January 17, 2012
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Question
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Ken:
As always, thank you for your publication.
I have a question. A very large, well-known alarm business brokering company and 3 speakers at ISC East are all predicting the continued fall of multiples. What sources do you have that contradict this? As a buyer of alarm companies, this is something I watch.
Also, re: diversifying: the big guys are now selling identity theft protection.
I've joined LegalShield and we all now sell their Identity Theft product. Anyone can join and sell the product and it's superior to LifeLock(tm) and most others out there. We don't sell the legal parts of their offering but the LegalShield identity theft plan has been selling like wildfire for us. It's another added bonus if we need to sweeten a deal or something that sets us apart. We build it right into our packages and people have no problem with it.
And you get a nice commission check each month.
While people could use anyone they might know that can sign them up and mentor them, if someone wants the info and a link, it is: www.prepaidlegal.com/hub/davidlmyers
I don't mean for this to come off as an ad. Sign up under me or anyone, but dealers need to start offering ID theft. It goes hand- in-hand with our other products and is easy to sell. It also bring in a lot of extra cash each month that you do NOTHING to generate. Sell it once and that's all.
Thanks
David L. Myers
Myers Protection Services
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Answer
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I don't see any drop in multiples for the alarm industry in 2012. If anything, it seems that multiples will be strong for sellers. Statistics? My office has been involved in close to 10 deals in the past 45 days and the multiples are all over the place. But, alarm companies that have positioned themselves in a well thought out exist strategy do better. There are two important factors that every alarm company can control, having updated contracts [my Standard Form Contracts of course], are on their own central station lines so that they can be moved easily.
Other factors may not be that easy to control, such as the type of market and accounts you have, such as residential vs. commercial; intrusion vs. commercial fire; etc.
Want another edge when involved in a buy - sell transaction? Call my office and speak with Jennifer Kirschenbaum, Esq., [516 747 6700 ext 302] or me [ext 301]. Keep it simple, efficient and timely. Call before you agree to terms that you will later want to change. Helping you structure the deal is just as important as putting it to papers and getting the deal closed.
Keep you options open for providing new products and applications this year. Increasing your RMR should be your number one goal, and new technology certainly provides new ways to offer your subscribers more protection.
Identity theft protection, seems like a natural for alarm companies. May as well give Dave the business !!!!
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Tennessee fire
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Ken;
I found the actions (or more correctly the inactions) of the Fulton TN FD to be unconscionable. I heard one "bright light" state that if they did put out the fire, then every homeowner who was paying for the service would stop paying. What a crock. If you get into a serious car accident and have to be flown by helicopter to a trauma center, you get a bill for many thousands of dollars from whatever agency operates the helo. The members of that FD should be charged criminally for non-feasance. If they didn't know about the fire it would be one thing, but to stand by and watch a house burn, I think is criminal. They could easily amend their contracts with the homeowners who are in the outlying areas to read something like: "the annual fee for fire protection is $75.00 per year. Any homeowner who refuses coverage will be billed for the time that the firefighters and municipal equipment are on scene. If you roll three pieces of apparatus and have a dozen firefighters on scene, they could easily charge several thousand dollars per hour for the cost of fighting the fire. That 75 bucks becomes a really cheap insurance policy. If they had saved that guys house and then sent him a bill for say $20,000.00, a) his homeowners policy would likely cover the expense.
John from NJ
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Some tax advice for 2012
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The federal exemption from estate tax has been adjusted for inflation and is $5,120,000 for individuals dying in 2012. The federal exemption from gift tax will also increase to $5,120,000. For married couples, these exemptions are doubled, enabling the married couple to pass up to $10,240,000 to their heirs without triggering a federal estate or gift tax.
Since estate and gift tax exemptions are scheduled to revert to $1,000,000 by 2013 wealthy individuals may want to hedge their bets by transferring wealth to their children and grandchildren during this coming year. Keep an eye on proposed legislation this year. You have until the end of 2012 to make your decision.
The federal annual exclusion from gift tax remains at $13,000 per person and there is still no limit on the amount you may pay on behalf of another for medical or education purposes.
Some clients will choose to make gifts outright, which is the simplest form of giving a gift. Others will choose to form trusts as a way to provide for their loved ones, while at the same time protecting the gift recipient from the claims of creditors or in the event of a divorce. These trusts can also be structured to minimize estate taxes upon the death of the recipient (referred to as generation-skipping tax planning), and to ensure that gifts remain in the donor's bloodline, rather than passing to an in-law, following the death of the gift recipient.
You can gift out right or set up trusts.