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    This is in response to Mr. Yusza’s comment in the Oct 27 2014 article,
    ” With reference to a companies selling price, if all you have to sell is the monitoring value of your company it's been poorly managed and you'll get what you deserve.  You can bet the systems and the customers are not going to be worth a top price”.
    To make a blanket statement such as this is unfair to all the small dealers out there that takes pride in their company, I for one own a very small company that has been around for quite some time and although I do not have a great number of accounts they are installed professionally and utilize top quality equipment. To use your thought process that would make my company worthless or close to, my customers have been with me on average longer than 8 years or more and their service records are impeccable with most requiring no service calls due to improper installation, no to minimal service calls due to defective equipment (as it is installed properly to minimize false alarms and the equipment being used is top quality). My attrition rate has never been due to my service being poor as the main reasons an account has been lost has been either customers relocating out of the area or sadly a customer’s death. With my record of service does that make my accounts multiples worthless, I would think it would not? Although I do not have many accounts like the larger companies I think my company would at least have multiples in the higher range and not be of no value as you state.
    Thank you Mr. Kirschenbaum for giving all alarm dealers this venue to make our thoughts heard.
    Here's the deal.  You can have a handful of accounts or thousands.  Your valuation is going to be based on your RMR.  Monitoring is almost always charged as RMR [Recurring Monthly Revenue is still the right terminology even if the charges are not billed monthly, as long as they are billed periodically].  Though some of the super large companies may be valued in other ways besides RMR times a multiple, I am confident that the valuation will correspond closely with the RMR valuation.  If you get a value through it's going to be based on RMR.
    I suppose the quoted statement can be interpreted in different ways.  I interpret it to mean that in addition to monitoring RMR you should have other RMR to be valued and added to your company equity.  If you use the Standard All in One forms you know that many different services are identified, itemized and separately charged.  The RMR adds up.  If you monitor you most likely provide repair service too.  Providing repair service without a contract is foolish because you leave yourself exposed to liability unnecessarily, and it does nothing to add to your equity.  Service that is not supported by contract RMR will not be given a multiple in valuation.  While a potential buyer, or someone valuing the business may use a higher multiple for the contract RMR because there is a lot of service repair revenue that is not included in the RMR, that consideration is very likely not going to be expressed or explained.  You can bet that you won't be able to say, "look I have $120,000 a year in service revenue year after year.  That's $10,000 a month.  I want the multiple you are giving me for the monitoring RMR applied to the service revenue, or if not the same mutliple then something a little less".
    The answer is likely going to be no dice.  No Service Contract with RMR then no multiple.  That would be my response.
    If what was intended was that any business should have attendant good will to sell, such as telephone numbers, logo, web sites and domain names, etc, then I think that most of that will be consumed in the multiple for the RMR; in other words, not much if anything extra will be paid for those assets; they come with the subscriber contracts with RMR that are being purchased or valued.
    Building equity and value in your alarm business is not rocket science.  Build up your RMR.  While some RMR is worth more than others, all RMR has value.  Those of you that have experienced or believe in the exception to the valuation rule have a point of view and may be right, but for Tom, Dick and Harry, it's "how much multiple you giving me for the RMR".  
    You want to maximize your RMR?  Use the Standard Form Agreement.  There I said it.  What are you waiting for?


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