Ready to sell – what are next steps and who can help December 14, 2022

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Ready to sell – what are next steps and who can help
December 14, 2022
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Ready to sell – what are next steps and who can help
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Ken,
          I am interested to explore the possibility of selling my company. I am a small integrator, my sales are about several million a year with all of my work coming from commercial and industrial customers. What are the steps I need to take to start this process and who would you recommend to guide me?
Anon

Response
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          A bit self-serving but I can’t think of anyone better qualified to guide you than me.  There are many knowledgeable people in the “guidance” business, most of the professionals you see writing into this forum or posting their services on The Alarm Exchange; but I think you start with me.  What am I going to tell you?
          Well probably not much more than you’ve read on this forum or could read on K&K’s website on the Alarm Articles page.  But it sounds like it’s time for real professional services, not self-help DIY legal, accounting and tax services.  I have clients who often tell me that they’ve been involved in more than 10, 20, 30, 50 deals in their time.  Impressive for sure.  But it’s not hundreds that I have been involved with, many hundreds.  And, as far as DIYing the deal, remember “a lawyer who represents himself has a fool for a client”.  A non-attorney who tries to represent himself is more likely to end up with the short stick, or lose the deal, which might be the better outcome.  BTW, this is not to suggest that clients aren’t knowledgeable and helpful in the transaction, perhaps the most knowledgeable, but still, an independent objective evaluation of the transaction is necessary for best results.
          So, where do we start?  Well, it’s going to start with a Retainer Agreement whereby you engage K&K to be your lawyer and you agree to pay our legal fees, and if you don’t already have a buyer [or seller if you’re the buyer] you engage K&K to find you a buyer [or seller].  The legal work is billable on the clock and the finder fee is contingent of finding another interested party with whom you consummate a transaction.  K&K “finder’s fee” is about 1/3 of what the alarm brokers charge and that part of your relationship with K&K doesn’t have to be exclusive and you’re not locked in to any time period [in fact, if I don’t find you someone to have a deal with within weeks we will discuss engaging one of the brokers on The Alarm Exchange].
          Next step will be discussing what you can do to enhance the value of your security / fire alarm business, though honestly unless you’ve contacted me well in advance of your readiness to sell it’s probably a little too late to make changes, but we could look to strike a deal that will nevertheless give you the opportunity to “cure” some of your prior bad habits and enhance the purchase price of the deal.
          Anyone interested in finding out about your business will need to sign a Non-Disclosure Agreement.  These agreements are not all the same and I prefer the K&K standard non-disclosure agreement version, and that’s what I will insist on [to be overruled only by you].
          Next will be due diligence.  That will entail the prospective buyer seeking information and documentation from you; it will involve a lot of your time, especially if you haven’t maintained great records and business practices, but even so, lot of time.  I won’t be helping, so be ready to provide the information or you can engage someone to assist.  Jim Wooster just started that service – see him on The Alarm Exchange.
          Next comes the Letter of Intent [sometimes called the Letter of Interest] and what I often call a waste of time, because the next step is the Purchase Agreement and if due diligence is done or almost done then it’s time to start working on the Purchase Agreement, not a Letter of Intent that the slick buyer is going to try to turn into the Purchase Agreement.
          After the Purchase Agreement we will be assembling the documents for closing the transaction.  Then the deal will hopefully close, your stress relieved and you’ll be semi or fully retired and semi or fully richer.
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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