December 14, 2010
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Question:
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Ken,
I have an alarm company and an opportunity just came my way to buy the name and logo of one of my major competitors. The company selling it name and logo has been in the business for over 50 years and is a major player in the area, the company’s owner decided to stay in business but dismiss all the sales and installation staff and stop growing the company .
That being said I was offered the name and logo but I don't know what it would be worth. Do you have any knowledge of a deal like this being done before or has there been an alarm company sold in the past where they set a price on the name, logo or goodwill. I would not be getting any accounts just the name.
Please let me know your thoughts and I welcome the input of the companies that follow your daily emails.
Thanks,
Larry
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Answer:
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Alarm companies typically sell subscriber contracts based on a formula factoring in RMR [recurring monthly revenue] due pursuant to proper enforceable contracts, times a multiple which can range from 10 to over 40 times, depending on several criteria. But alarm businesses do share common valuable intangible property, such as name, phone numbers, logos, trademarks and web sites.
Obviously name recognition is a valuable asset for any business. Some names acquire recognition because they've been around a long time, others because of massive efforts to create brand name, and still others just because they have the right name for their product or services. There may be ways to quantify the value of a name and other intangibles, but I don't know those ways. I do know there is at least one service that puts a value on domain names and web sites, which I think is based on visits and hits within the site.
Others may have more to contribute on this topic - let's hear from you.