In spite of the economic downturns and difficulties, Acquisition and Funding Services helped broker the sale of many businesses in the fire and security industries last year. While the economy and market may seem unpredictable still at the start of 2023, predictions point to a better year for M&A activity. That means now is the perfect time to prepare your business for sale, so you can sell when the market is strong.
We have a few posts to help you if you are just starting to consider selling your business, including our Checklist for Business Owners and a helpful guide to protecting your legacy as you exit. If you’re certain you want to sell but not sure this year is a good time, here’s a few reasons financial advisors think it is:
Opportunities to Invest in Stable and Essential Services Will Be Even More Attractive
With some predicting a recession this year and others hopeful the U.S. will avoid one, investors are looking for stable options. Rather than trying to hop on new trends or take risks on developing concepts, firms ready to buy want businesses that are guaranteed to perform. Companies that have a strong reputation, history of success, and offer services that will remain in demand are becoming even more attractive acquisition targets.
Fire and life safety companies offer all of the above to investment firms. Throughout the pandemic, fire protection services remained essential. Even while companies closed their doors to customers, certified technicians were allowed to enter and complete their safety inspections. Heightened interest in remote security meant even more business for total fire protection companies that could install and service alarm systems as well.
Most importantly, small businesses that demonstrated their value to the community by thriving through the last couple years caught the eyes of investors. If your fire protection company has a solid history, is well-respected in the fire safety community, and has remained solid or even grown in the last couple years, it will be a very desirable acquisition target this year.
Larger Companies Want Fast Ways to Expand Services
With a new year ahead, larger companies within various industry are ready to come back strong. For some, this means building momentum by adding new services. For others, this means rebuilding areas of their businesses after making budget cuts or layoffs during last year’s difficult moments. Many think acquiring the right businesses in their industry is the fastest way to achieve this and are hoping to do so this year.
For fire protection companies, this is only good news. If your company specializes in one area of fire protection, such as fire sprinkler or fire alarms, your company could be the perfect new division of a larger industry player.
Fire safety leaders in the M&A space such as Summit Companies and Pye-Barker Fire have used this strategy to expand their presence significantly over the last few years. Whether they use acquisitions to enter new territories, to add employees, or to begin offering full service protection to a region, life safety companies that are doing well remain hot targets for these industry leaders as they compete to expand.
While the Macroeconomy Suffered, Private Equity Firms Amassed Funds. Now They’re Ready to Act.
Private equity firms have been actively searching for companies to invest in since the pandemic hit. However, economic uncertainty kept many of them on the sidelines until now. This means private equity firms have money waiting to be invested and are actively looking for already successful companies to add to their portfolios.
As we said before, fire protection businesses that have a proven track record of success and expertise in the industry are attractive assets. In fact, fire and life safety companies continued to field competitive offers from private equity companies through the economic downturns of 2022. As the compelling reasons to invest in fire protection remain, interest in purchasing life safety companies is only expected to grow.
The fire safety M&A market is also hot right now because it gives private firms the chance to work with small to medium sized businesses to expand companies in their portfolios. The private equity firms that back industry leaders want their existing portfolio companies actively seeking new acquisition opportunities. And with the extra funds they’ve accumulated, they are ready to green light even more deals this year.
AFS Can Help You Sell Your Company for More in 2023
If you are ready to sell your fire and life safety business, AFS can help you navigate today’s market and sell for more! With over 30 years of experience, owner Rory Russell has helped life safety business owners secure great deals through many different economic times. He’s ready to do the same for you!