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Due Diligence Process for a Dealer Program
You have made the decision to participate in a Dealer Program, and now it is time to research the best one for your business, as well as prepare to be selected. Just as alarm business owners and integrators will need to do their homework, you can expect vendors and service providers — especially those operating purchase programs — will also do their due diligence when evaluating potential members.
Is your management A-rated? Managerial expertise is a critical element a potential buyer will check. In fact, poor management is one of the most frequently cited reasons alarm businesses fail. Companies who offer dealer programs are going to be looking at the longevity, health, and creditworthiness of your business. Make sure you have taken the steps to prepare your company before you consider any type of sale.
Are your records in order? A dealer program provider will need to see your financial data – tax returns, receipts, profit and loss sheets, bank statements, etc. – before making a decision to purchase some or all of your alarm accounts. Other items to have handy include insurance, licensing and permitting information. Failure to present any of these items may deter a company from wanting to partner with you.
Have you accurately calculated your RMR? Details such as your alarm company’s attrition and account aging, customer payment history, and your subscriber contracts are some of the criteria a dealer company will review. Doing so allows the company to accurately calculate the value of your alarm business portfolio. Click here to view the list of nine criteria Alarm Capital Alliance uses when considering a business’s RMR.
Whether you are considering selling some or all of your alarm accounts – now or in the future – focusing on this due diligence criteria will help you achieve your business goals. Want to talk to us about potential options for selling your alarm business? Contact us today!