In the alarm industry, many dealers have taken a traditional approach to realizing the equity in the companies they have built. These dealers spend years, maybe even a lifetime, building their companies, creating a solid portfolio of customers, until the day comes to retire or pass the business on. Then they sell their entire account portfolio – sometimes their entire company “lock, stock and barrel” – to a purchaser, in what is likely a once-in-a-lifetime transaction.
We’ve done numerous traditional deals with well-respected dealers who have decades of experience in the industry and we know that the traditional account acquisition is still a good model – for some dealers. However, a recent trend in the industry suggests that it’s not the only model. Some dealers are taking a different approach, selling only a portion of their account portfolio, to raise capital for a variety of business and personal reasons.
While many dealers use the infusion of capital to continue to build their business into a profitable, high-value business, others use the opportunity to sell only a portion of their accounts to further other strategic business objectives. Some dealers sell a selected segment of their portfolio to divest themselves of accounts that are no longer in their core business, such as accounts located in a certain geographical area or those that are not aligned with their main market focus. By selling these selected accounts, dealers can both realize the full value of the accounts and use the capital they generate to grow their core business. In the alternative, some dealers sell a portion of their portfolio to generate capital to take their businesses in new and different directions, allowing them to enter new regions, markets or service sectors. Partial portfolio sales also allow dealers to make capital improvements on buildings and facilities, to purchase new assets, and to invest in new technology and training, for themselves, and to meet customer demands for new products and services.
Of course, some dealers want liquidity in order to meet personal or family financial commitments, or to realize personal goals, make alternative investments, or start to grow an unrelated business. Sales of a portion of their alarm portfolio can enable these dealers to access some of the equity in their companies without a complete exit or sale of their entire portfolio.
Perhaps you have business or personal objectives and could use some capital. Or perhaps you’d like to know more about the alternatives available to you. Request a business advisory conversation, click
here to learn how we can help you.
