KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Sub wont sign contract and you don’t want to give up account
December 23,  2019
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Sub wont sign contract and you don’t want to give up account
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 Ken,
    I have a client who kept the same name, but sold to a larger mother company with other offices.
            I've done this company’s work for years and monitor with a "central monitoring contract" from 2013, which is now month to month.  We do access, security system, fire alarm, and elevator phones.   The new facilities manager is a real dick with an enormous ego.   I've been trying to get him to update to new agreements, but he's been holding me off.   
            Is my current contract with their company name still in effect?  I suspect I know the answer.  
            It's been over a year since they took over and it's a fairly lucrative account.  I was hoping that our demonstration of good service and quick response would soften him up a bit.  I think if I can get past him to someone in the home office, I could get a reasonable person, other than this little Napoleon, to sign an agreement, but if he finds out I've gone around him I think he'll cancel.  
Please don't publish my name.
Anon
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Response
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            Most alarm companies have experienced this dilemma.  You know you should have a proper contract but you don’t want to push too hard to get it and risk losing the account.  It’s one form of gambling.  It can work out for you just like a night in Vegas.  Maybe you should sell your alarm company, come to ISC [prepay your room], take all the money from the sale and put it on red; one turn of the wheel.  
             There are alarm companies that have never had a subscriber loss that’s come back to bite them.  There are also companies who have had such claims; more than one.  My job is to educate you on the risk and help you reduce that risk or manage the risk once the shit hits the fan and you get a claim.
            But there is another consideration; equity in your business.  It’s great to have cash flow, but don’t delude yourself into thinking that your company can fetch top dollar if you want to [or need to] sell.  Your stomach for risk my not be the same as your buyer’s penchant for risk.  In fact you can bet it won’t be.  Your buyer isn’t going to offer top dollar for a pig in a poke.  Get ready for a multiple in the low 20s instead of the high 30s.  Do the math.  Take your RMR and multiply by 25 and then by 35.  Aren’t you the smart one to keep using no or outdated contracts.
            You don’t have a contract with this subscriber.  And you’re doing fire alarm monitoring.  Your central station would love to know who you are; so would your insurance company.  They don’t share your love of adventure.  
            OK, let me play devil’s advocate.  You don’t care about equity, you want the current revenue.  If you can’t get a contract signed, or worse you have to sign the customer’s contract that ties you up six ways to Sunday, then be careful with your work, get a little extra insurance and name the customer as an additional insured, put everything in your wife’s or kid’s name.  
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I have a Hanukkah and Christmas gift for you – it’s free and worth every penny
**************************
              Ron Davis authored The Start of the Deal.  Get yours today for free.   Thanks to Ron Davis’ generosity we are offering his smash hit, must have, book, The Start of the Deal.  It’s free and no annoying promotions.  You just have to click here and fill out the form.  So, Click Here    This offer is available until December 25, 2019 and Ron promises to personalize and sign each book.  
            Thinking about selling or buying alarm accounts?  Here’s the DIY primer for you.  Of course the smart move would be to call K&K’s Acquisitions lawyers before you start reading this book, and definitely after you read it.  
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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