Concerns for Buy/Sell Transactions October 7, 2026

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Concerns for Buy/Sell Transactions
October 7, 2026
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some concerns for the buy sell transaction of today
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   I miss the good old days when an alarm transaction—one alarm dealer buying the subscriber accounts of another alarm dealer—was a relatively straightforward process, handled over a month or so with legal fees of a few thousand dollars. Today many buyers are hedge funds, private equity firms, PE, or larger dealers funded by PE backers. Your buyer may now fall within the category I think of as buyers with other people’s money, OPM.
   When shopping with OPM, it’s easy to lose sight of the cost. Think of gambling casinos: there’s a reason you play with chips and the casino has no windows or clocks. The only check and balance buyers with OPM seem to have is the arduous checklist a seller must satisfy before the deal can close. Unfortunately for many sellers, that checklist contains a long list of items that seem to be—and, in my opinion, are—irrelevant to the deal. Why, then, are buyers approaching deals in a manner that requires them to examine information and documentation that, in the old days, didn’t seem to matter? For example, what difference does it make if the seller is taking too many liberties with finances when the buyer won’t be continuing those practices? If there are 1,000 monitoring accounts and the seller is paying 30% for third-party monitoring charges, what difference should that make to a buyer who knows its cost will be closer to 10%? What’s the point of demanding all of the seller’s documentation, including five years of tax returns, personal financial statements, certified balance sheets and more?
   The answer is not difficult. The buyer is not merely buying accounts. The buyer is preparing a file for an investment committee, lenders, insurers, accountants and lawyers, each of whom wants to demonstrate that no stone was left unturned. The person requesting a document may not know why it matters to the alarm business; that person knows only that the item appears on the checklist and must be checked off.
   That does not make every request reasonable. Due diligence should identify risks that can affect ownership, value or transferability of the recurring revenue and assets being transferred: whether subscriber contracts are enforceable and assignable; whether accounts are active and paying; whether licenses and permits are current; whether employees, subcontractors or central stations can assert claims; whether taxes, liens, litigation or regulatory problems may follow the assets; and whether the represented recurring monthly revenue is real. Those subjects belong on the checklist.
   A request that does not bear on value, liability or the ability to close should be questioned. Sellers should not respond to every request with a reflexive “yes,” particularly when the request seeks personal information, years of records having no connection to the assets being sold, or material that is confidential and unnecessary. Ask what risk the requested item is intended to address. Often the request can be narrowed, answered by a representation, satisfied with a summary, or deferred until the buyer has completed its review of the core account information.
   The seller also has to accept some responsibility. You cannot decide to sell on Monday and expect to close on Friday when subscriber agreements are missing, contracts are unsigned or not assignable, account records do not reconcile with billing, licenses have expired, and corporate records have not been touched in years. A buyer using OPM will not overlook those defects. It will reduce the price, increase the holdback, demand a broader indemnity or simply move on to the next opportunity.
   The first document a seller must insist on is a Non-Disclosure Agreement, ensuring the confidentiality of seller’s information. Before signing a letter of intent, the seller should know what the buyer expects to review, who will review it, how long diligence will last, what conditions permit the buyer to walk away, and whether exclusivity prevents the seller from speaking with anyone else while the buyer conducts its investigation. An open-ended diligence period is an invitation to delay, renegotiation and deal fatigue. Deadlines, materiality limits and a defined scope are not signs that the seller has something to hide; they are signs that the seller understands the transaction. This is an essential concern. Prolonged due diligence—whether it drags on with little happening or produces an endless stream of requests—does not favor the seller. The exception may be when the seller continues growing its RMR and the purchase price increases at closing, but that is not always, or even usually, the case.
   Produce documents in stages. Keep a record of what was provided and when. Redact information the buyer does not need. Do not hand over subscriber lists, pricing, access credentials or other competitively sensitive information before confidentiality protections are in place and the buyer has demonstrated that it is serious. If the deal fails, you do not want your most valuable information sitting in the files of a competitor—or in the files of every consultant the buyer hired.
   OPM changed the process, but it did not change the basic bargain. The buyer should receive the information reasonably necessary to confirm what it is buying, and the seller should receive a fair price without being buried under irrelevant demands. Be prepared, be organized and be willing to push back. A checklist is a tool; it should not be permitted to become the transaction.
   At K&K, our transactional team cuts through the unnecessary—or, as I prefer to call it, the BS. We routinely limit both the due diligence period and the scope of what will be produced. Having handled so many deals, we have developed a well-trained nose for a deal that is starting to stink. When it does, we shut it down and find another buyer—one less beholden to committees, consultants and layers of decision-makers whose approval is needed before the deal can close.
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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