Selling and Valuing Security Integrators

Author: Brian Karas, Published on May 12, 2017

This ia a tutorial in how to (1) determine your security integrator's value and (2) to sell your security integrator. If you own an integrator, want to buy one or even are thinking of starting your own one day, this is a must read.

We spoke with an M&A advisors Final Image and Reitman Consulting, both specializing in security integrator sales, about factors that impact the valuation of security integrator businesses.

This post covers:

  • How much an average security integrator is worth / can get in a sale
  • How much the sales price is driven by RMR
  • How to know when it might be time to sell your business
  • How long it takes to get a sale completed
  • How much it costs to hire an M&A advisor and prep for sale
  • What to expect after the sale

**** ** * ******** ** *** ** (*) ********* **** security **********'* ***** *** (*) ** **** **** ******** **********. If *** *** ** **********, **** ** *** *** ** even *** ******** ** ******** **** *** *** ***, **** is * **** ****.

** ***** **** ** *&* ************* *************** **********, **** ************ ** ******** ********** *****, ***** ******* **** impact *** ********* ** ******** ********** **********.

**** **** ******:

  • *** **** ** ******* ******** ********** ** ***** / *** get ** * ****
  • *** **** *** ***** ***** ** ****** ** ***
  • *** ** **** **** ** ***** ** **** ** **** your ********
  • *** **** ** ***** ** *** * **** *********
  • *** **** ** ***** ** **** ** *&* ******* *** prep *** ****
  • **** ** ****** ***** *** ****

[***************]

Valuing ** *********** ********

* ***** ******** ** ********** ***** ***** ** *.* ***** annual *****, ** ** ******, *** ** ******* *********** ********. For *******, ** ********** *****, ***, $** ******* ******** **** a **% ($*,***,***) ********* ****** ***** ******* * $* ******* sale (* ***** $*,***,*** ********* ******, ** *.* ***** $**,***,*** revenue).

* **** ******* *********, *** *** ****** ** ********* ******* would **** ** *** ***** ** ** *** * ******** of *** ********* ****** ** * ******** (** ******* *-** times) **** ****** ********* ****** ****** ***** **-**% ** *******.

******* **** ***** ***** ****** **********:

  • ****** ********* ******* ******* ********** (******* ** **** ****** *****)
  • ******** ******** **** ****
  • **** ****** ****
  • ****-*********** ****** ** ***** ** ******** *******

** *** ********, ***** ***** ****** *********:

  • ***** ** ********* *****/****** **** ** ***********
  • **** ** *** ********* (**** ** ******** ********* *** ********** annual *****)
  • ********* ** ******* ********** (** *** *** ** **** **** business ** * ****** ** *******)
  • ********** *** ******* (**** **** ~**% ***** *******)
  • **** ********** ** ******* **** * **** ***** ****** ** customers
  • ***** ******* ** *********

RMR ****** ** *****

*********** **** ****** *** *** **** *** *+ ***** **** of *********** **** ****** ***. *** ** ********** ****** ******* for *** ********, *** ** ** ****** **** ****** **** project ***** ***** **** ******* **** ** ****** ************, ***** customers *** *** ************* ********* ** *** *** ****** ********.

**%-**% ** ******* ** *** ** ********** * ******* **** in ***** ** ******** ********** ********* *** **** ******** ***** valuation. ******* ** *** *********** **** *** **** *% ** revenue **** *** *** ** **** ** * ******** ************** for *** ********.

******* ** $*,***,*** ** *** ******** ** **** **** ********* and ***** **** **** **** ******* $*,***,*** ** ******* *****, integrators *** ****** ** **** ***** ******** ** *** ****** need ** *********** ** ******** *** ***** ** *******.

*** ********** *** ********** *** *******, **** ***** *****, *** to ******* ******** ***** ** ******* ************.

*** *** *** ** ****** *******, *** *** ****-******/***-**** ********* like ***** ********** **** ** ****** ****** **** *** *** lower-margin ******** **** ******** *****, **** ** ******* **********.

Factors **** ***** *****

**** *******, **** ** ********* ***** ** *** ******* *** obvious *****-********, ******* ***** ****** **** ********** ****** ***** **** may *** ** ** ********.

** * ***** ******* ** *** *******'* ******* ***** ********* from * ***** ****** ** ********, **** ******* **** ********** be ********, ** *** **** ** ****** *** *** ** those ******** ***** **** * ***** ******** ****** ** *** business. **** ** * ******* **** **** ***** *********** *** have *** ** * *** ***** ******** **** ***** * significant, ** **** ****, *******.

