When is a Good Time to Sell Your Security, Alarm or Fire Protection Company?
The answer is NOW!
As we near the end of 2022, many business owners will begin to evaluate the timing of their business sale. If you are looking to maximize your profit and sell your security alarm or fire protection company for top dollar now is the time! Industry trends in the market, such as high market demand and interest rate increase, are showing that it’s the perfect time to sell your security alarm, fire protection or fire sprinkler business. Here’s why:
It’s a Seller’s Market:
You can get top dollar in this market! How? Because there are currently more buyers in the market for fire protection and security alarm companies than there are sellers. This is the ideal circumstance for increased competition among buyers. As a result, sale prices will rise as buyers are willing to pay more to acquire your company.
Improved Capital Gains Tax Rates:
The capital gains tax rate dropped almost 10% in 2021, to around 20% and has stayed there this year. This means you will be taxed at a lower rate than in year’s past. Capital gains taxes are likely to increase in 2023, so act now while they are low and leave more money in your pocket!
Rising Interest Rates:
Due to inflation, interest rates have been steadily increasing but are still considered to be on the lower side. As interest rates increase, buyers will have to adjust their capital when making an offer. They are likely to offset the additional costs by making a lower offer on your company. Industry insiders are predicting rates soaring to has high as 5% in the next year.
Reduced Corporate Tax on C Corporations:
Corporate tax on C corporations is currently at 21%. This low rate is highly favorable for sellers like you. Looking to 2023, the current proposed budget plan is calling for raising the corporate income tax rate to 28%.
Supply Chain Issues:
Due to supply chain issues, labor shortages, and the fluctuating costs of raw materials such as steel, our industry, especially in the fire sprinkler division, has faced challenges being able to complete contracted jobs on time and at quoted costs. We anticipate this trend to continue in 2023 and into the next several years before we see a turn around. Waiting to sell may affect your overall earnings and yield a lower sale price.
The Internet has Gained Market Share:
Offerings from cable and telephone companies has made the security alarm industry gradually more saturated. Due to the popularity of the DIY security system, growth opportunities for conventional companies has stalled. Consumer demand for home automation and remote monitoring has forced many companies to invest in costly upgrades to remain viable.
Interested in learning more about how to sell your security, alarm or fire protection company?
Reach out to Egan Security Group for a no obligation confidential consultation.
As an experienced broker with over 50 years of experience in the security alarm industry, we can help you determine your company’s value, negotiate the best price & terms with interested buyers, and help you facilitate a swift, hassle-free transaction.
