While it is always necessary to have an attorney, an industry attorney, to handle the legal aspects of the transaction, a broker or consultant serves a different purpose.  The sale of a business is complicated and emotional, and most Sellers have very little, or no, experience in selling a business.  Anyone can hang up a shingle and call themselves business brokers or consultants.  I get “cold calls” all of the time from operations that are boiler room “business brokers.”  While there are quite a few experienced and ethical professional people in our industry it is important to engage an experienced professional who has your best interests in mind.  Many “brokers”  believe that their job is to connect you with a potential Buyer and then walk away.  Some will stay engaged only to protect their fee arrangement and may end up hampering your deal. 

    Make certain that any broker or consultant understands your needs and, most importantly, understands your company.  There is a big difference between a mass market company with “house accounts” for sale and a “carriage trade” company with multiple sources of cash flow and a complicated management structure.  While there are many Buyers out there, not all are a good fit for every Seller.   Ask a prospective professional what sets you company apart from others and how he/she would market you to them.  Although any responsible professional will insist on you engage an attorney, make certain that the professional  has at least a working knowledge of the legal and tax aspects of corporate structure and issues regarding the desired transaction.  For example, a Stock Sale differs from an Asset Sale for a variety of reasons.  Your professional should be aware of the issues in each and be able to explain your options.  Be wary also of any professional who does not insist on you engaging an attorney with experience in our industry such as Ken and his group.  Very few Sellers, if any, can successfully navigate the legal process, and any Broker who tries to do this for you doesn’t know what he doesn’t know.   Find a consultant with a staff and a full time office.  Issues will come up (missing documents, bookkeeping information, and closing schedules) during due diligence and the transaction and it is important to be able to respond quickly.  A “Broker” who does not have adequate support, may delay the transaction. 

    Even if  you have a trusted tax adviser who has represented you well, this person may not be familiar with tax issues surrounding a transaction, or how these issues are addressed in the typical sale of a security company.  We many times have to walk a Seller’s tax professional through the transaction as they don’t understand the industry. 

    This may be the biggest transaction in your life, don’t go it alone.  