********* ** ********* ****** ** ** *****, ******** ******* ****** that **** ********* ****** *** "**** ********" ** *** ********. This ** *** ** *** **** **** **** ********* ********* comes ******* ******* **** * ***** ******* ** **** ********* will ** *** ** ****, ***-**********, *******, ** ********* ***-********. It ***** **** ******** **** *** ********** ** *** **** to ******** **********, ** *** **** ******* ********* *** * project **** ***** **** *******. *** ***** ******* *********** ****** ensure **** **** *** *** ******** ****** ** *** ********* on ***** ***** ** **** *** ******** ** **** ***** company.

Individual ******** *** *** ******* ******

** ***** ***** *** ****** *********** **** ** *** ***** sold, *** ** ********** ******* ***** ** **** *** ***** shares ** ***** ** ****** ** ****** * ********* ****** that ********** **** ***** *** * ******* ***** *** ***** share, ********* ** *******. *** *******, ** *** ******* ** valued ** $*,***,*** *** ***** ** * ****** ******* *******, and *** ****** ***** *** ** *** ******** **** **** likely ******* * ***** *** **** **** $***,***. *** ******* for **** *** **** ***** ******* ****** **-**, ***** *********** ****** **** ********** **** *** "******* ****", and ** *** **** * **** ******** ****** *** ********** worth **** **** **** * ******** ** *** ******** ** sold ***. ** ***** *****, *** ********* **** ** *** a ******** ***** ** * ***** *******.

When ** *** ***** **** ** ****

** **** ******** ** ******** * ******* *******, ** *** be ** ********* **** *** **** ***** *** ******* ** far ** *** *** ** *** ******* *************. ****** ******* points ********* **** ****** * *** ******* *** *** ******* in ****** *****, ****** **** *** **** ** ****** ** other ******* **** ************* ** ********* *******.

* ******** ** ********* *****, ** ****** ********* **** *** significant *** **** **** **** **** ** ******** (>* ****) can **** ** ********** * ******** ********* **** *** *** a ********* ********* ** ** * **** **** ** **** a ****.

*********** *** **** ***** *** ******* ****** *** ******** **** indicates * **** **** ** *** ***** ******* ** *** sale. ** ***** ************ *** ***** ****, ****** ******* ** nationally, ** *** ** ********* **** ********* **** ****** ** capital *** ****** ************ ** **** ***** ** * ***** of ************** *********.

****** **** ** ***** ** *********** *** **** ******** ** is **** ** **** *** *******, *** ** **** **** more *** ******** ******* **** ******** ****. ** ******** *** see ********* ** ******* **** ******** **** ***** ************* ********** to ****** * ******** ******* *******. ****** ***** ********** ** this ****, ****** ** *** ** ********** ** ****** ****** the ******* ******* **** ** **** ** ******* ** **** afloat.

How **** ** ****

********** ** ********** **** **** *** ****** *******. ***** ***** recommended *********** **** * ***** *****, *** **** ** **** but ** *** *** ******** ** *** **** ******** ***** for ******* *********. ***** *** *** **** ******* ** *** company ** **** ******* *** *** ****** ** ******.

************ *** ******* *** ***** * **** ** ******* ** the *********** **** ** ******* *** ******* ** *** ******. Companies **** ***** ***** *** ** ***** ** **** ***** as *********** ** ** * ***-**** *** *********. **** **** identify ********* ******** **** *** ******** ***** ** *** **** time ** ******* **** ****** ******* ** ********* *********.

*** ******* ** ******* *** ******* ** *** ****** *** completing * **** *** **** *-** ******. **** ****** **** to **** **** ********* *********, **** **** **** ** ******** their *** *** ********* ******* ** ** ******* ********** *** come ** **** * *********, *** **** ********** *** ****** sale.

Advising / *********** ****

** ********** ***** *** ********* **** ***** ******** ** ***** own, ********* ** ***** ********* ********** *** ***** ****** ** prospective ******.

