Develop Your Exit Plan?

There’s no better time than the present to start planning for your future. If you’re ready to start work on developing an exit strategy to put yourself and your company at an advantage when the time ultimately comes for you to step down and pursue what’s next, get in touch with AFS today. 

Give Rory Russell a call at 800-354-3863 or contact him online to get the conversation started today. 

Curious about working with Rory Russell of AFS when it comes to developing an exit strategy? Check out these 5 advantages you’ll gain by working with AFS when it comes time to sell your alarm business.

Wondering where to start when it comes to succession planning? Find some guidance when it comes to alarm business succession planning here, and get the scoop on creating a fire protection business succession plan that protects your legacy here.

Worried about making mistakes when it comes to selling your alarm business? Here are some common, yet highly avoidable, mistakes to watch out for as you’re approaching an alarm company sale.

Editor’s note: This content was originally published in 2021 but has been updated as of July 2022.