Mitch Reitman
Reitman Consulting Group
Fort Worth, TX
       There is no question in my mind that if you have an alarm company for sale you want to use a broker rather than a lawyer to help you sell the business. Equally important you want to use a broker that has experience in the alarm field.
       Business brokerage is its own profession and requires years of experience  and knowledge of the process of selling a company and of valuing companies. Very few lawyers I know would profess to knowing much about either and certainly very few lawyers will know how to value van alarm company and go about selling it.
      Thanks for including me on this question. I would be happy to help the person who submitted the question.
Victor Harding
Harding Security Services Inc.
Toronto, ON   M4T 1A3
Tel: 416.925.7474 
    Generally, I believe a broker is better suited to sell an alarm company. While attorney's will always be needed to complete the documents, a broker can help the Seller during the sale. 
    As part of my service, as a Broker, I assist the Seller with the choir of re-contracting their customers if needed. Also, if there are any other hurdles that need to be jumped, I work directly with the Seller to get it done. For example, my last customer was 81 years old and he needed help pulling his contracts. So I spend a few days with him and his son going through the files to gather the contracts. This wouldn't be cost effective, nor would an attorney go onsite,to pull contract with a client. 
    With regards to marketing the business, this is going to depend upon the individual and there process. I can tell you that many brokers would post the business on business for sale websites and wait for buyers to respond. While this type of business would sell, it does not provide the best price for the seller. 
    I use a 6 point marketing approach to generate interest and offers in the business. My proactive approach, very similar to a bidding process, will generates multiple offers in a 45 day time frame. I have found that the bidding keeps buyers on their toes and offering a fair price, while providing my client the peace of mind knowing they received multiple offers on the business. 
    Finally, I believe that brokers tend to be more responsive than attorney's when responding to their client or to buyers. For example, I provide my clients and any potential buyer with my cell phone. Most of these guys are working and I make it a point to be available after hours if they have questions on the business. I have found it nearly impossible to speak with an attorney after hours...and sometimes it is hard to speak with them during the day. As a brokers, I am available and can respond quicker as selling the business is my only focus, unlike an attorney who may have court, closings, etc to deal with.
    Just my shake on it. I am curious to read the write up if it is available.
Gino A. DiGiallonardo, Jr.
Managing Broker
The Online Group Business Brokers
    In the best of all worlds, attorneys and brokers make up the team that brings the most successful conclusion to a transaction. One is not more important than the other, each does their own job with their own expertise.  An attorney, while very important to the sale from the legal aspect, generally does not help the seller with the following:
    Get your Company ready for sale so that you’re worth maximum dollars. We look at all aspects of your business—sales, marketing, management, operations, administration, installation, service, paperwork, software programs, products etc. to insure all is in order.  Just like a great realtor who looks from the outside, to the inside of your house and even your closets, and makes it as desirable as possible so that the potential buyer will offer maximum dollars, great alarm Brokers do the same for alarm companies.
    We’ll write a Book on your company. It’s called an Executive Summary. This is what a potential buyer we’ve screened will look at to determine interest. No names or exact locations are in the Book. If there is interest in next steps, then more will be revealed. All potential buyers must sign a Non Disclosure. I have yet to hear of a breach in our industry.
    The great Brokers have several reputable years in the industry, and because of that, many of the top buyers contact them frequently looking for companies in various parts of the U.S. At this stage, it’s time for the Broker to rifle shoot by tapping into the companies who have expressed interest in the seller's market. Hopefully the Broker will find the perfect match from this group. The Broker goes through a series of answering questions, providing information and eventually weeding out until there are a select few potential buyers.
    Once they have enough information, the potential buyer will make offers (Letters of Intent—LOI). We (seller and Broker) jointly determine which one is the best and whether it’s acceptable. Negotiating takes place here (and in fact, throughout the entire process by the Broker). If it is acceptable, the seller signs it (non binding at this point) and we go on to the next step which is providing the potential buyer whatever information they require. After all, they’re about to pay a considerable amount of money for the company. They and their Bank have to be sure this is the right purchase. They may decide to visit your company, whenever it’s convenient for you (nights, weekends if necessary). Then they make a final offer (Brokers negotiate here as well) which, if the seller signs, is binding and the Buyer now writes their Asset Purchase Agreement (APA). This is the legal document between the two companies. A lot of negotiating takes place here (legal portion is with the seller's and buyer's attorneys, business portion is with the Broker) until both parties are satisfied. Finally—the closing and payday.
     If the Broker doesn’t find the right buyer from rifle shooting, which does happen, then the great Brokers promote to a database of potential buyers they've accumulated over the years . We may target the local area or region as well as companies with accounts throughout the Country. A non descript ad such as ____ alarm company (or integrator), over _____ customers looking to sell. Contact us at ______. The Broker will get flooded with emails and calls. Then it’s a weeding out process. Then the Broker goes through many of the same steps as above. The goal is to get 3 or 4 very qualified interested parties. That tends to bump the offer prices up.
    So that’s the process. Most Brokers in our industry do not get paid until the sale is complete and the seller is paid. If the Broker fails to find a match, we don’t get paid. What you’re buying from us is our expertise in bringing you the best deal possible. The best transaction to any great Broker is a win-win situation. Both the seller and buyer are happy. I would say over 98% of our transactions have been that way. On occasion, the buyer is disappointed after the sale to find that the employees are disgruntled and some leave. Or the seller is not happy working for the buyer as he/she finds it difficult not being the decision maker. But I’m happy to say, those scenarios have not happened except for a few of the over hundreds of transactions we’ve been involved in.
    I highly doubt that an attorney, who is absolutely needed in every transaction, would have the patience and perseverance to do all the above.  They are two distinct jobs with two distinct expertise's.
Steve Rubin
Davis Mergers and Acquisitions Group, Inc.
847 550 1557  Office
847 340 2555  Cell
    Regarding Attorney vs Broker.  There is a lot to consider when selling your alarm business.  Many make the mistake of getting an attorney involved after they have signed an agreement to sell.  An attorney like the team at Kirschenbaum who are involved in our industry have seen and helped negotiate many deals but they can't negotiate a deal after the agreement is signed.  So the first bit of advice is speak with the attorney early and don't sign anything before it is reviewed. 
    I can't speak for industry brokers but I can tell you the value my company brings to the table.  We are involved often before a sale is even contemplated or at least early enough so we can identify issues that will cause a buyer to offer you less and help you repair those detractors so you can get better offers.  Don't wait until you have to sell to call for help although better late than never.  The sooner we get to work, the sooner we can help build your value.  I laid out improvement plans for one company so that when executed the owner decided he didn't have to sell after all.   When it is time to sell, we can help identify buyers who are looking for a strategic purchase and consequently willing to pay more.  Planning ahead changes everything.  We help dealers develop and execute growth and value enhancing plans, whether selling or not. 
    Best regards,
Bob Shoremount
Strandberg Consulting Group
      When selling your alarm company, working with an experienced alarm company broker is arguably the best option. There are a number of reasons why this is the case. Experienced brokers have valuable insight and knowledge of the security alarm industry that can benefit you throughout the sale process. From understanding the ideal time to sell to accurately assessing the value of your company and successfully negotiating favorable terms of sale, alarm brokers can help immensely during the sale of your alarm company.
    While attorneys and traditional business consultants may be skilled in facilitating general business transactions, alarm company brokers understand the security industry, specifically and have the specialized knowledge necessary to ensure that your company sells for top dollar. Brokers understand that RMR is a key factor in determining how much your alarm company is worth and recognized that using the more traditional EBITDA model to valuate your organization may diminish its value.
    Additionally, experienced alarm company brokers are familiar with negotiating this specific type of transaction and are often able to expedite the sale process. Most are familiar with qualified buyers, giving them the ability to match the cultures of both businesses quickly and efficiently without wasting your time. They are also able to negotiate favorable terms on your behalf and assist with the coordination of financing. For these reasons, in most cases, it is very beneficial to work with an experienced alarm company broker if you decide to put your alarm business on the market. 
Rory Russell, 
Acquisition and Funding Services, 
Personal Cell 518-366-5111
    Is it better to have a seller’s representative or an attorney handle the sale of an alarm company?  The answer that serves the seller best is.... both.  Their roles are DIFFERENT, and each is important.
               There are two main components of the sale:  the negotiation of the letter of intent and the negotiation of the purchase agreement.  The seller’s representative is clearly the better choice to negotiate the letter of intent, while the seller's attorney is the one to negotiate the final purchase agreement.
     The letter of intent addresses the major terms of the deal, e.g., the multiple the buyer is paying for the accounts or company, other assets that he or she may be buying beyond the account base, attrition holdback and possible attrition basket, etc.  An experienced representative is positioned best to negotiate these items, as he is in the trenches both with the seller throughout the process and daily in the acquisition marketplace.  This equips him with critical knowledge regarding where the market is trading and how much he can obtain for his client.  In the event that an item on the letter of intent needs legal view, the representative will certainly get the attorney involved to work through the legal issue.
     The second technical component of the transaction is the purchase agreement.  Here, the seller’s attorney works diligently to protect his client regarding legal issues such as representations and warranties, receipt of future payments, etc.   
     For nearly ALL the deals I have worked on throughout my 20+ years in the industry, neither the buyers nor the sellers relied on their legal counsel during the letter of intent negotiation.  The majority of the SDM 100 buyers negotiate the letters of intent without the use of their attorneys, and instead utilize the attorneys later in the process for the preparation of the final purchase agreement.  Likewise, the majority of the sellers do not engage their attorneys for the letter of intent but instead engage attorneys for the purchase agreement.
     It is a detailed but very rewarding path from the seller making the decision to sell to the last monies being wired.  I am available to speak with a prospective seller and have the discussion on the different processes involved so that he can see the whole process in advance.
All the best,
Barry Epstein, President
Vertex Capital
    To maximize the value of the transaction and insure the Stock or Asset Purchase Agreement properly protects the Seller, my opinion is you need both a Broker and a Lawyer.
    With over 40 years of experience my firm provide the following comprehensive services for the Seller:

