KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comments on Seller unhappy with representation in sale and litigation that followed / ISC meeting /Party Invite
November 5, 2025
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You're invited: K&K 2025 HOLIDAY PARTY WILL BE ON DECEMBER 4, 2025 6 PM Old Westbury, NY. RSVP only if coming with Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com or Diana Henriquez at 516 747 6700 x 328 or email dhenriquez@kirschenbaumesq.com. Space limited so be sure to RSVP if coming asap
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Private meetings at ISC EAST
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We are getting closer to ISC so if you're attending an want to make the time to meet please reserve an appointment time sooner than later.
To arrange a private meeting with K&K and staff at ISC East on November 19 or 20 please contact Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com or Stacy Spector,Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.com. We are planning half hour appointments between 10:30 and 4:30 on November 19 and 20. If you think you need more time let us know. We look forward to seeing you at ISC; meetings will be outside the hall at the food court area.
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Comments on Seller unhappy with representation in sale and litigation that followed from article on October 20, 2025
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Ken
Huge. PLEASE get an attorney experienced in buying and selling alarm companies, like Ken and the K&K team. Please!!! When we finance a buy - sell the wrong attorney can be a deal breaker.
James T. Wooster
jtwooster@alarmfunding.com
cell 917 747 5379
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another comment
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Ken,
In reading your article today, Seller unhappy with representation in sale and litigation that followed, I was reminded of my own experience when the company I was working for agreed to buy me out of my contract.
As you know, I began insuring alarm dealers way back in 1981. At the time I was one of the three founding of the Los Angeles County Burglar and Fire Alarm Association. Being a founder, I sat on the Executive Board as their first Secretary and Treasurer, and I also chaired the Insurance Committee. Long story short, as the Insurance Committee Chairman, I created the most competitive General Liability insurance program in the country. The competitive rates and broad coverage soon became a great membership tool for the LA association. Within a few months we grew to over 200 members, all because of the insurance program. Within a few years the program was endorsed by virtually every alarm association in the country including the NBFAA which is now the ESA.
After five years of success, the insurance agency I was working for wanted to update my employment contract. At that time, I owned 25% of the book of business and the agency wanted a more formal agreement which was fine with me. However, when I read the fine print, I found that I could be fired for something as insignificant as insubordination. Also, that if I was fired, I would lose my ownership in the book. To me, this was unacceptable. The agency was talking about us getting married and all I could see was a pending divorce. Coming to this conclusion, we began negotiations for them to buy me out.
I hired a Beverly Hills, Penthouse legal firm to handle the transaction. The firm had a reputation of buying and selling insurance agencies, so I felt I was in good hands. We identified the accounts to be sold, determined the commissions and fees they generated, and we agreed to a price. The agency was to pay me over a five-year period on the accounts as they renewed. Pretty simple on its face. However, I took notice that in the contract there was no penalty for non-payment. When I brought this up to my attorney and I asked what would happen if they stopped paying me, she said in a very matter-of-fact way that we would file a suit against them.
I laughed because I could see the writing on the wall. They would pay me for a few months and then abruptly stop payments alleging that the book was not as profitable as they had anticipated and that they could not afford to pay me as we had agreed. Recognizing this, I said no to the deal. I decided that I would either get something in writing that better assured that I would get paid or I would simply open my own agency and compete for the business.
With this in mind, I inserted a clause in the contract that accelerated payment in full of the entire book if they stopped paying me. So, if they were more than 15 days late on a monthly payment, I would notify them accordingly. They would have 15 days to bring the account current. If they did not, I could require them to pay the remainder of the contract as if all of the remaining accounts renewed at the same premium and fees. Additionally, in the event of non-payment they would be responsible for all costs and fees incurred to complete the collection.
My attorney advised me that they would not agree to these terms. I felt that since they were only going to pay me on the accounts as they renewed, there should be no pushback to the terms. As it turned out, she was right. They turned down my offer and we began competing. Within 90 days there were over 60 mid-term cancellations. Within two years I had taken back virtually every account. And, as they say, the rest is history.
My experience is very similar to transactions alarm dealers face when they sell their accounts. Over the years I have heard alarm dealers say, "If there is a hold back, consider the money flushed down the toilet." I don't believe this has to hold true. First and foremost, it is paramount that you use an attorney who specializes in the security industry. And, when creating language to protect yourself in the event of a holdback, consider using a liquidated damage clause as opposed to a penalty for non-payment. And be sure to research the laws in your own state. Finally, and of paramount importance, find out as much as you can about the company you are selling to. If it doesn't feel right, reconsider. Your gut feeling more often than not is right on.
I my case, I knew something was wrong and I trusted my gut. And, as it turned out I was right. The agency I was working for was in negotiations to merge with another agency and I would have ended up with little or no control of how the book of business was run. Funny how things work out when you trust your feelings.
Rick Gombar
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Response
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I think Jim is closer to what I'd advise than Rick, though I agree with Rick that you do need to question things you don't feel are in your interest, not blindly follow what your attorney is willing to accept. But, don't confuse your internet search with your attorney's law degree, and hopefully your attorney has experience handling hundreds of alarm transactions, easily more than you have experienced. Wonder where you can find a attorney with that experience????
K&K's transactional team is here to represent your needs, from structuring the deal, closing the deal and dealing with after-sale issues, including dispute resolution if necessary [which it won't be if you engage K&K].
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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
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