Selling Your Security Guard Company?

Enlisting a broker on your side ensures you know the market and make rational decisions

Deciding whether, when and for how much to sell a security guarding business that you’ve been building up over a period of decades has both financial and emotional ramifications.

No doubt, you have your own opinions about what your business is worth and how to go about negotiating the sale. And that’s fine – you should. This is potentially going to be the most consequential transaction in which you will ever participate.

But getting a second opinion – by bringing in a knowledgeable broker specialized in the security guard industry – helps ensure you don’t leave money on the table as you’re walking away with your check. After working so hard to grow your company for 25 or 30 years and making it successful, you don’t want to end up kicking yourself in the rear as you walk away because you’re experiencing seller’s remorse after it dawns on you that sold yourself short.

What brokers can bring to the table is a sophisticated knowledge of the current marketplace, the multiples involved and valuations of companies, as well as who the potential landscape of buyers are, and which ones would be the best to consider for your particular sale. Too often, owners of small to midsized guard companies take the first offer that comes their way because, heck, it sounds pretty good to them. But they haven’t done a market check, which the larger, often private-equity-backed buyer has, outsmarting them when it comes to valuation. A broker will protect you from being outsmarted.

In addition, a third-party broker can act as a buffer between the buyer and seller, helping to keep greater confidentiality about the business before the transaction is consummated. The seller understandably is going to be reluctant to tell a potential buyer about the details of their businesses, including potentially confidential information such as the types of accounts and profitability.

Brokers know from experience which cards to put on the table and which ones to hold closer to the security vest. And they act as a confidante for the seller, laying out the picture and the story to the potential buyer in the most appealing possible way.

A broker intermediary can also be a voice of reason for a seller, who understandably has an emotional investment in his or her company in addition to the financial stake. After growing a business for a quarter-century, it’s easy to get caught up in the emotions of the moment, not act rationally and not end up receiving full value. Someone who can take a third-party, objective view will help you avoid such an outcome.

When choosing a broker, it’s important to find one who’s a seasoned expert in the security industry and has a knowledge base when it comes to valuations. Brokers with experience in another sector, such as restaurant or retail, might have well-honed negotiating tactics and understand the process in a general sense, but they’re not going to have the specific industry knowledge required to get you the best value. They don’t know the buyers and they don’t know how much security guard companies are worth.

You should hire a broker who has not only worked in the security guard industry, but also has managed a large operation, has been on both sides of the acquisition process, and is a certified public accountant. In addition, you need someone who has been successful in representing sellers in security guard transactions.

Lastly, rest assured that the fee you pay a broker is going to be recouped many times over – it’s so small compared to the value you will gain. A broker with expertise in the security industry is going to know how to maneuver to get the best price for their sellers. A broker is going to get you a much higher price than you would if you went into the process on your own. Attempting to represent yourself in these transactions might be penny-wise, but it’s definitely dollar-foolish.

And that’s the bottom line. Believe me now, or believe me later when you realize you’ve walked away from the table with your pockets half-empty.