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license question for CA alarm companies / comment on how much are you leaving on the table / Free Webinar
September 12, 2018
Free Webinar:  September 27, 2018. 12 to 1 PM EST.    Round table discussion on preparing your company for sale [we may get to buying considerations too].  Business brokers and consultants will join the discussion.  Mitch Reitman, Robert Shoremount, Barry Epstein and Rory Russell are our Round Table Experts.  Join us by reserving your spot:  Click here:
license question for CA alarm companies
    I am dealing with a company not in my state of California. They are confused as to why California Alarm companies do not require a C10 and C7 to work on Burglar and Fire alarm systems. I explained my ACO and ACQ covers all low voltage and a C10 is only needed if working on the high voltage side of a Fire Alarm system. There must be documents in California that explain what exactly a ACO/ACQ license is allowed to do.
    Can you help?
    Best if a CA license holder explains.  Can someone help?  Here is response from Nick:
California has several licenses affecting the alarm/security industry:

ACO - Alarm Company Operator: For alarms to which 'police' may respond, ie burglar alarms, holdup alarms, 'panic' alarms. This license is also required of companies providing monitoring services for those signals, regardless of whether the company is located within California or in some other state. This license does not authorize installation of alarms to which 'fire' department responds, such as fire, sprinkler, heat, smoke, ansul, etc.

ACQ - Alarm Company Qualifier: The license for the 'person in charge' of a licensed ACO.
C-7 Contractor: For low voltage work, ie camera, intercom, telephone, door bell, malibu lights, enviromental condition monitoring, but specifically excluding fire alarms.

C-10 Contractor: For everything electric, including fire alarms (including the high voltage and the low voltage side).
C-28 Contractor: For locks, and related hardware.
QMO/QME - Qualified Managing Officer-Owner / Qualified Managing Employee - The 'person in charge' of the licensed contractor is (or the company employs) one of these. Depending on the size of Tony's company, and the volume of fire alarm work it does, after obtaining the needed C-10 license, Tony might also consider 'hiring' a QME using the assistance of Ken's 'Alarm Exchange'.
    Tony has been lucky so far, as he most assuredly needs a C-10 license, in addition to his ACO/ACQ license. If Tony has been in the trade for a while, based upon his prior work experience, he likely can sit for the C-10 license test, and (perhaps with the aid of one of the many companies offering such services, who will automatically let him know of their 2 and 3 day cram courses) will probably pass the license exam. This will allow Tony, himself, to perform fire alarm work. But if Tony has employees who do fire alarm work for Tony's company, there are many additional hoops for them. Tony can see more information about this is in each issue of the Calif. Alarm Association 'Mirror' magazine, which, as a ACO licensee he probably receives by mail each month. But important for Tony to act quickly, as the penalties for getting caught performing unlicensed fire alarm work in California are substantial, and it is other, larger, licensed fire alarm contractors who will blow the whistle on him. Good luck, Tony!
    Lastly, Tony, suggest you carefully review the 'indemnification' provisions in the sub-contractor agreement your company has with the out-of-state companies for which your company does work. Make sure you are not assuming more liability than you can afford to lose. I have found that the out-of-state companies often lack the Calif license required of them, ask for lots of indemnification, and they get all the RMR, but the sub-contractor (that would be you, or, if my company agreed to do such work, me) gets all the liability. IMO, best not to do business with them.

how much are you leaving on the table from September 3, 2018 article
    Interesting topic that seems a little murky in the industry. I am curious what multiples the industry values RMR based service revenue at.   Also, what factors for service and inspection RMR raise or lower the multiple.
    My panel of experts and I are likely to touch on this topic, and many more, so be sure to sign up for the Free Webinar scheduled for September 27, 2018 at noon, NY Time.  Register here:
    Multiples for service and inspection revenue can range from 20 to low 30s times RMR.  I think there are three primary factors that would influence the multiple:
  1.  Is the RMR properly priced
  2.  What is percentage of RMR for each category for monitoring, service and inspection
  3.  Is the service and inspection RMR under proper contract
    Pricing the service and inspection RMR is crucial for those service to be of any value.  If you commit to providing all labor and material, or inspection, and the buyer concludes that you have under priced the RMR and it's actually costing you more to service or inspect the account than you are being paid, expect little or no multiple.  If the buyer thinks you priced it right then expect to get paid.
    Most alarm account buyers are looking for monitoring RMR.  While some don't want the service or inspection RMR, others will be happy to buy it and others will reluctantly pay for it.  Sometimes it depends on how bad the buyer wants the monitoring RMR and how much of the total RMR is not for the monitoring.  If the service and inspection only make up less than 25% of the RMR then the buyer may offer a blended multiple, so that service and inspection RMR gets prices the same as the monitoring.  If the service and inspection RMR is much higher percentage of the total RMR then expect to see a different, and lower, multiple.
    Service and inspection RMR must be under contract to have value.  Per call service and inspection is not likely to be valued.  Yes, you will be transferring all your customers at the closing and the buyer will be picking up that per call service and inspection, but you won't be getting paid for it, usually.  Deals can be structured where you will be compensated, but it's not typical and it will be an up-hill battle.  Put your service and inspection under RMR and use the Standard Form Agreements to get top dollar for that RMR.
    And register for the webinar right now:

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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