Buyers and sellers, learn the secrets of the deal with Graybeards new Information Points
— Ron Davis, September 2009
Hello, my name is Ron Davis, and I’m Managing Partner of “the Graybeards,” a firm that does acquisitions and mergers, exclusively in the alarm industry. In the last 10 years we have helped dozens of alarm companies and their owners cash out, profitably, with expectations either met or exceeded. Along the way, we learned some fascinating facts about how to prepare an alarm company for eventual sale. Conversely, these facts can help you if you’re a buyer of alarm companies, because, believe it or not, both interests — buyer and seller — come together at some point in a transaction. During the next eight weeks, we will be sending you a series of INFORMATION POINTS about what we’ve learned in this sector of the industry, in an effort to help you, whether as a future seller or buyer.
Everything you need to know about buying and selling an alarm company
In the coming INFORMATION POINTS, we will be inviting leading industry experts to give their opinions about the whole process of buying or selling an alarm company. It’s a fascinating process and we hope you will find it as interesting and educational as we have. By the time we have sent you the last e-mail in this series, you will likely be much more knowledgeable about this process of buying or selling an alarm company.
Unfortunately, and it is the nature of the beast, at this moment we don’t know whether you’re a buyer or seller. Just like most other companies in the industry (as well as almost all other industries), we are confined to mailing this information, via e-mail, in the hopes of hitting our target market right on the head. If, for some reason we’ve missed and you are receiving this in error, just ask and you will be taken off our mailing list… permanently. It’s not our intention to be intrusive…but rather helpful.
And now, here is, in its totality, the first great idea in successfully completing a transaction:
To paraphrase a lesson lawyers tend to relay to their clients, think about this: “The seller who represents himself in a transaction involving the sale of his company, has a fool for a client!” That’s not to say that everyone who goes into a transaction without good advice gets taken, but when you’re a seller, the likelihood is you’re only going to sell a company once. And an even greater likelihood is that the buyer will have done this at least once, and is more knowledgeable than you, more experienced and certainly knows a few more “tricks of the trade”. So here’s the idea: Surround yourself with the three best experts you can possibly find. Those experts are someone extremely knowledgeable in transaction law, someone extremely knowledgeable in the tax ramifications of almost every type of business transaction and someone who is extremely knowledgeable about which buyers for your company will be most advantageous to you!
The chances are, if you take this bit of advice, regardless of how large or how small your company is, you will come out further ahead than you might ever imagine.
Friends and relatives are not always the best business consultants
I have seen deals fall apart because sellers insist on using distant relatives, old high school buddies, someone they may have read about or someone who they may have a loyalty to when getting a traffic violation straightened out…but that’s the wrong person to handle a transaction. You need someone who understands transaction law. And, of equal importance, is someone who understands transactions that take place in the alarm industry. This industry has its own code, its own terminology, and people who do transactions understand this and play by the same rules. When you need a real estate attorney or someone who is involved in criminal law…or any other discipline, they have to get educated about the industry where they will be practicing. That takes time, and money…your money!
The same holds true for financial advice. Whether it’s your business accountant, family accountant or a specialist who help you to determine exactly what the tax consequences are of any kind of transaction…they will, most likely, determine how much money you put in your pocket. Frankly, at the end of the day, it’s about how much money you keep that defines the success of your transaction.
All we do is find buyers for your company, interested?
Finally, the guy/gal in the middle who is sometimes called a broker. In our case, we are not “licensed brokers” and in fact, have no desire to be. We are consultants that provide a “finder” service in locating buyers for your company. That’s all we do. But we do it well, and have dozens of success stories to back up that statement. There are others in the industry — some of them pretty good. Look around, get comfortable with who you choose and select someone who has — as we used to say — the best rolodex in town!
I hope you’ve enjoyed this first e-mail in this series. If you think you may want to sell a company at some point, make a hard copy of this, put it in a safe place, and use it for reference in the future. You’ll be glad you did. We’ll be sending another of these messages in the next week or so. We welcome your comments and, if you have a specific question, feel free to pose it to us. Some of them, we’ll even post on future mailings to be e-mailed. No names or locations will be attached.
Yours, for greater success,