8 Mistakes to Avoid When Selling Your Security Alarm Company

Alarm company owner upset over making a mistake in the sale of her company

When it comes to selling, most alarm company owners have a lot on their minds. From deciding whether or not it’s the right time to sell, to choosing how much to sell for, when to put the company on the market, whether to sell the entire company or just accounts, finding qualified buyers, selecting a lawyer and broker to work with… the list goes on and on.

With all that on the table as you embark on your journey to sell your alarm business, it can be difficult to hone in on the key factors that make for a successful sale, and even more difficult to keep your eye out for potential mistakes along the way.

To help sellers navigate the process of putting their alarm companies on the market, we’ve shared insight about the steps to take to sell an alarm business successfully. Our guide includes the steps to follow if you’re hoping to execute a successful and profitable sale.

But what about the mistakes you should be looking out for?

Here, we’ll delve into 8 important mistakes it’s in your best interest to avoid when you’re in the process of selling your alarm business.

Key Mistakes To Avoid During Alarm Company Sales

1. Putting Your Business on the Market Without a Succession Plan in Place

We can’t overstate the importance of succession plans when you’re in the process of selling your business or accounts. Having a strategy in place in terms of your exit and the continued growth of your company is incredibly valuable, both for you and for your company. It helps to ensure that you don’t make a panic decision and transfer your most valuable asset into the hands of an incapable successor. It’s also something many well qualified buyers look for when considering their options.

Not sure where to start when it comes to succession planning for your alarm business? Check out these helpful tips for successful alarm business succession planning.

2. Pausing Company Updates While Your Business is On The Market

If you’re planning to sell your alarm business in the near future, it can be tempting to stop keeping your company up to date. After all, you’ll soon hand over the reins to someone else, whose responsibility it will be to get the company caught up.

Though it may seem appealing to abandon your responsibilities, coasting through your last few months or years of company ownership can actually be incredibly damaging. It can ruin your prospects, hurt your chances at maximizing profit from the sale, and cause well qualified buyers to turn away. Read more about why keeping your company up to date is imperative, especially with an impending sale on the horizon.

3. Handing Over the Reins Before You’re Ready

For many alarm business owners, selling their company is challenging on a personal level. Handing over the reins and giving up control of something you’ve spent your life building can be a difficult thing to do – even if you have exciting things ahead.

Whether you’re moving on to another opportunity in the alarm industry, pursuing a new venture in another industry, or retiring altogether, it’s important to be sure that you’re ready to sell your company when you make the move to put it on the market.

Not sure you’re ready to move forward with selling your entire company? Selling some of your alarm accounts may be the right next move for you.

4. Selling Your Business at the Wrong Time

If you’re like most business owners and you’re hoping to maximize profit from the sale of your alarm company, timing the sale correctly is very important.

Keep an eye on the market and your finger on the pulse of industry trends. You’ll want to look for the ideal opportunity to sell, when there’s a seller’s market and a favorable capital gains tax rate. The Internet of Things has also made now a good time for many companies to sell.

5. Moving Forward with a Sale to an Unqualified Buyer

In your quest to sell for the right price at the right time, it’s important to consider WHO you’re selling to as well. Search funds and private equity can be appealing, but they can also present hazardous sale opportunities. Enthusiastic potential buyers can be convincing, but they’re not always the right fit. Don’t be tempted to move forward with a sale just because the timing is right. Finding a qualified buyer who is willing to pay top dollar is key to a successful sale.

Think about it this way: The person you sell to is going to be responsible for continuing the legacy of the business you worked hard to build. You want to be sure that person is capable of doing the job the way you’d like to see it done.

Here are some key questions to ask to determine if the buyers you are considering are qualified to purchase your alarm business.

6. Selling Your Business for Too Little

Knowing how much your alarm company is worth can be a challenge. Business valuations for alarm companies can be complicated, as the typical EBITDA formula is not accurate for businesses that generate a significant amount of recurring monthly revenue. Fire alarm business valuations can be particularly complex. As a result, many alarm business owners do not know how much their companies are truly worth and some end up selling them for significantly less than they should have.

If you want to avoid selling your business for too little, an important first step is to find out how much your alarm company is worth.

7. Choosing the Wrong Type of Sale

There are a number of different ways alarm company sales can be structured. Understanding the sale types and ensuring that you choose the structure that is best for you and your business is imperative.

Two of the most common alarm business sale structures are asset sales and stock sales. You can learn more about the pros and cons of stock sales and asset sales for sellers here.

8. Selling Without the Help of an Alarm Company Broker

Working with an experienced alarm company broker can help you avoid many of these mistakes – and others – when it comes to selling your alarm business. Having an ally on your side who knows the ins and outs of the industry can be incredibly valuable when it comes to selling for the right price at the right time to the right person.

Learn more about why you should work with an alarm company broker if you’re hoping to sell your fire or security alarm business now or in the future.

Avoid These Mistakes When Selling Your Fire Or Security Alarm Business

It is in your best interest to keep these errors top of mind as you approach the sale of your alarm company. Avoiding them will help you to ensure that the sale goes smoothly and is as profitable and beneficial for you and your company as possible.

Looking for some insight about selling your alarm business the right way? Wondering if now is the time to sell? Download our free eBook, To Sell or Not To Sell, for valuable industry insight that can point you in the right direction.

Interested in more insight that will help you mitigate risk as you approach the sale of your alarm company? Find some of our top tips for avoiding hazards and risks when selling your security business here.

Interested in working with an experienced alarm company broker to sell your alarm business? Give Rory Russell of AFS a call today at (800) 354-3863 (personal cell with 24/7 availability) or contact him online to get the conversation started.

With decades of experience and approximately $350 million in mergers, acquisitions and financing of fire, burglar and integration companies under his belt, Rory knows how connect you with well qualified buyers and sell your company for maximum profit.