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Agreements you'll see when selling or buying alarm accounts – the final agreement
July 17, 2018
Agreements you'll see when selling or buying alarm accounts – the final agreement
            This is the sixth and final article in the series Agreements you’ll see when selling or buying alarm accounts.  

               Your deal is ready to put pen to paper.  Buyer and seller have agreed on the essential terms of the deal: multiple, price, other assets being purchased or going with the deal, guarantee, restrictive covenant, possible employment and other items.  You figure it’s a done deal.  Then the contract arrives and you can’t make heads or tails of it.  Every paragraph seems to refer to another one and you can’t figure out what it means.  Sometimes you can, and it doesn’t seem to reflect what you thought you agreed to.
            Well, all of the documents you’ve seen so far pale in comparison to the final agreement.  There are several types of final agreements and they all have their own essential provisions.  The most common is the Asset Purchase Agreement, the APA.  In this agreement the buyer is buying certain assets, always the alarm contracts and the good will that comes with it, but none of the seller’s liabilities, unless those liabilities are identified and assumed as part of the purchase price.
            Sometime, less often, the buyer agrees to purchase the actual entity that the seller owns and operates the business through.  If a corporation, it’s the shares, if an LLC, it’s the membership interests.
            If the deal isn’t really a buy – sell, but a merger, then the final document will have other provisions to reflect the deal made.
            This final agreement will contain all the essential terms of your deal.  If it’s not written clearly or leaves issues unresolved or not mentioned then you could be in for trouble later.  Better make sure your lawyer will be there for you then.
            It should be obvious that using an attorney familiar with the alarm industry and alarm transactions will give you an advantage, and will also help avoid problems that can arise.  Because there is typically a guarantee in the agreement the parties end up having to deal with each other post-closing.  Even when there is no guarantee it’s rare for the buyer and seller not to have to communicate and cooperate post-closing.  The agreement should deal with all issues that may arise post-closing and stipulate how the issues are to be resolved and determined.  Transactional attorneys are too often one dimensional because they may know how to put the deal to paper, but they don’t know how to anticipate the problems that can arise later.  An attorney with a litigation background will be more sensitive to those issues.  [at K&K you get both transactional and litigation attorneys – so be sure to contact our Alarm Transactional attorneys – Jennifer Kirschenbaum, Esq at 516 747 6700 x 302 or]
            Though the APA [or stock or membership interest purchase agreement] is the final agreement, it’s not the only document that will need to be read and signed at the closing.  The APA will refer to all kinds of other documents, such as  security agreement, restrictive covenant, employment agreement, bill of sale and assignment of the contracts, bills of sale for other assets such as vehicles, domain sites, telephone lines, radio accounts, central station agreements.  And these are only the documents for a simple deal.  There are lots more on a more complicated deal.  But if you start at the beginning and engage the right professionals to guide you along the way, and you’re reasonable, it should all work out in the end.
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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
516 747 6700