When it’s time to sell your business, there’s a lot going through your mind. You may have questions about how the process works, certain expectations about what you hope to get for your company, and worries about your team’s future after you leave. A broker can help you sort through these questions and navigate the sales process.
But, not every broker will be a good representative for you and your company! Understanding how to prepare a business for sale, then negotiate the best price for it is an important part of what all brokers do. But, some brokers may not understand your fire and life safety business. If they don’t understand it, their business valuation could be based on the wrong business model type, and thus underestimate how much your business is actually worth.
To improve your chances of getting the offers you deserve, you should find a broker who has experience in the fire alarm industry. Here’s three of the main reasons that working with a broker with fire and security systems experience will improve your end result.
There’s a Difference Between EBITA and RMR-based Business Valuations
The two most common types of business valuations are earnings before interest, taxes, and amortization (EBITA) and recurring monthly revenue (RMR). EBITA is most commonly used for businesses that have a physical product, while RMR is most often used for businesses with a service-based recurring revenue model.
Fire and security businesses are almost always service-based, with a recurring revenue model. This means that an EBITA valuation would likely underestimate the true value of your business. A broker who understands this will use an RMR-based valuation, which will more accurately reflect the true value of your fire protection or security integration company.
Your Fire Alarm or Security Integration Team Has An Important Perspective Your Broker Needs to Understand
When you’re ready to sell your business, you may have more qualifications in mind for the next owner than simply offering enough money. You may be equally concerned with protecting your employees’ future career aspirations and benefits. Taking time to identify what types of buyers you would consider appropriate to take over your company will help your broker search through leads for the best options.
While some brokers may not support your decision to prioritize the wellbeing of your employees over a higher sales price, an experienced fire safety broker will understand this perspective. They will know that in our industry, it’s not uncommon for the staff to stay on board after a business sale. In fact, it’s often necessary for a successful transition!
The fire and security industry is relationship-driven, meaning that your company’s reputation is one of your most valuable assets. If you sell to a buyer who doesn’t maintain the same standards and relationships that you have built, it could damage your company’s reputation and negatively impact future sales. A broker with fire and security experience will be more likely to identify and vet buyers who will maintain or improve upon the relationships your company has established.
A broker with this experience will also understand that, to the right buyer, a company that already has solid management in place and stellar relationships with their customers is worth more money, as it is a safer risk.
A Broker that Often Represents Fire Protection or Security Companies Will Have a Better Network of Buyers
When you’re ready to sell your fire and security business, you want to find the right buyer as quickly as possible so you can move on to the next chapter in your life. Waiting for the right buyer to come to you could take months, or even years. While fire and life safety companies are in a great position now with the competition to buy businesses in these and related industries, too many options can also make it hard to identify the best choice.
An experienced industry-specific broker will have a network of pre-qualified fire and security buyers that they can reach out to on your behalf. This will help you avoid a long and drawn-out sales process, and get you the best offers from buyers who are already interested in fire and security businesses.
This also means your broker will know more about the buyers interested in your company. He will be able to tell you more about each of the leads, what other sellers’ experiences have been working with the potential buyers, and whether your business would be connected to other fire protection companies through the sale. A broker who has navigated many fire security sales transactions will understand what benefits each buyer has for your specific company.
Finally: When It’s Your Business, It’s Personal
Brokers who have never owned their own businesses will not be able to understand where you are coming from and the responsibilities weighing on you during this time.
Selling a business that either you or your family started, or that you purchased from a respected industry leader, is an emotional process. There’s a lot of pressure on you to sell the business to a good owner who will take care of the company and the customers. The mix of emotions this process can involve, the difficulties of leaving but also the excitement of moving on to the next opportunity or to retirement, is something only other owners who have sold their businesses can understand.
A broker who has been through this process personally before helping others through it will have greater empathy for your position and be ready to fight for you the same way he would have wanted a broker to fight for him. A broker who has sold a business similar to yours will even better understand some of the unique difficulties that are involved with selling a business in your specific industry.
As mentioned above, when you’ve worked in a service-based industry like security alarms or fire protection, you end up working with and around the same people for many years. Even if you are exiting your business, there’s still a desire to maintain your own reputation and respect the legacies of others in the industry as you exit. This is something a broker with fire and security sales experience understands.
When It’s Time to Sell Your Security or Fire Alarm Systems Business, Work with A Broker Who Knows the Industry
If you’re thinking about selling your fire and security business, working with a broker who has industry experience is the best way to get the offers you deserve. When it comes time to sell, don’t underestimate the value of finding the right partner who will help you through the process and ensure that you get the best possible outcome.
Rory Russell, managing owner of Acquisition and Funding Services, is a former security-business owner who sold his own business thirty years ago and then started helping his peers in the industry sell theirs when the time was right. With decades of experience working with both security alarm and fire protection companies, he not only knows your business better than other brokers, but also has all the right connections to find you a great buyer.
Contact him through our confidential form to start the conversation about your future today.