Business Valuation Blog | Understanding Buying / Selling a Company

What's Involved With a Business Appraisal for Security Systems Companies

Posted by Business Valuation Specialists LLC on Dec 9, 2019 8:00:00 AM

Security Systems Business Appraisal

You run a security company, so much of your daily focus is on hiring the right employees, having the right monitors in place and reducing your response time to emergencies to an absolute bare minimum. But what is your business actually worth? Not knowing the answer to this question can put the security of your business at risk. What happens when you have a security system business appraisal performed on your company? Here's a quick overview to give you the basics of what to expect.

What's Involved With a Business Appraisal for Security Systems Companies

To start, a business valuation specialist will take a solid look at your business' finances. They'll make adjustments to your accounting books to remove any one-time income or expense that is skewing what your usual figures would look like, determine if there are areas that are inaccurate, such as fully-depreciated equipment that has no value on your accounting books, but still has significant value in the regular operation of your business. They may be able to make some suggestions, such as if you're carrying a lot of bad debt from clients who are not paying their bills and how to handle that type of situation so that you can improve your business' overall financial health.

Next, they'll take a solid look at your business operations. Are there areas where you're leading the pack in terms of ingenuity, efficiency or similar areas? Are there areas where you're lagging behind, actually causing harm to your business? If there are areas where your business is seeing high overhead, they may be able to make recommendations about how to make that part of your company operate more efficiently to reduce that excess overhead and improve your profitability.

What about your competitors? Is the area you're in saturated already or is there room for business growth? The business valuation specialist will take a long, hard look at your competition, whether it's on a regional level based on geography or a comparison to other businesses that handle the same specialty that your business is focused on. They'll be able to determine differences between the companies and adjust your business' value in their calculations accordingly, providing you with a much more realistic picture of your company's value.

The next area they'll take on is the condition of the market. Is it growing or shrinking? If some hot new technology is giving homeowners a different option than traditional security systems, that may be impacting your business' ability to compete in the marketplace. The business valuation specialist will also take a hard look at other businesses in the market, using them as a final ruler to calculate your business' value by comparing your company to the other businesses that are in the market that have sold recently.

By staying on top of your company's value with a security system business appraisal, you can rest easier that your company is as secure as your clients' homes and businesses. A quality business appraisal report from an accredited business valuation specialist provides you with a solid tool for fighting bad tax assessments, proving your company's value in court, securing financing for expansion or working with an insurance adjustor for downtime after a disaster strikes your area. Shouldn't it be part of your emergency response toolkit?

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Topics: Security Systems Business Appraisal