  • Company Preparation including gathering data from Accounting, Operations, Central Station, Information Systems, Personnel, and Subscriber Form Contract Review (with Seller's Lawyer).
  • Develop RMR Rollforward, Financial Analysis, Assist correction of Contract issues to insure the maximum RMR is "Qualified."
  • Prepare Executive Summary highlighting the Favorable Marketing Points of the Company
  • Develop a potential Buyer List consistent with the goals of the Seller
  • Solicit initial indications of interest of Buyers and discuss with Seller
  • Solicit a Letter of Intent with selected Buyer
  • Negotiate Terms
  • Oversee Buyer Due Diligence
  • Review Business Points of Purchase Agreement with Seller's Lawyer
  • Negotiate Terms 
  • Closing Schedules assistance
  • Closing assistance
  • Post Closing Hold Back assistance.


So Ken, while an Expert Security Industry Lawyer such as you could do a most if not all of the preceding the vast number of man hours required to properly prepare and market the Company for Sale and all the hours following through to the Post Closing Hold Back is probably prohibitive.
Thank you for your forum and all you do for our Industry! 
John J. Rooney, President/Owner
Rooney & Associates, Inc.
Acquisitions, Financing, Consulting 
Palm Harbor, FL 34683
727 781 2704
727 480 5848 cell