***** *** *&* ********, **** ***** ***** *** ******* **** help **** *** *******. ******** **** *****:

  • ***-**** *** ********* ******* **** ******* *** ******** *** **** up **** ******** *** *********** *** ********* ******* ***** **** typically **** $*,***-$**,***.
  • ********* ** "**** ****", ***** ** * ***** ***** **** on *** ******* ** **** ** ********* ********* ***** *** company. **** ******* *** ***** ******* $**,*** ** ***** ** complete.
  • ******* ******, ******* **** ************, ******* *** ****, ***. ********* is ******* ** * ********** ** ******* ***** ***** (******* from *-*% **** ***** ** **** ***** *** ****** ***********).
  • ************ *** ********* ******* ** ***** *** ********* ***** ** is ********* (*** ********, ********* ** *******).

Anyone *** ***** * ********

*********** ******* ** **** ***** ******** ****** ** ***** **** there ** ** ****** ********* *** *********** ** ************* **** provide ******* ********** ** **** *****. ***** *** *************, **** as *********** ******* ** ************ *********** ********* ** ******** *** ****** *********** ** ******* ********** *** ***** ******** in * ***** ****.

Post-Sale ************ / ****-**** / ***********

****** *** ********** ***** ** *********** ****** ****** ** ** required ** **** ** ***** *** ****. *** ********* *** considered ** ** * ***** **** ** *** ***** ** the *******, *** **** *** **** ** **** *** ******** is "******".

** **** ***** *** ******** *****(*) **** *** ** **** in **** **** *** **** ******, ******* ******* ** ****-*** over * *-* **** **** ****. ****** **** ****** *** owner(s) ***** *** * ****** **** *** ********* *******, **** their ****-*** ******* **** *** **** ** ************ **** **** agreed-upon ****. ****-**** *** ***** **** ** *********** ******* **** continued ****** ** ************* ** *** *******, *** ** ***** targets *** *** *** ***** ********* *** ******** **** ** adjusted **** ***********.

[****: **** *** ********** ********* ** **** *** ******* ** 2017 **** ******** ******* *** ********.]

Comments (10)

Undisclosed Integrator #1

07/21/16 04:12am

****** *** *** ****. **** ****** ****** *** *** ** course ** ******* ** *** *** ******. ***'* *** ***** a **** ******* ******* ** *** ****** * *?

**** ***** *** *** ** *** ******* *** ****** *** a ******** ******* ***** ********** ** ****?

John Honovich

IPVM | In reply to Undisclosed Integrator #1 | 07/21/16 07:02am

**** ****** ****** *** *** ** ****** ** ******* ** the *** ******. ***'* *** ***** * **** ******* ******* is *** ****** * *?

** ** *****, **** *******.

****'* * **** ***** ****** ** *******. ***** ***** ***** an ******* ****** ***** *** *********** ** **-**% **** ** average ********* ******** ** * - * ***** ******, ***** is *********** *.** *******. **** ** ********** **** **** ** have **** ** ****.

****** *** **** **** **** ******* *** **** ** ******** more ** ********** ******* (*.*., *** **** *** *** *** owner *** ***** ****** **** ******** / *******).

****, * ******* ******** ** ****** *** **** ****** ** understand **** ** ****** ***. ***, ** **** *****, ** acquirer **** ********* ********* ***** ******* *** ****** ********* ***********.

Undisclosed Integrator #1

07/21/16 08:38am

"** **** ***** *** ******** *****(*) **** *** ** **** in **** **** *** **** ******, ******* ******* ** ****-*** over * *-* **** **** ****. ****** **** ****** *** owner(s) ***** *** * ****** **** *** ********* *******, **** their ****-*** ******* **** *** **** ** ************ **** **** agreed-upon ****"

**** ****** **** * *** ****. ***'* *** ** **** a ******* **** **** $*** ** ***** *** **** **% profit **** * $**** ***** ******.******* ***** *** ** ****** at $*.**. ****** ***** **** *** **** *** * ***** and **** **** $****. ***** * *****, *** ******* ***** have **** $*.** ** *** ***** ** ** ****'* **** (that's ** *** ******* ** *** *******), ******* *** ***** with **** ** *** ** ******* ********* ***** ** ** getting *** ***** ** *******. **** ** * ******* ****? Would *** ****** ****** ** ********** ** $*.** ** ** was ***** ** ****?

Thumbnail brk1

Brian Karas

IPVM | In reply to Undisclosed Integrator #1 | 07/21/16 06:27pm

* **** **** ******** ** ***** *****, *** **** *** their ***** ********* **** ********:

*** **** ******* ** **** ** *** **** ** *** sale - *** ***** ***** **** ******** ** * **** amount ** *** ******** ***** - *** $* ******* ** this **** - ***** ** *** *** ** ******** ******* return. ** ******* - *** ******** ** **** ***** ** a ******** ** ******* ** **** - *** ** ** crystalizing *** ***** ***** **** *********. **** * ***** ***** be * **** ******* - ** ***** ********* *** * shorter ******* ****** ** * ** * ***** ***** ********* the ****.

