KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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To Broker or Not To Broker
June 15,  2021
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To Broker or Not To Broker
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Ken
     To Broker or Not To Broker?
     That is the question.
     When the idea of retirement is floating around, and one has received not one but TWO unsolicited local company inquiries, one of which who said “we will pay top dollar with no holdback”, why would one want to employ, and pay for, a broker to make the deal? Why wouldn’t we just hire K&K to write it up and save the (est.) 5%?
  Staying Anonymous
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Response
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     There are a number of very reputable and reliable brokers who specialize in and service the alarm industry; you can find them in The Alarm Exchange. But it's a legitimate question: why do you need one?
     Well, in some cases you don't; in others you do. There is a lot more to a deal than the introduction and the multiple. Some of these deals take months to unravel and they move along at a snail's pace. Other deals happen quickly. In fact I think that the deals that seem to take too long probably won't happen. Sure, there are plenty exceptions to the rule, so don't bother telling me about the deal that took a year or more from start to finish. How about the deals that drag along for 6 or more months and then fall apart?
     The "smaller" deals are very likely to happen with a broker. There are at least two reasons that come to mind for that. One, brokers invest a good deal of their time getting involved in a deal and they just don't want to waste their time with a small deal. Two, small deals are often between owners who know each other, get along and maybe even do business together. Often small deals are between long time employees or family members; there's no place for a broker.
     Brokers typically represent Seller, though some prefer Buyers as clients. They won't be shy letting you know if they are a good fit for you as Seller or Buyer.
     You should have a solid idea what your company is worth. You can do that by going to https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth
Next, do you have a buyer knocking on your door? Can you find someone through
https://www.kirschenbaumesq.com/page/alarm-exchange
     If you are committed to selling and you don't have a buyer then you may have to find a broker first. Hiring a lawyer, K&K included, isn't the same as hiring a broker to find a deal. Though I will "broker" a deal, and charge a lot less than a traditional broker [and they get from 5 to 10 % of the deal] my "broker" service is limited to asking several clients if they are interested.      Brokers will do a lot more homework and they will assist with the due diligence if necessary.  But brokers aren't lawyers and if they start offering legal advice, run. More of that another time.
     I suppose you may be wondering what exactly is a "small" deal. It may depend on the day, but under a million dollar deal would be a small deal for a broker. That's not to say they won't take it on but some brokers may not want to spend their time on deals less than several million.
     A word of caution. Retaining a broker may be the first contract you are faced with, and that's a mistake. Your first contract is a retainer with K&K or some other lawyer, then you can have legal advice entering into the contract with the broker. The broker's engagement agreement should not be signed as presented; it requires modification to protect your interests. You should have legal advice at each stage of the deal thereafter, probably starting with a strong NDA.
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ISC schedule
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          I’ll be at ISC in July and we are now scheduling private meetings and participation in round table discussions, topics and guest speakers TBA.  Time for private meetings are limited so please reach out to Stacy Spector, Esq at 516 987 8428 or SSpector@Kirschenbaumesq.com.  Concierge Clients with appointments are all set. 
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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