How Security Company Mergers and Acquisitions Work: The Seller’s Perspective

If you’re ready to sell your alarm business, you may be wondering what to expect and how to prepare. The following blog post will lay out some simple tips for security company mergers and acquisitions.

Defining Security Company Mergers and Acquisitions

Let’s begin with the definition of two key terms.

  • Merger: Companies consolidate functions and assets to become one united company.
  • Acquisition: A company purchases another company and its assets.

Consider which alternative best suits your situation.

How a Merger or Acquisition Works When You’re the Seller

Typically, the merger or acquisition process proceeds this way.

  • Your strategy: You’ll need to determine if you’re looking to merge or be acquired, the type of buyer you’d like, a price you’re looking for, and key parameters of the sale (for example, do you want to retain a portion of the business).
  • The value of your business:  In order to know what to sell for, you need to assess your company’s worth. This is a complex combination of many factors. A broker who knows the security alarm business can help you.
  • Your company information: This includes a company profile, in addition to a profit, loss, and balance sheet.
  • Accredited broker: Finding a trusted, accredited broker is very important. A great broker will handle all communication with potential buyers and be able to sort the “okay” deals from the “great” deals.
  • Letter of Intent: After providing information to potential buyers, your broker will secure a Letter of Intent (LOI) from a qualified buyer with a similar company culture. Exclusivity is assumed once the LOI is signed.
  • Buyer’s due diligence: This is the stage at which the potential buyer takes a thorough look at your business.
  • Negotiation: Your broker will negotiate price terms, and timing with qualified buyers.
  • Purchase agreement: Once you’ve drafted a purchase agreement with a buyer, you will review to make sure you understand and are pleased with the agreement.
  • Closing: You close the deal when you sign the final merger or acquisition agreement via e-signature.

Hire a Knowledgeable Broker

The security company merger and acquisition process can seem overwhelming to a business owner. This is something that many owners do infrequently. Maybe only once!

Most owners will want to have a knowledgeable partner working with them—someone who knows the industry as well as the merger and acquisition process. An experienced broker is the perfect partner.

Take care when selecting your broker. They need to be well-versed in business valuation and negotiation and be able to identify potential buyers. Most important of all, you need to be able to trust their expertise and advice.

AFS Knows Security Company Mergers and Acquisitions

When you’re looking for a partner who’ll help you sell your company, consider working with Rory Russell and AFS. We have expertise in the security company business and the mergers/acquisitions process. Our in-depth understanding of the industry helps you through the process and gets you the best deal.

If you have questions about your alarm monitoring operation or the mergers and acquisitions process, contact Rory Russell at 888-551-0476 or online to get the conversation started today. We wrote the book on selling your security alarm business.