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do contracts provide same protection for different response policies / valuation of AES radio accounts
July 22,  2017
do contracts provide same protection for different response policies
    The Newsletter seems to be getting better with age.  Keep it going.
    My very broad question  is:  Do the typical Kirschenbaum TM contracts provide the same legal protection for “private response”, or “public police response”, or "no response", to calls for help from the traditional remote monitoring sources?  Questions are prompted by investors when projecting future value of alarm contracts.
    We know that most alarm security providers work seamlessly across dozens, or hundreds of AHJ/Authorities Having Jurisdiction. We know that each of the 15,000 AHJ could have different language in local Policy or Ordinance related to private alarms. And most AHJ have the right to alter alarm response priority when the call is received.  Some of us believe that local police response will continue to diminish.      Security providers could use guidance as they adjust their business models.
    Thanks again for this wide reaching forum.
Lee Jones
Support Services Group
    Technology offers various ways to "monitor" alarms, not to mention respond to the signals.  Not only are there multiple communication pathways to consider but monitoring can be direct from the AHJ, private central stations and self monitoring.  Monitoring centers can communicate with subscriber by telephone call, text message, email or video clips or images.  First Responder response can also vary, from shifting priority set by police, fire department response that will not terminate even if the fire department is advised it's a false alarm, to no response at all.  
    We know that these and other contingencies need to be addressed in the proper alarm contract.  So the answer is YES, the Kirschenbaum TM Standard Form Agreements [and the All in One forms are the recommended premier forms] cover the various situations.  And, yes, the contracts provide the same level of contractual protection for the different scenarios.
valuation of AES radio accounts
    I have a question about valuation as it pertains to AES radios. I am hoping to get some input from some of your account buyers and brokers on this subject. I know that buyers regularly discount POTS accounts that are not on owned lines and that have to be reprogrammed to move them to the buyer’s central station.  From what I’ve seen, buyers generally discount those accounts by 2X to 3X.  From my perspective, AES radios are in the same boat. If the dealer owns the IP Links, its tantamount to owning a phone line and the seller may be in better shape, but that’s assuming the buyer even has an AES receiver.  So, here’s the question.  If a dealer is programming AES radios to his/her central station’s network (meaning they are not “portable” and will have to be reprogrammed), are buyers generally going to discount the multiple on those accounts?  I thank you in advance for putting the question out there and I thank you for all that you do to educate and edify this industry.
    Hopefully the brokers and buyers will offer some guidance.  If accounts need to be reprogrammed, especially if remote access is not available and a site visit is required, the reduction in multiple is closer to 5 times; figure cost of at least $150 per account, assuming the buyer has the man power to devote to the switchover.  AES radio is another issue because not only will re-programming be an issue but the availability of AES repeater stations is another issue.  The buyer needs to be comfortable that communication pathways will support all the accounts.  Otherwise the buyer needs to consider the cost of new communication and that could affect the entire system.  
    Dealers should be thinking about the value of each subscriber account, not just in terms of monthly revenue but how that account contributes to company equity which will translate into dollars upon sale. The alarm business is a tough industry and you don't want to end up with an empty retirement basket.  
    So, what are the AES radio accounts worth in multiples?


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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