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Comment on valuation from Nov 13, 2103 article
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Ken
As always, Your “Legal E-mail News Letter” is educational and brings quality information to your readers. I have a list of about 80 Questions that I like to ask “Buyers or Sellers”. A Good Business Broker is usually working for 2 people, The Buyer and the seller. You have to have a good Broker who knows that they are going to get the best price for the Seller. 95% of the time the seller is paying the Broker to get the best job done for the seller. They need the Best price and the best terms and conditions. The following are just a few of the questions to be asked, or other good information the Buyer & seller both need to have.
1. Do you own the phone lines that your Alarms are connected to in the Central Station? This usually always effects the Purchase Price. Many buyers will reduce their offer by 5% to 10% if they have to do the reprograming. Make sure you double check with your Central Station, about your status. We find in many cases a Central Station has put other companies on your phone lines, These are legal issues Ken can help you with. Check and make sure the agreement with your central Station is OK with Ken.
2. How Many Sales People do you have? What is their Production level? How long have they been with you? How are they compensated? It adds to the value of your business when you can show that the Operation side of your Business is creating large Numbers of accounts. A good Business Broker is usually working with many Alarm-Security owners for 2 or 3 years before they are ready to sell. The right Business Broker can show you how to improve the value of your Business, in a short period of time.
3. How Many New R.M.R. accounts do you add each month? How many dollars of R.M.R. do you add each month on the average? If you add 3 to 9 accounts per month, that has a Big value. In most cases each of those accounts are worth a $1,000 - that is $3,000 to $9,000 per month of real income that is not on your Balance sheet or your P & L Statement. Most Buyers do not want to pay you for that asset Value.
4. A Buyer always wants to know, What is your Average R.M.R. per account? This is one of the first “Things” they want to know. You always want to improve this Number. If you are over $30 per month your Business is worth more, If it is under $30 it is worth less.
5. The Best Buyers now making the best offers are asking a lot of questions about each of your profit centers. Make sure you have the right answers, that make your Business have higher Gross sales and better net profits, which will get you a better offer. I have a list of about 50 questions most buyers want answered. Most of these question are not asked on day one, but as you go thru the process, the questions will all have been asked. You need your Broker to bring you 5 or more offers, the Broker gets most of the work done for you. They want to make sure you get the best offer that will not be changed at the settlement table.
Dennis Riley
cell 240-462-8220
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Response - Dennis can now be found on The Alarm Exchange under the Broker/Consultant category
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Webinars
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December 4, 2013 12 noon EST Register here: https://attendee.gotowebinar.com/register/4919260455763006721
Title: 10 Things Residential Security Alarm Companies should consider BEFORE entering the world of Commercial Engineered System Fire Alarms
Presented by: Bob Williams, President of Briscoe Protective Systems and his Management Team.
Briscoe Protective Systems has been in the industry for 35 Years and has made the transition from a Residential Alarm Company in the late 70’s to a Engineered System Fire and Security Company that is an SDM Top 100 Company. Find us on the web at www.BriscoeProtective.com or on LinkedIn under Companies, Facebook and Twitter@BriscoeProSys
Description: There is a big difference between installing Residential Fire Systems and Commercial Engineered Fire Systems and there are “Key Factors” that Security Company’s should consider before attempting to go into this lucrative but challenging market.
Who should attend: Alarm company owners and fire techs.
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