In response to “competitor stealing accounts”, when is a contract a contract or not a contract for your Tortious Interference response?
    In my opinion, the vast majority of systems in service today are “outside” of the initial contract period and I believe that the majority are month to month or at best year to year.  I also believe that many alarm company owners, buyers and sellers in the industry believe that there is equal value in the account base with month to month agreements as when the majority is early in the first term. I disagree. Ken, maybe you can clear this up for me? 
    When or how is the consumer so constricted from accepting a lower monthly fee, or a new system that uses some of the existing components, which they own, just because there is a business relationship with another alarm service provider in a month to month or year to year agreement?
    Or, has the industry just taken for granted that the evergreen provision, even year to year, will protect them from loosing accounts?
    The value of the first term of the contract is not in dispute, but maybe, just maybe, by our own neglect we have given rise to a new kind of alarm company, “Up Grade Your Old System For Free”. Existing alarm users are already sold on having security and lead generation costs are as low as a tank of gas and some hours.
    The industry may be on the edge of having to provide something tangible or of perceived value to re-sign accounts to new 5 year agreements to maintain their value.
    The future is here and the time to act may have passed many by.
Bart A, Didden, President
USA Central Station Alarm Corp.
Offices in NY, CT & MN
    Contracts in automatic renewal period are still valid enforceable contracts, provided you have complied with your state's law, if there are any.  However, the automatic renewal period is rarely as long as the original term, though "renewal for like term" is not uncommon.  Generally, a contract in original term is more valuable than a contract in renewal.  That means you're better off getting a new contract rather than depend on the automatic renewal.  If you have to throw in a free survey or some updated equipment it may be worth it.  That's the point Bart makes.
    You hear that subscriber accounts in renewal or valued the same or close enough to contracts in original term.  That may be true in some instances, but here is where it comes into play, and you may not realize how or why.  When a buyer looks at acquiring your accounts [and isn't that really the best test of what they are worth] the accounts will be valued as a group, not separately.  If all are on Kirschenbaum Contracts, or all are in original term, or most meet those criteria, those that don't will be grouped in.  But here is where the quality of the contracts or accounts are truly evaluated, in the multiple offered.  A potential buyer may articulate why the offer is only 33 times, or less, and blame it on the contracts or the age of the contracts.  It's very intuitive; the buyer just knows that this is all the accounts are worth.  A more business like evaluation of course will approach the acquisition by trying to calculate the cost of the investment and likelihood of getting the expected return.  If most of the accounts are out of original term, if the enforcement of the contracts are in question, if the quality of the accounts are poor to average [credit scores or other criteria], if attrition is historically high, the multiple offered will be well below industry standard, which I think is 35 times, more or less.  
    Anyway, I agree with Bart that contracts in original term will fetch the higher multiple.  The best contracts will fetch the best multiples.  Better subscribers are more valuable than high risk subscribers.  The advice in this area hasn't changed: Use the Standard Form Agreements.  A year before the renewal would kick in go out and get new contracts signed.  Hopefully you'll have the opportunity to update the system, increase the RMR and get an updated contract signed.