March 5, 2012
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Question on contracts
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Hi Ken,
I have a question about your alarm contracts.
I subscribed to your email list a few months back and keep hearing references made to your standard alarm contracts for sale. I can't seem to find more information about them besides the order form on your website. Can you give me some additional information about what's contained in your contracts, why I would need them, and which contracts I would need? I am a small dealer in California doing mainly wireless low voltage residential systems with plans to start offering interactive services through Alarm.com (lighting, locks, and thermostats controlled remotely and eventually remote video)
Thanks in advance for your time,
Cason
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Answer
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The Standard Form Contracts are customized state by state and include the provisions generally considered essential in the alarm / security industry. The various contracts address the different services that alarm companies provide and when possible combine services. The All in One for example is a generic security equipment sales, monitoring and service combined contract. One advantage of the Standard Form Contracts is that the terms are the product of years of revisions based on feed back from alarm companies all over the country. Though I am sure you need all the basic contracts, including the All in One and if you do commercial fire, the Fire All in One, from your email is seems like you can start with the Subscriber Enabled Monitoring Service Contract which features the subscriber remote services. That contract has no central station monitoring, and for that use the Monitoring Contract. You can order the contracts on my web site at https://www.kirschenbaumesq.com/alarm2.htm
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Question on alarm company valuation
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Ken
Your letters are very usefull and informative.
Not too long ago you mentioned to one of your readers that monthly
revenues are worth between 30x-45x multiples. What determines the value
of such a wide gap? is it the market or the proper installation.
Thanks
CK
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Answer
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First let me direct you to a new service offered by my law firm - a team of lawyers specializing in assisting sellers and buyers navigate their way through a buy - sell transaction. You can start by finding out what your alarm company is worth by going to WhatsMyAlarmCompanyWorth.com http://www.kirschenbaumesq.com/newalarm2.htm
Although you'll have to pay a modest fee for a quick evaluation, I can tell you that the evaluation will include the two items you mentioned, your market and your installations.
There are many factors that should be considered for an evaluation of an alarm company. I'll list a few here, and the list is certainly not all inclusive and some factors should be given more weight than others. Keep in mind that the process and evaluation is not something you should be doing on your own and the time to engage knowledgable counsel, hopefully me and my attorneys, is before you have your first conversation with a potential buyer. You don't want to start agreeing on terms that you will later regret.
So few things to consider:
size of your subscriber base; residential / commercial mix; intrusion / fire/ other mix; monitoring / service / leased systems mix; your area of operations; your contracts; license and other laws compliance; type of equipment; do you operate your own central station and if not do you have your own lines into the wholesale central station; what contract terms have you agreed to; do you have insurance; claims history; historical attrition rate; number of employees; profitability; have others expressed an interest in your subscriber accounts;
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Woke up - now using contracts - newsletter endorsement (unsolicited)
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Hi Ken,
Thank you for your impassioned dedication to our industry and your sound advice. We found you through the ESA and got your newsletter after getting the employment agreement.
We too, are a mom & pop with 300 active alarm accounts, all of which were secured with a firm & friendly handshake. We ran for years with only our self created "limit of liability" construction agreement and the Limit of Liability from our sub contracted monitoring company. We even got lax on those.
We did get sued by a jewelry store that supposedly and suspiciously suffered a $500,000 loss but we won. Winning means we got to pay a lawyer and got dropped by our liability insurance company. We paid a lawyer because we didn't trust the insurance company's layer. Newer insurance policies were much more expensive than our old policy. We have been with Scottsdale insurance since that incident as it was the only insurance company that our local agent represented that would even insure an alarm company.
We are a fully convergent technology company and install data, voice, video and security systems. We had a real incident happen where a customer's property, fiber optic cable, was damaged.
We repaired the damage and the Scottsdale claims agent stalled our claim from December to April. In October we were handed a renewal by our Agent whom I had given information on SARRG in September. He said he looked into it and there were some prerequisites. One was that we had to be a member of the ESA. I pointed to the certificate on the wall and asked what else. I refused to renew and insisted that he contact SARRG. We now deal with our same agent and our premium is less. SARRG requires us to use contracts with our customers so we have been diligent with that using your contract. Getting customers to sign the contracts has been easy and now I have more peace of mind when investing in projects.
I don't think we would have done this had we not subscribed to your newsletter.
Thanks again.
Best Regards,
Ron B