Alarm company valuations are complex. The appropriate strategy for each business valuation is different - there is no one-size-fits-all option for determining the value of an alarm business.
    That being said - while there are numerous factors that typically impact the value of an alarm business, I have to agree with Steve. CA’s new auto-renewal law is not a factor that should have a significant impact on multiples when it comes to a business’ valuation. There are a few reasons why this is the case.

  • First, regardless of the laws that are in place, you should have solid, up to date contracts (like Kirschenbaum’s Standard Form Agreement) in place with your clients and customers. This is a key element that potential buyers consider when assessing a company they are interested in purchasing. Unenforceable contracts are a huge red flag for potential buyers.
  • Second, if you stay on top of your contracts with your clients, there should be no gap and relatively little opportunity for the terms to be changed. This means the value of the contracts should stay just about the same regardless if they are in their initial term or if they have been renewed. Renewing contracts well before they expire is something you should be doing anyway, as it is good business practice in our industry. This new CA law is simply extra incentive to do so.
  • Third, buyers calculate their multiple offers based on a number of criteria. Two of the most important criteria are contracts and account quality. If you have enforceable, up-to-date contracts in place and high quality accounts with reliable customers, you should be in good shape to sell regardless of CA’s new law, now or down the road.

    For more insight regarding factors that can impact alarm business valuations and alarm company sales, please check out our free downloadable eBook, To Sell or Not To Sell, on our website, www.afssmartfunding.com. You can also contact me personally at (518) 366-5111 with questions or for a free alarm business valuation.
Rory Russell
Acquisition & Funding Services
Rory’s personal cell: (518) 366-5111
    Those in the know seem to agree that the multiple for accounts in renewal are consistent with those in original term.  I think however that is the case when a good percentage of the contracts are in original term.  That percentage is determined by the buyer.  Contracts that did not renew because of non-compliance with an automatic renewal statute are likely to be excluded from the deal, so the multiple on those could be zero.
    After taking advantage of Rory's free alarm business valuation you may want to pay for confirmation by getting an evaluation at whatsmyalarmcompanyworth.com  It's not free, but it is cheap, quick and reliable. 
    Did he even bother getting a hand-shake?
    This should be your December 31st column.....
    Do not send him to SARRG until he has completed getting contracts on all of his customers. 
    Btw, if he was with SARRG and falsified his application when asked if he used approved contracts, I would have returned his premium and denied coverage based a a fraudulent application. 
Bart A. Didden, Executive Claims Manager
Security America Risk Retention Group - SARRG
    And SARRG would be right taking that position.  Alarm companies are crazt doing business without contracts [not just for liability reasons but building equity reasons] and insurance companies are crazier insuring companies with proper contracts.
    The Standard Form Agreements have been updated for 2017.  We've added a non-disparagement provision.  We added a liquidated damage provision when the installation is delayed by the subscriber or others. We modified the monthly payment provision for services so that you have option to give one lump sum instead of separate charges. Fire Protection contract inspection provision was modified in several ways.  Retention of ownership of decals and yard signs was added.  Warning on audio and video added.  Fire All in One added provision to deal with inconsistent agreements.  Other changes have been made and you should check with our Contract Administrator Eileen Wagda at 516 747 6700 ext 312 to see if your form needs updating.  We starting adding the updates several months ago so you may be up to date.  Keep in mind that our updates are free for 6 months and half price for 12 months.  Updates will be prepared and sent out after the new orders are processed.  The sale ends January 6, 2017, so please be patient.  

notice of contract sale - order at www.alarmcontracts.com [you don't need a lawyer to figure this out - order during the sale and save thousands of dollars - call our Contract Administrator Eileen Wagda at 516 747 6700 x 312 for assistance]
    Contract sale starts now and runs through January 6, 2017, ending at 3 PM.  The discount will be accepted on all orders received between now and January 6, 2017 by 3 PM*.  This will definitely be the best deal of 2017.  Here's the deal:
    Buy 1 Residential, Commercial or Fire All in One and get $100 off and $25 off Disclaimer Notice
    Buy 2 All in One forms and get $100 off first and $200 off second and $50 off Disclaimer Notice and $100 off alarm.com rider.   Save up to $450.
    Buy 3 or more All in One forms and get same as above and $300 off the third form and $400 off the fourth form.  Save up to $1150.00 [Residential, Commercial, Fire, Home Automation]
    Commercial Mobile Surveillance Lease $1000.  Save $500
    The Fire All in One with Security Rider $1250.00.  Save $400.00  Add the Commercial Fire All in One and the Commercial All in One and get $200 off each.  Save $800.00
    Qualifier Agreement  $1200.00   Save $300.00
    Nationwide DIY with monitoring.  $3500.00  Save $1000.00**
    Nationwide PERS with or without GPS tracking.  $3500.00  Save $1000.00**
* Your order must be placed on line at www.alarmcontracts.com and received by our office no later than January 6, 2017 by 3 PM EST.  Orders must contain valid credit card payment.  Fill out the order form, add up your charges (we will check the arithmetic) and put in "promo" after your total.  Orders arriving after sale ends will be returned or with your approval charged regular published rates.  Orders will be processed in order received.  Rush orders, delivered by email within 48 hours, add 15%.
** Does not include consultation or modification
What's our Guarantee policy re updates?
    Free updates within 6 months of purchase*
    Half price within 6 months to 1 year*
* applies to original purchase only
To check if you need or are entitled to an update contact our Contract Administrator Eileen Wagda at 516 747 6700 x 312.  Update orders are processed after discounted or full price orders.