Advice on selling / Subcontractor concerns for commercial fire installation March 18, 2019

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
You can read all of our articles on our website.  Having trouble getting our emails?   Change your spam controls and white list ken@kirschenbaumesq.com 
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Advice on selling / Subcontractor concerns for commercial fire installation
March 18, 2019
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Notice:  I'll be at ISC West in April.  Call our Concierge Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304 to arrange a private meeting and consultation.  Meetings and consults will be No Charge during the ISC show.
I will also be scheduling meet and greet times at a few central station booths in the exhibition hall.  That schedule will be posted here soon.
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Advice on selling
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Ken,
             We love you!
            We’re contemplating downsizing our security company by selling off approx. 70%
of our account base in order to cut costs and responsibilities so we can enjoy life a little more but still be ‘in the game’ (part of our motivator here as well is we are a C Corp, so if we sold all of it we’d get double taxed out of the gate as you know).
            We have not started the process yet,  but we were thinking of directly approaching our contracted Central Station to see if they have interest or possibly another dealer they monitor for (think they would be motivated to help as they would be keeping the accounts ‘in-house’).
            We so value your thoughts and ideas we’re turning to you for any words of wisdom that you might be able to share with us on this journey.
            Thanks again Ken for all you do-you’re great!!
Dan (Anonymous: for obvious reasons!) 
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Response
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            It’s nice to be held in such high regard for my professional advice, and I can see why you want to be anonymous:  You wouldn’t want to admit such high admiration in public.  I don’t blame you.
            You are thinking of selling part or all of your accounts and business.  There is much to think about and there are things you should be doing to maximizing a potential sale.  Here is a list of things to consider.  Sorry in advance if some appear self-serving:
1.  you will need proper professional advice.  Engage K&K immediately.  Consider the Concierge Program to take advantage of easy access to me and other attorneys at K&K and for the programs and opportunities that are offered exclusively to Concierge Clients.  
2.  make sure your contracts are updated.  You knew that was coming.  Well, the contracts are what you’ll be selling and it’s time to decide if you want 25x, 30, 35x or 40x or more.  You also want to have proper contracts so you don’t eliminate a good percentage of the companies that may be interested in buying your accounts.
3.   approaching your central station for a recommendation for a potential buyer may be a good idea depending on your relationship with the central station and your local competitors.  Obviously it’s risky also.  You may not want the “industry” to know your plans for selling.  However if you are comfortable with the idea your central station may be a good start to find a buyer, particularly if it’s a modest transaction.
4.   It may be wiser to engage a broker from The Alarm Exchange to assist you.  But you should not do that until you have engaged counsel because you will need to negotiate and modify the contract the broker will present.  I can’t blame them, but their priority concern is themselves and protecting their commission.  That’s fair provided they do their job, but some brokers try to lock you in unfairly.  Don’t even think about negotiating this agreement yourself because you’ll be eaten alive.  
5.   you also need some idea of what your company is worth.  You can’t start the selling process without some idea, though your expectations may be very wrong.  And that miscalculation does go both ways; sometimes you undervalue the business.  
            So, at the risk of sounding self-serving, the best advice I can give you, and everyone else, is engage K&K sooner, rather than later, to assist with the prospective sale process [or acquisition process].  
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Subcontractor concerns for commercial fire installation
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Ken
            We have your commercial Fire All in One.  As far as the commercial fire alarms we are doing more work as a subcontractor. Who should be signing what contracts?
Greg
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Response
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            The GC should have contract with owner for installation.  You will have subcontract with GC.  If GC doesn't do monitoring, service and inspection, then you will get the owner to sign the fire all in one for those services.
            Subcontractors need to be mindful that they depend on the company hiring them to have a contract in place with the customer that protects the subcontractor.  A loss following an installation may very well involve the subcontractor.  As a subcontractor you don’t want to find out that the company hiring you didn’t bother to get a contract signed by the customer.  Consider a fire installation.  It could be residential or commercial.  No proper contract signed by the customer.  You are the subcontractor and you do the installation.  Fire loss with damages significant enough to have lawyers looking for every pocket with money they can find.  Might be the customer’s lawyer or the lawyer for the company hiring you that brings you in.  Think you have a great relationship with that company so you don’t have to be concerned?  Well, don’t be stupid, it’s not the company but it’s insurance carrier that will be handling the claim and who will look to bring you in, and believe me, they are not your friend.  If you’re smart they will be your insurance carrier too.
            The GC should have the customer sign the Fire All in One if commercial, or the Residential All in One if residential.  Those contracts will protect subcontractors.
            The GC and subcontractor need to sign the Subcontract Agreement.  And they need to make sure that they read that contract and follow the provisions in that contract.  
            Subcontractors are often called in to install commercial fire systems.  The GC is often the electrical contractor, who may itself be a subcontractor for a General Contractor.  Hopefully neither the electrician nor the GC have any interest [or capacity] to service, inspect or monitor the fire alarm system.  If you are the subcontractor and your goal is to get the repair service, inspection and monitoring [because the installation alone isn’t profitable enough] then you should be getting the Fire All in One signed by the customer BEFORE you agree to do the installation as subcontractor.  The Fire All in One, if signed before the installation is done, will also protect the subcontractor even if the GC doesn’t have a proper contract with the customer.  By proper contract, in the context of this discussion, I mean a contract with provisions that shifts the risks for liability to the customer and contains protective provisions that reduces the alarm company’s exposure to liability.
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CONCIERGE LAWYER SERVICE FOR THE ALARM INDUSTRY PROGRAM
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You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
I am looking forward to meeting all Concierge Clients in Las Vegas at ISC West in April.  Please make arrangements with Stacy Spector,Esq. 
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NOTICE:  You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles
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THE ALARM EXCHANGE

This area is reserved for alarm classifieds, alarm company announcements, solicitations, offers, etc. Those wishing to sell or buy; borrow or lend; dealer program or dealer; central stations; insurance brokers; business  brokers, insurance companies. Equipment to sell; looking for employees; subcontractors; mergers;

Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com