Acquisition, collaboration continue to be growing, necessary trends for wireless dealers

But wireless dealers must have a realistic valuation of their business before taking those steps. Calculating the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) can help illuminate what strategy is most beneficial. In some cases, wireless owners without much real estate—for example, towers—or who have ballooning overhead costs must financially rectify their company before selling or consolidating.

“Take your EBITDA over a period of time—preferably 5 years—and you average that and multiply times four,” Fordinal said. “If the number that pops out of that calculator is not what you need, you should stay where you’re at and get it to where you need it, rather than trying to expect someone to pay you more for it.”

Manion agreed. He acquired DSC in January from an owner that opted to retire from the wireless business. Before signing the deal, Manion ensured that employees added value to the acquisition, market share was significant and service contracts were in check. Because DSC was financially sound and established, buying the business made more sense than going with a startup.

“It’s much easier to acquire, because it’s such a niche industry and market,” Manion said. “Licensing agreements already in place with Motorola, familiar employees, that makes it easier. Acquisition is higher, but the value is there. You’re getting immediate revenue.”

Growth being the main priority, the panelists emphasized that changes to the wireless dealer model would be inevitable for every owner in the room. Fordinal said that conversations about consolidation and selling have been ongoing for years, but the time to act on those potential changes is now, for most.

“I encourage everyone in the room, whether you’re ready to sell or not, to do this evaluation: Is the value of your business increasing with time or is it decreasing?” he said. “If it’s increasing, you may not have to do something right away. If it’s decreasing with time, the sooner the better.”