KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and white list ken@kirschenbaumesq.com ******************************* Selling accounts - how to make your second mistake / more comment on associations May 17, 2019 ********************** Selling accounts - how to make your second mistake ********************** First mistake is signing the broker agreement with NDA or a mutual NDA. Second mistake is signing an LOI presented by a potential buyer without first having a lawyer review it, carefully. An LOI can be very deceiving. What looks appealing is the vague offer presented by the buyer. Usually the LOI has a multiple in it that catches the seller's attention. Buyer's going to pay over 40 times. Sounds great, where do I sign? How about the fine print, that's really not that fine; it's right in your face but you can't see past the over 40 multiple. The fine print let's you know that the entire offer is subject to due diligence; buyer can withdraw for any or no reason, at any time. While the buyer is paying over 40 multiple, it's only going to pay for approved or qualified accounts. That may end up cutting out a significant number of your accounts. Worse, the buyer may insist on getting all the accounts, even the ones the buyer isn't paying for, so the real multiple drops well below 40. But here is the part you really need to be mindful of; the LOI will also have an exclusivity period in it. You will be prohibited from talking to any other potential buyers while the buyer is deciding whether to actually close on your deal. Of course some period is acceptable because the buyer is supposedly incurring expense conducting its due diligence. But what is an acceptable period of time to tie you your business? Does a buyer really need 6 months or even 3 months to conduct due diligence and make a decision? Do you know what happens during that time period to the seller? The seller thinks there is a deal and begins the countdown for the sale. As the possible closing date comes closer the buyer is able to squeeze and squeeze on still unresolved issue because the seller has been placed in a vulnerable position; bags packed and one foot out the door. When it comes down to the final sticking points in the final deal [a deal by the way that may bear little resemblance to the original terms in the LOI] the seller is worn out and has to agree and close. Sure, plenty of deals go smooth and quick. These deals shouldn't be that complicated if the parties and their attorneys are reasonable. Don't make the first or second mistake. Get K&K on your side. Call our Merger and Acquisition team. Jennifer Kirschenbaum,Esq at 516 747 6700 x 302 or Jennifer@KirschenbaumEsq.com. And, you don't have to wait until you are ready to sell or even thinking about selling [which is everyone the moment they go into the alarm business] - you can join the Concierge Program today. Then K&K will already be your lawyers. ********************** more comment on associations ************************ Ken, Where to even begin responding to Gene from Reliable, The success of the business environment in New York State is directly associated from two entities, the NYBFAA (name at the time) and its chapters and the NBFAA. We developed our licensing rules based on what we wanted, not what NBFAA wanted (if they even had an opinion) because it’s our state, not theirs. What we did adopt as part of our Law was the National Training School with its already created content and administrative staff. At that time the school was running for about 4 or 5 years and had thousands of students who completed the program. It came with credibility. As far as the laws about false alarms, the guidelines and best practices that is endorsed by the policing community at the national levels and creates fairness was developed by NBFAA from what was working in many different communities including Scarsdale, NY. It is now endorsed by the IACP, NSA, FARA and other Law enforcement national associations. As far as his local chapter, the ESA has a strict hands off approach when it comes to the local politics of the chapters. It is incumbent on the chapters that they have internal programming to grow its future leaders and for guys that have been around as long as Gene or myself, the industry is too small and the old dogs need to be recycled from time to time. Most of the new entries into the industry don’t understand the good work that the associations do, especially in NYS where we are protected and have been since the late 1980’s. How do I know? I was there. Bart A. Didden, President U.S.A. Central Station Alarm Corp. Port Chester, NY Milford, CT St. Paul, MN 877-872-1266 ********************** Response ********************** I think you left out Metropolitan Burglar and Fire Alarm Association of New York. It's easy to feel left out of associations and like a lot of things, you get what you put into it. Participate and lead. ******************** CONCIERGE LAWYER SERVICE FOR THE ALARM INDUSTRY PROGRAM You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** NOTICE: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles *********************** THE ALARM EXCHANGE
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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 ken@kirschenbaumesq.com www.KirschenbaumEsq.com
