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Alarm Co. Mergers & Acquisitions Expert Sierra Consulting can help you buy or sell an Alarm Company

Q: What is my company worth?

A: Because the alarm business is unique, we determine the value of your alarm company based on its Recurring Monthly Revenue (RMR). While most other service businesses determine their value based on items such as profit, owners compensation, depreciation, etc. (known as EBITDA), if you were to use this typical service business valuation for an alarm company, you would realize a value of approx 60% less than if valued your company based on RMR. 

At Sierra Consulting we know this personally. Ron Stennes, Sierra Consulting CEO, owned and operated an alarm company for over 20 years. He purchased another company that was represented by a business broker who set the asking price valued as a typical service business -- at 50% less than if the company were valued by RMR!  (This company came with a fully functional UL Central Station!)

As an alarm business, your main asset is your RMR, which is sold at a multiple, from anywhere in the low 30’s to the high 40’s.  That being said, in most of the transactions we negotiate, the seller does receive additional revenue for the hard assets such as trucks, tools, inventory, desks and computers etc.  If there is real estate owned by the company we sell it separately, or lease it to the buyer because most buyers’ financing will not allow real estate to be included. 

The multiple is impacted by the quality of your contract, the quality of your company’s reputation, and, more importantly, the experience of your Broker and how hard they work for you.  

Q: Why should I use a broker?

A: A broker can act as an independent third party and ensure that no money is left on the table. We know through personal experience.  I sold my company in 2000. Prior to that, I owned and operated a very successful alarm company for 20 years. Through those years, I did acquisitions, but I never sold a company.  Consequently I did what most alarm company owners do and called a competitor directly and talked to them.  Because of the awkwardness of being competitors, I did not call more than one, and consequently, I left money on the table.

The more buyers you have looking at your company, the higher the price.  That’s just common sense, right? A broker can provide you with access to multiple buyers and can act as an independent third party -- preferable to the awkwardness of you calling your competitors directly. In addition, we provide the expertise and experience on what is acceptable from a buyer and what is not with regards to the contract and guarantees that you would provide.

Q: Why should I use Sierra Consulting?

A: Sierra Consulting is very unique in the services we provide. Our differentiators include the following:

1. We will personally come out to your office, meet you, and see your place of business.  We believe that we cannot adequately understand your business and serve you best if we haven’t met you personally or visited your office.  Selling your business is one of the biggest decisions you can make, and it can’t be done over the phone.
2. We provide a very complex informational packet (called a Sales Offering) that highlights all of the positive aspects of your company. The Sales Offering has everything that a buyer will need to make an aggressive offer.  We have had numerous comments that our Sales Offering packets are the most through and professional they have ever seen.
3. Unlike other brokers, we just don’t call one buyer and pass off your name and phone number.  We search our exhaustive database for the best fit and qualified buyer in your area, and, in the rare case that we don’t have more than one in your market, we will find another wanting to expand into your market area.  Most of our success has been finding aggressive regional buyers that would like to expand into your market place.  To date we have not sold one business to a national company.  If we need more buyers in your market, we will find them.
4. We have 30 years experience in the industry. We know business inside and out and speak the language. We have owned and operated an alarm company just like yours.
5. We always look out for your best interest throughout the process – from finding the right buyer, to doing the negotiations and contract review to closing,
6. We will get you more money for your years of hard work than you can on your own, WE GUARANTEE IT!

Q: Is there a buyer out there for me?

A: The simple answer is YES, and we can help you find them!…  We have one of the largest databases of qualified buyers, but occasionally we only have one. In those rare circumstances, we find new buyers.  We will always have more than one buyer interested in your company.

Q: I’m concerned about my competitors finding out I’m selling my company. Will you take this into consideration?

A: Yes. Sierra Consulting is very sensitive to this issue, and we recognize that all sellers are very concerned about this.  We don’t advertise your company for sale in magazines, or worse yet, on the Internet, as some other brokers do.  Potential buyers will not receive any information, not even your name until they sign a very restrictive confidentiality agreement.   Not only do we protect you before and during the sale, but also after the sale.  Unlike other brokers we will not publish your alarm company sale in order to attract new business, just not right.  We respect your privacy!

Q: I’m worried my employees will find out I’m selling my company. How do you help us with this sensitive issue?

A: We are very careful not to let any employees know that you thinking about selling your business or that you are for sale and we will never mention it to any of your employees without your permission.  In fact, this is one of reasons we selected the name of our company. The name “Sierra Consulting” does not say what exactly we do.  Potential buyers will not be allowed to call you or your office, all calls from the buyer are directed through Sierra Consulting.

Q: Is now a good time to sell my company?

A: Yes. Because the market is still good and financing is readily available to qualified buyers, this is a great time to sell.  There has been some talk that multiples may experience a move lower in what’s being paid, but we have yet to see this.  Perhaps the biggest reason to sell now is the capital gains tax rate.  Most of the money you will gain from the sale of your company should be taxed at the capital gains tax rate, which is currently at 15%.  A few years ago it was 28%, and the current administration is talking about raising it to the old rates if not higher.  If this were to happen, it could mean that a sale after a rate change could cost a seller a 5 multiple difference, or $100,000’s of dollars lost.

Contact us to get started with your free company valuation today!