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 ************************************ Comments on the desperate seller / ISC schedule April 9, 2019 ********************* Notice: At ISC West. Private meeting times are coordinated by our Concierge Program Coordinator Stacy Spector,Esq at 516 747 6700 x 304. Call her to confirm your meeting. Open Meet and greet schedule at ISC: Meet me at any of the below booths: Wednesday 11:00 am – COPS booth ; 2:30 pm – Avant guard booth; 3:30 pm – All American Monitoring booth Thursday 11:00 am – Rapid booth; 2:30 pm – J. Krug booth *********************** Comments on the desperate seller from April 3, 2019 *********************** Ken, was that a late April Fool day post? And I want a pony included in my sale. JL ************************ Ken Where does this seller have these accounts? What State and what city / town are they based out of D ***************************** Ken May I ask Where this company is located that is interested in selling accounts? Renee **************************** Ken What a fool. PM *************************** Ken If he has any alarm net accounts and is located in Kentucky I'd be willing to buy some to help him out assuming you think I won’t get screwed in the deal I’m always willing to help out another dealer AV **************************** Ken where is this guy located? Mike ********************** Ken: My experience in acquisitions I paid 6 to 12 times monthly monitoring. With his demands I would pay 6-8 times. He has little to NO leverage. Hope you are doing well and making Billions! Paul Lauttamus ************************** Ken To the Anxious Seller, Too bad you didn’t select USA to do your monitoring for the following reasons, * When Ken started telling alarm dealers to have their phone line, we would have issued you one on request and as you did test/inspection or service calls you could have migrated your accounts painlessly * We have been known to offer loans to established, long term customers when they found themselves in trouble without ever having to sell the accounts, get an attorney or a broker that drives up more costs * If when all else fails and you need to sell, we would connect you with one of our other valued alarm dealers who could work within some of your demands Otherwise, I think that Ken put forth a compelling justification for the pricing on your asset. Bart A. Didden President U.S.A. Central Station Alarm Corp. Port Chester, NY ***************************** Ken With regards to the gentleman offering his accounts for (cash) sale. Anyone who goes after a deal like this would be better off using their funds to have their head examined. A far better deal. Respectfully, John W. Yusza, Jr. ****************************** Ken Here is my take on what your subscriber will get for his accounts. I will not be as harsh as you were: * Not sure why you are starting the multiple at 35X. Might be high. We don’t know the rate on the accounts or how many he wants to sell * I agree that not being prepared to take a holdback will drop the multiple by 2X. * How much the multiple will drop because he wants to sell gross RMR depends on what % cell and alarm.com accounts are of the total. It could be 2X or less or more. * The seller picking the accounts depends on what accounts he picks. If he leaves the buyer with all the “lousy” accounts, multiple could easily drop 4X or more * Accounts not on a call forward line will cost him if buyer wants the accounts in his station and this is not where they are now. 5X may be too much of a discount. Depends on whether they can be downloaded or a visit to each account has to be made. Or seller may get lucky and the buyer is ok with leaving the accounts there. * No buyer is going to pay for parts and service revenue if that is what the seller is thinking. * Likewise no buyer is going to pay for CCTV systems unless there produce true recurring revenue. Overall Ken I agree with the message you conveyed in your answer which is if the seller is demanding all these things, he could be in for a shock on the multiple offered. Victor Harding Harding Security Services Inc. 70 Shaftesbury Ave., Unit 10 Toronto, ON **************************** Ken, Regarding the desperate account seller, there should be warning bells going off everywhere for potential buyers. When a seller is coming from a place of desperation, they are not in a position to dictate terms. I have been the middle of dozens of deals in my 25 years in the wholesale central station world, and having served as Acquisition Manager at Counterforce USA, I was involved in the purchasing of thousands of alarm accounts from many alarm dealers. I will say that your assessments are right on the money. If I were a potential buyer, it would be of grave concern to me that the seller has so much debt that has to be cured so fast. The feeling I would get is that if the seller is that far behind with creditors, it us a strong indicator that he/she is not running their business very well. That may mean that customers aren't being billed or serviced in a timely manner. It also could mean that the record keeping is not up to par, and as a buyer, I may not be able to put a lot of stock in the information that is generated in due diligence. And the fact that the seller won't guarantee anything; well that is a huge concern and a major multiple killer. Lastly, buyers do not want to be rushed. The seller is asking for at least $250,000. Savvy buyers are not going to let a desperate seller bully them into terms that are not favorable for the buyer and they are likely not going to fast track the deal so the seller can fend off creditors. Those creditors have every right to collect the debts owed to them. All I can say is..Buyer Beware! Mark Matlock Vice President Indirect Sales Pro-Vigil, Inc. ************************ Ken, Desperate Seller should become Wise Business Person by raising the money through a loan and holding on to all his/her RMR accounts. Alarm Financial Services provides loans from $150,000 to $2,000,000 using RMR as collateral. Dealers can leverage their hard earned accounts to grow rather than shrink. Jim Wooster www.alarmfunding.com *********************** Ken My take. With 2-4 years on contracts no guarantee Going to pick the worst accounts. Max $62,500 Good luck Global ************************ CONCIERGE LAWYER SERVICE FOR THE ALARM INDUSTRY PROGRAM 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. *********************** NOTICE: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles *********************** THE ALARM EXCHANGE
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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 www.KirschenbaumEsq.com