******* *** ** **** ** ** ** **** *** ******* concept ** ********* **** ** ****** ** * ********* ****** number *** ******. ** - ***** ***** ******* ** ***** 4 * = $* *******. ****** ***** * ***** = 9 *******. **** ** ********** ** * ******* ** ***** plus * * **** ******* ** $*.* *** ****.

Tom Burns

In reply to Brian Karas | 07/24/16 10:46pm

** *** ** **** **** ** *******:

*** ** *** **** ****** ******* *** * ****** **** push *** * ****** ****** ******** ** ****** ******** (*.*., "Yes **. *****, *** ** ******* ** ***** **** ******* the *** ****** ****** **** ** '*' *** **'** ******* at '*'). ** ***********, ****'** ***** ** * **** ***** with ** *********** **** *** ******** ***** ** ******** ****** upon ****** ****** ******* *** ********.

*******, ***** **** ****** **** ******* ** *** **** ** yrs ** ******* *******, ********** **** *** ******** ******* ** to ** ********** **** *******- *** ****** ***** ********. *** often *** ****** **** ****** **** *** ********* ******* ********** impacted *** ******** (******** ********* *********, ******** ***** ******, ***..) and *** ** ** ** ***********. **** *** ** ********* for **** *******.

***** ****** ** **** ****.

Thumbnail picture of guitar with chris

Christopher Freeman

In reply to Brian Karas | 05/12/17 02:18pm

******** **** , *** ***** ********

Thumbnail picture of guitar with chris

Christopher Freeman

05/12/17 02:16pm

***** **** *** **** *** ********* ******, *****, *** ********* to ******** *** ******* **** * *****

**** **** ** **** ***** , ** *****, **** *********** signatures.

******** **** ***** *******'* ** ********'* *** *******.

*** ****** *****, *** ********* ***** , ** ** **** close **** *** *********** *** ***** ** *** ***** ** the ***** ********** *******

Thumbnail marty2016

Marty Calhoun

IPVMU Certified | 05/12/17 02:44pm

**** ***********, ***** *** *****!

Mitch Reitman

05/13/17 06:06am

*'* *** *********** *** * ********** ***** ****** ** *** article, *** * ****'* ***********. *****, *** ***********, *** *** quotes **** **** *** ********* ** * ************ **** * gave ** *** **** ** *** *, ****. **** * actually **** *** **** ** ********** **** * *********** ****** of *** ****** ******** ******* *** *** ** * ********, then ********* *** ****** **** *** **** **** **** ***. The ************ *** ** **** **** *** **** *** *********** to ******* ****. *** ***** ***** ** **** *** ********* are *** **** ** ******* *** **** ** *************. *** source *** **** ** * **. *** ***** **** (****** v. ************). *** ********* ** ******* ****** **-** ****** ** the ***' ********** ** ***** ** * ******* ** ***** as "*** ***** **** * ******* ***** ***** *** ** a ******* ******."

**** ***** *** ****** ******** ** ***** * ******* ***** upon **** **** ** ****** ***** *** *** *******:

************** ** ******** ****** - **** *** * ****** *******, again ***********, *** ********** ****** ** **** **** ** ********** and * ******** ** *******.

********** ****** ******** ****** - ********* ******** ** **** **** are ********** **** ** ********* * *** ******* *****.

** * ****** *** * *********** ** *** *** *** Conference **/*** *** ******** ** ****** **** *** *** ****.

****** *** **** ******** ** ********* ** ** ********** *** feel **** ** ***** ** *** ** **** **** **** any *********.

Undisclosed Integrator #2

05/13/17 01:55pm

*-** ****** ** *** **** ** *** *********** ** **-*** monthly ***. **** ***** ******** *** **** ****** **-** ******* RMR. ***** ******* *** ****** *** ** **** ** ******* manufacturer ****-- ******* * **** *** **** **** *********** ***** 15mm+ **** ****** ** **** ***** ******** **** **** **** with * ***** **** *** ******** *****.

* ******* **** * ****** ****** ***** *** ******* *********** market ** ********* ***** **** **** * ****** ** * larger ***** **** ***** ****** *****.

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