Comments Seller unwilling to id accounts until closing/ ISC meeting sign-up/Party Invite November 4, 2025

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comments Seller unwilling to id accounts until closing/ ISC meeting sign-up/Party Invite
November 4,  2025

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.

Comments Seller unwilling to id accounts until closing from article on October 18, 2025
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Ken,
   Having engineered a few bulk sales from ADT dealers to ADT corporate, I had some thoughts about this.
   In general, it takes some time and attention to create a dataset for purchaser due diligence that meets the need, but it can be done without too much complexity; sounds like that was already done here. The next thing that comes to mind is that this is a primary reason that holdbacks can be larger in sales of recurring businesses like alarm contracts compared to others. The seller should be able to produce an anonymized list of accounts that includes items like city, state and zip code but leaves out the customer specifics; in addition to the expected monitoring rates, customer credit rating, charge frequency, etc. The seller should be able to sample detail documents (i.e. detailed customer payment transaction statements, contracts…) for a small number of customers with the customers contact details suppressed. Hopefully the LOI or discussions just after the LOI is signed outlined a process for this. Withholding the customer contract details till closing is not unreasonable when other due diligence items like tax records, bank statements, and financial statements support the legitimacy of the cashflows from the contracts. As you know, this is why a multiangle approach to due diligence is so important. Rarely, will due diligence answer the details objective questions that a buyer has, but when you perform comprehensive due diligence, a lack of red flags is meaningful. Then, of course, the sale and purchase agreement should have clear procedures for replacing accounts within a given guaranteed window or deducting from the reserve.
   If you post this, please feel free to share my name.
Justin W. Steigerwalt
Dealer Cortex LLC
jws@DealerCortex.com
(404) 395-7051

another comment

Ken,
   Thank you for your good thoughts on so many issues our industry faces.
   As someone who has been involved in a number of purchases, it always strikes me as a little odd when a seller is unwilling to disclose the information about what they are selling. We wouldn’t buy anything in life this way. If you’re buying a house, you walk the entire house, do an inspection for problems, review the cost of utilities and taxes. If you buy a car, you test drive it, check the car-fax, read the reviews, see the gas mileage, and do your best to understand the overall cost of ownership.
   Buying a company or accounts is the same and on a much bigger level. A buyer absolutely needs to know as much as possible about the purchase they are making to ensure that the purchase is a good fold in for their company. Without the detail, the purchase should be worth much less, because the risk is much higher.
   There are so many things to consider that might put the seller’s investment at risk:
   Addresses are necessary to ensure that the customers are in the same geographic area as Buyer’s current base?
   What is the equipment type, and can you service it?
   Names are needed to ensure that no single customer over 5% of the entire deal (which presents a high risk and might need a carve out for holdback)
   Financials are needed to ensure that you calculate known attrition.
   A cash-test needs to be done to ensure that monthly invoices weren’t just being credited to keep the value of an impending sale high
   You are absolutely correct that a good NDA is necessary here.
   The truth however is that a seller should want the best deal they can get, and they should get that by selling something that actually has value. If they won’t disclose what they are actually selling, any buyer should be wary of the purchase and move forward with caution.
   What’s more, there’s a false thought that simply having names and addresses means that a buyer has the time, the staff or the desire to cold-call those customers and try to steal them away, all without the seller getting wind about it. Most buyers want to keep their good name when buying so that other sellers will consider them later. This would ab
   There has to be some element of trust in a deal, or you’re likely making a deal with the wrong person to begin with.
Eric Widner
Loud Security
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another comment - from another wise guy (who I happen to like)
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Ken
   You would wire up your own alarm panel to save a buck
Scott
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another thoughtful comment I should have thought of long time ago
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Ken
   "If you were smart enough then you'd be a rich lawyer, not a rich alarm guy. Not many lawyers wire up their own alarm panel."
-Ken Kirschenbaum
   You should go into comedy lol
Warmest Regards,
Steve

another comment from a weekend wannabe attorney who has managed not to be sued for "Malpractice" yet :)

Ken
   Quickly thinking off the cuff and to protect the buyer (writer), I would need to evaluate the guarantee provisions from the seller.
   It can't be capped at 80% downside by the seller, and needs to be based on who actually pays their invoices through the first cycle under the buyers term of ownership. The guarantees also need to consider the current state of the contracts on all customers and term still in force, besides compliance with local or states Laws for renewal clause compliance.
   Always be watchful for hidden traps including non competition clauses.
   At the very least top 20% of rate payers should be examined and 5% on those jobs inspected thoroughly.
   Just my fast thoughts from my experiences helping my customers sell their companies to my other existing customers.
   BTW, USA often helps with promotional pricing to keep these transactions within the USA family of companies.
Bart Didden, President
USA Central Station
A monitoring center listed on The Alarm Exchange
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Response
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   I want to start by thanking everyone who took the time to share their experience and valuable advice. I want to remind you that selling or buying alarm accounts is not something you likely do as your primary business; it's something you do in conjunction with running your business, if buying. If selling, it might be your first and only sale of a lifetime or you may be working on your second, third or fifth company. It's very wise to be involved in your transaction, to question matters and make business decisions. But you would be remise to think you have the necessary knowledge and skill to handle a transaction without competent counsel and often tax and accounting advice.
   A comment on central stations. If you don't have a buyer in mind your central station may very well be a great source for finding a buyer. The central station has many dealers and has an interest in retaining your business and accounts, which might not happen if you sell to a dealer who uses a different central station. Of course not all central stations will get involved in the same way; some not at all and some, like my buddy Bart, who will be happy to handle your deal from soup to nuts [which you'd be if you let him].
   Practicing law, with or without a license, is a lot like being an alarm dealer, with or without a license. You do the work and hope for the best. In most cases things to great. it's when they don't go as expected that there's more than egg on your face.

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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