Barnes: "Generally, there has been consistent interest in the industry from a consistent mix of investors. The recurring revenue component and the market's sustained growth during the recession have helped to keep the industry attractive to investors. The impact of the recession however has made investors more conservative with an emphasis on investments that are more proven and less risky."
Schmidt: "The physical security space has always experienced strong consolidation economics, which have led to consistent consolidation interest from the leading industry companies. What has changed over the past six years is the number of financial buyers, mostly private equity firms, which have discovered the great opportunities that exist in the security industry. In addition to significant capital, these private equity firms bring additional resources and discipline to the industry."
Davis: "The types of investors who have come into the industry over the years have not changed dramatically. They do not have a high degree of risk tolerance and are looking for stable, cash-flow businesses. Many have come out of the cable, satellite dish or telephone industry and understand RMR. They are looking for a large platform company to get established in the industry. Today's investors may be younger or even smarter but at the end of the day, they're interested in a good operating company and that has not changed."
Tips for Selling Your Company
10 Steps for an Easier & More Satisfying Experience
1. Put Your House in Order: Make sure all contracts, financial and management documents are current and accurate. Be able to explain your metrics.
2. Know Your Strengths: Don't inflate or overestimate your capabilities. Develop a preliminary "elevator message" that describes who you are and what you do best.
3. Hire Professionals: The sale of your business is too precious to leave in the hands of a friend or relative-no matter how well-meaning or attractive their offer.
4. Create a Presentation: A compelling presentation summarizes the company's capabilities and helps the broker pre-qualify candidates. In some instances, it may be advantageous to tailor the presentation to a specific buyer.
5. Keep Opportunities Interested: Work with the broker to answer all questions from qualified parties immediately and honestly.
6. Manage the Bidding Process: To remain fair and open, delineate the bidding process to allow sufficient time for the bidders to make decisions but at the same time moves the process forward quickly.
7. Close the Gap: Select the best candidates from the bidding process with whom you will continue negotiations. Now is the time to put your cards on the table as to what will make or break the sale.
8. Make the Decision: Select the offer that best suits your needs.
9. Submit to Final Scrutiny: Because the advance preparations were detailed and comprehensive, due diligence should be relatively fast and painless. Be prepared to offer any additional requested information.
10. Finalize the Sale: A memorialized Letter of Intent is signed. Develop a transition plan with the new owner and agree on how the plan will be communicated internally.