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MERGING CENTRAL STATIONS
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Ken,
    Just curious, if I were to have a large central station which also has their own installation and service technicians, that may potentially be ready to begin discussions regarding moving their central station accounts to our central station,  is there any preliminary data that I can begin gathering prior to bringing you in?
    If Yes, what is the kind of information I should be gathering?  
Thank you,
name withheld
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RESPONSE
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    Nationwide wholesale central stations is big business.  Establishing a functional, up to date, full facility central station is expenses; manning it with operators is expensive, not to mention a 24/7 job.  While there are smaller regional central stations and those that service primarily their own retail subscribers [as you describe, a retail operation that operates its own central station] they are finding it harder and harder to keep up with demanding technology and expense.  I suspect that the minimum expense to operate a UL listed central station is between around $100,000.00.  If that central is operated by a retail alarm company and monitoring primarily that company's subscriber, well, that's a lot of subscribers.  That company could easily find a wholesale central station to monitor the subscriber for far less than $100K.  So there is an opportunity to merge or acquire one of these smaller central stations.  
    Acquiring another central station's monitoring accounts is quite different than buying retail alarm subscriber accounts.  When you buy 5000 subscriber accounts you have 5000 customers.  When you buy 5000 wholesale monitoring accounts you may have less than 100 customers, and you can't count on them staying with you once you buy the central station they are connected to.  Often the relationship between central station and dealer is very personal, not just economics.  You need to be comfortable with the clientèle, and by that I mean the dealers, not the subscribers.
    You will want to know what central station equipment and systems are used, what procedures are followed, what Dealer Agreements exist, whether the central station requires its dealers to use proper contracts or three party contracts and the three party contract is properly written and executed.  You'll want to know that your central station is prepared to handle the same kind of accounts, whether they are fire, burg, environmental, video, audio or PERS.  You'll want to know what the dealers are paying for the central station services, and their payment history and practices.  
    There's a lot more you'll want to know and check out.  Bring in counsel sooner, rather than later.
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SELLING ACCOUNTS OR BUSINESS
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Ken,
    What is the difference between selling accounts only and selling the business?
Rick
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RESPONSE
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    Alarm companies typically sell their subscriber accounts.  Accounts under well drafted RMR contracts will bring the most money.  Most sales are asset purchase deals where the buyer acquires the assets and none of the liability of the selling company.  In the alarm business, usually, it's the contract RMR that purchased and alarm companies that have different models of operation, those who try to sell their business based on gross sales as opposed to a multiple of RMR under contract, will find buyers, but it's less common.  If you're thinking of selling your business operation, rather than your RMR under contract, be prepared to work for the Purchaser so that there can be continuity of operations.  
    Selling your business, rather than your assets, is less common because Purchasers are reluctant to risk assuming your liabilities.  Those deals are made, just less popular.  Typically, don't count on it.  Sale of a business rather than the assets will probably entail an EBITDA evaluation.  [ Earnings before interest, taxes, depreciation and amortization is an indicator of a company's financial performance which is calculated in the following manner: EBITDA = Revenue - Expenses (excluding tax, interest, depreciation and amortization).]  Mitch Reitman would be the right guy to talk to if you're considering an EBITDA sale.  You'll find him on The Alarm Exchange under Business Brokers / Consultants
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