Re: Value of monitoring Contracts?

["R.H.Campbell" <rh.campbell@xxxxxxxxxxxxx>]

Please ignore the partial post below....hit the button too soon...will
repost later when the message is complete...

R.H.Campbell
Home Security Metal Products
Ottawa, Ontario, Canada
www.homemetal.com


"R.H.Campbell" <rh.campbell@xxxxxxxxxxxxx> wrote in message
news:WvudnRurXZEx64neRVn-qw@xxxxxxxxxxxxx
> Well, since that sounds like an invitation to post, I will....))
>
> Long term contracts are one part of the process of determining a companies
> net worth for the purpose of selling or buying. RMR locked into a long
> term contract does build equity in an alarmco's business, and depending
> upon the buyer, can be one of the most important things relating to the
> companie's value for resale. However, with buyers and banks becoming more
> prudent in lending money to buyers based on the worth of the company, it
> is far from that cut and dry anymore !!
>
> Any buyer doing "due diligence" to assess the worth of the business will
> look at far more than that. I'll summarize some of the more salient points
> below:
>
> 1- The companies track record as far as losing customers (called
> "attrition rate") is important. All companies lose clients through people
> moving, but bad companies lose far more than their share. Companies who
> specialize in the "free systems" also seem to lose far more than their
> share, perhaps because of the "el cheapo" nature of many clients who shop
> this way.
>
> 2- Buyers look for companies with the minimum number of types of panels in
> service. A proliferation of different alarm panel types will increase
> service costs for the buying company.
>
> 3- Buyers like all panels to be "uploadable" which saves service costs
> over time.
>
> 4- The monthly rate you charge will have an affect on the ultimate
> purchase price, since higher rates bring in more revenue.
>
> 5- The companies reputation in the marketplace is very important. Happy
> clients stay with a company with or without long term contracts and this
> loyalty can be transferable to the new buyer. However, much of that
> "loyalty" can disappear depending upon how the buyer handles the first
> year of ownership. If the buyer gets too greedy and trys to change things
> too much, customers will leave (contract or not), and this loss will
> usually reflect on a lower final payment price for the company. Most
> buyers try to lever in a "holdback" clause, to ensure that any losses
> through their stupidity comes out of your pocket.
>
> 6-
>
>
> "Jim" <alarminex@xxxxxxx> wrote in message
> news:1125374120.646605.13240@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
>>
>> James wrote:
>>> If I am thinking correctly your saying it will take me 2.5 years to
>>> break
>>> even?    Wouldnt you need a 5 year contract to make it worth your time?
>>> He
>>> only does 3 or 4 installs a year so it wouldnt break the bank.   But at
>>> the
>>> same time we wont gain much either...
>>>
>>> James
>>>
>>
>> You can contact Bob Campbell in this group. He can tell you all about
>> long term contracts and how it affects the worth of the accounts you
>> are buying.
>>
>
>