positioning yourself for sale / wholesale central station growth
I really enjoyed your article from Security Sales & Integration Magazine on obligations and considerations when buying and selling central station accounts as it relates to third party monitoring centers. As an industry professional for over 35 years and an independent consultant for 12 years, I have witnessed, first-hand what you described in your article. Most dealers and many acquirers of accounts don’t consider the commitment they have to their monitoring center or the ramifications that telecom and connectivity has and can affect valuation and portability.
I have been engaged several times by dealers who are ready to sell and retain my services for maximum valuation and assistance with a transaction. I work for buyers and sellers and unfortunately some dealers call me too late in their process. It’s really difficult and sometimes impossible to earn maximum valuation when you initiate your efficiencies and cleanup during a sale process. The dealers that call on me a year or more before starting a process yield the best results. Many are amazed at how you can boost the valuation of a company small or large by adopting some best practices, cleaning up some messy areas of the business and smoothing out and defining their relationship with their monitoring provider including telecommunications. You always say it best, Ken, when you challenge dealers to call you for solid advice and contracts before they have to call you after the issue and pay you a substantially more, to defend them in litigation. It’s very similar with my services where a dealer should plan ahead. Make sure your contracts are in order, make sure your accounts are portable, get efficient and effective in your operation and make sure your agreement with your monitoring center allows for a change or transfer should you sell.
The path and growth of third party wholesale central monitoring centers is significant. The percentage of subscribers monitored by third party centers in relation to full service dealers with their own in-house monitoring center has increased dramatically. Over the years the relationship between security dealers and the third-party wholesale central monitoring companies has continued to evolve and change.
The decision in owning and operating an in-house central station monitoring center is not the same decision as it was twenty or thirty years ago, the decision to stay in the central station monitoring business is not the same either. Some independent dealers are feeling the pain when competing with a dealer who partners with a third-party wholesale central station that inherently offer more services and streamlined communications. Decades ago it was the opposite. In the past, it was difficult for the dealer who utilized a third party central station to compete with the dealer who owned their own monitoring center.
Some of the wholesale centers have really done an extraordinary job in leveraging their size to step up their offering without compromising personal services. It is a serious job and big decision on choosing any partner and choosing a central station partner is one of the biggest decisions a dealer will have to make. It’s essential to really dissect the company, management, infrastructure and all around value proposition. The industry is fortunate to have a good group of respectable players. The old saying of, “Understanding the difference between price and value”, is probably more meaningful in the case of selecting a central station monitoring provider than in most choices in business. Deciding and understanding who the best attorney, consultant and monitoring partner for you is a process and serious decision that shouldn’t be taken lightly and should never be based upon price alone.
Thanks for your insight, I really hope the dealers and central station appreciate the knowledge you share.
Peter P. Giacalone, President
Thanks for sharing your thoughts on these important issues. The day you start your security business is the right time to consider your exit plan. If you do things right from the start then not only will your operation run smoothly but you will be positioned to sell, without having to turn your business upside down at the last minute.
As far as monitoring your own accounts, that ship sailed long ago. You can't operate an effective central station for less than $75,000 a month, so if you're not paying central station charges that much then you should be using a wholesale central station. Look on The Alarm Exchange for the best of the best. [if your cs isn't on The Alarm Exchange - why are you using it?] Teaming up with one of these central stations should make your life easier, your business more efficient and add to your bottom line financially. If not, change centrals.
Lining up a professional like Peter is also a good idea if you have any doubt about how well things are going. You don't have to wait until you're ready to cash in, or out.