WHY I CHOSE TO SELL MY 32-YEAR OLD SECURITY ALARM COMPANY
I had a very successful, ongoing security alarm company in the Washington, DC area. I began to realize that our industry was going through a major consolidation and the “Big Boys” were making further inroads into my territory. I had a very loyal following of clients and ones that would stick with me to the very end, but that was not going to be good enough to survive and be profitable in the long run. As more companies entered the market, they were able to allocate huge sums of money towards buying their new client base. Their strategy was to get that multi-year agreement at any cost even if it meant luring your clients with new equipment incentives from your company.
Unfortunately, the general current business model for our industry is to get zero or $49 for the install and a monthly fee which was lower than what I was used to getting from my traditional clients. I saw the red flags and the handwriting on the wall. I did what any astute business person would have done; I extrapolated the future value of my company with its current value and concluded, given the parameters of this new business climate, it could be less than what I currently had. I decided to seek potential buyers for my hard-earned valuable asset. After speaking to several alarm business brokers within our industry, I realized they were not able to obtain any higher multiple of value than I could, and for the privilege of allowing them to broker my deal, they would be taking roughly 6%-10% of my money off the top as a commission and putting it into their pocket. I figured I could do just as well, if not better, by working out my own deal.
I did some homework and discovered a large local company as one of the potential companies to merge my accounts with. Not only were they financially qualified, had a great industry reputation and in the top 10 per SDM Magazine, but their headquarters was in my backyard. They also were a super-regional organization with multiple offices in the Midwest, Southwest and Eastern areas of the country. Additionally, the CEO is a well-respected leader within our industry.
My initial phone conversation with their acquisitions person was very professional and non-intimidating. I was invited to come and see their operations in Maryland. After hanging up the phone with the acquisitions person, I ran a quick calculation of my company’s value. Realizing that the longer my account base was going to be poached by the major players entering the market, and the more negotiating I had to do with my existing clients to maintain their business (the ones who at least had the courtesy to allow me to rebid for their business), the more I realized I could possibly hold on for a few more years, but it was going to be a struggle to maintain the high monthly revenue (and value), which I currently had. After many days of pondering about what I should do and wavering on the fence, I replaced my emotional feelings with my business feelings and decided the time was right to sell.
The Company not only made me an extremely reasonable offer with great terms but gave me the assurance that my customers would be handled in the utmost professional and courteous manner. Additionally, my employees would be evaluated and offered positions within the organization.
I must say, our transaction went smoothly, and the funds were available when promised. This Company not only lived up to their commitments but exceeded my expectations. Because of the successful execution with my own transaction, I accepted their offer with confidence to become Director of Acquisitions.
I encourage you, as a potential seller, to look at the big picture and make a good business decision and reap the financial reward of your hard-earned accomplishment in the security industry. Now may be a great time to take advantage of the value you have created through your years of hard work and business ownership. I can help you through the process from start to finish and put more $$$ in your pocket at the end as well as coach you along the way. Feel free to contact me anytime at 240-644-8332 to discuss your possible options.