COMMENT ON WHETHER ITS BETTER TO HAVE LAWYER OR BROKER FOR SALE FROM ARTICLES ON DECEMBER 15 AND 16, 2015
I thought I'd offer my opinion to Mike S who raised this topic in the Dec 15 2015 article.
I sold my first alarm company in 2011 after building it up for 13 years with a business partner. The sale was a result of my partner's divorce, so it was sudden and I had no clue what to do or where to start.
I went straight to a broker whom I already knew. The very first thing he told me was I needed a lawyer and an accountant (already had the accountant), and he told me about how much a lawyer should cost. He tried to push me toward a certain lawyer, but I remembered hearing about Ken. The rest just happened.
The broker helped me on how to negotiate and Jennifer Kirschenbaum, Esq handled every bit of the legal, and she even went to bat for things that didn't happen during the negotiations. The fees were exactly in the range of what the broker told me that they should be, and we had a successful sale. I'll never regret using either the broker or the lawyer, as both were instrumental in getting the deal done without much difficulty. I know what I'm doing when I decide to sell my current company - I'm calling the same broker and the same lawyer.
I'm very proud of my daughter, She's an extremely competent attorney and she heads up our Transactional Department. Having handled hundreds of alarm industry buy - sell deals I am confident that we have attorneys that will handle your transaction competently and within your legal budget. Our lawyers in the Transactional Department range from relatively new attorneys [whom the more experienced monitor and supervise without additional expense] to attorneys who are announced for their expertise in the alarm industry. We've not only handled the legal work but brokered plenty of deals too, but broking is not our focus.
My advice on your potential sale remains consistent. If you follow this advice you should expect to receive at least 5 times more for your RMR. Do the math.
- get the most updated contracts at www.alarmcontracts.com
- top of the list, update your contracts and get all your subscribers under contract
- convert per call repair service to RMR service
- upgrade all systems and increase your RMR
- be certain that all your subscribers are on your communication lines or not mingled with other dealer accounts on central station lines and that the central station will transfer its lines to you if you want to move the accounts
Before taking on a broker it's probably a better idea to engage counsel [engaging me is the best idea of course]. You'll be signing an agreement with the broker for brokerage services and you would be foolish to sign any agreement without advice of counsel. The size of your deal will influence whether you engage a broker. They will be working on contingency though some may want you to pay for expenses if you have them doing due diligence work that you should be doing. But they typically only get paid if the deal closes. That puts them in inherent conflict with you since they have personal motivation to close the deal. And while that is in your interest you need to be careful that unfavorable terms are not accepted just so the deal is not lost.
Brokers are not bound by the same fiduciary duties that bind lawyers. Your communications with them are not privileged and not confidential, though you can contractual bind the broker to confidentiality. Lawyers are bound by professional standards, your communications are confidential and a lawyer may not breach that confidence, even without an agreement with you. Since transactional lawyers aren't working on contingency our only concern is our client's best interest. That usually means closing the deal but may not. We don't have the added pressure to close the deal to make sure we get paid.
Brokers who specialize in the alarm industry [see The Alarm Exchange] know the buyers and can often quickly match a seller with a buyer. They know the buyer's terms and limits, so a lot of back and forth can be avoided. Obviously some brokers will be a better fit for you than others, so select wisely. A good broker can find the right deal and structure it.
A lawyer can just as quickly kill or screw up your deal, so be mindful of that too. Might be a person peeve of mine, but I don't like lawyers who step out of their legal shoes role and think it's their job to push every deal to the limits, changing the wording of every sentence to show you how smart they are. Some think that if the agreement says 20 days they need to make it 15. Some lawyers are very qualified at killing a deal. If you can't read and understand what the attorneys have written then dont walk, run. If you can't read the proposed agreement without wanting to throw up, then don't hold back. I've seen proposed agreements that I can't bring myself to keep reading, and I know what I'm looking at and for. Can you imagine how someone else sees the agreement? There should be no words you don't understand; no unnecessary provisions or window dressing. We don't need 30 or more pages of print to make an alarm deal.
As I write this article my office is handling 3 different deals. One very small, one relatively small and one large. Three different attorneys in the office are handling the 3 deals. The legal fees will run from $1000, to several thousand to several tens of thousands. We know and are happy to work with all the industry brokers, so give me a call when you're ready to sell. Better yet, give Jennifer a call. 516 747 6700 x 302 or Jennifer@Kirschenbaumesq.com