Re: Brinks & Broadview Takeovers

[tourman <robercampbell@xxxxxxxxx>]

On Oct 3, 1:59=A0pm, mleuck <m.le...@xxxxxxxxx> wrote:
> On Oct 3, 12:22=A0pm, G. Morgan <usenet_ab...@xxxxxxxxx> wrote:
>
> > On Sat, 3 Oct 2009 11:48:19 -0400, "Robert L Bass"
>
> > <Sa...@xxxxxxxxxxxxxxxxxxxxx> wrote:
> > >> On long term contracts, we totally agree....(sshh.....let's not get =
Jim
> > >> riled up again.....:))
>
> > >I didn't think you intended to start trouble. =A0We have one opinion. =
=A0Jim has
> > >another. =A0'Nuff said?
>
> > No, not enough said. =A0What would you consider "long term"? =A0A compa=
ny can only
> > prove it's resale value with the contracts. =A0Why would a prospective =
account
> > buyer snap up contracts that are only month 2 month?
>
> It happens quite a bit

RHC: Oops, looks like I'm getting drawn in again. The real value to a
company doing their "due dilegence" takes into account the reputation
of the company, how long their clients have been in service, and their
customer attrition rate. The long term contract is valuable,
especially to larger buyers, because they seem to feel it gives them
some additional guarantees that the customers will stay with
them...aka...a bit more of a guarantee.  However, I can tell you that
the biggest thing that ensure clients stay with the buyer is how they
handle the sale and transfer of the the accounts to the new company.
Big companies get greedy and try to raise the prices while advising
the client of their takeover, and the clients disappear regardless of
long term commitments. If they don't disappear right away, they resent
it and leave when they can....

I can speak to this happening with an unnamed large company who bought
a small dealer out. He had long term contracts, and a too low price
for this buyer. So they tried to raise the prices and shit hit the
fan. End of a long story, they lost most of the accounts, left a
terrible taste in a lot of people's mouth's and learned a valuable
lesson in the process. Contract term or not, handle the customers you
are buying with care !!

So as Mark says, why not buy month to month contracts. As long as you
give the customers quality service and fair prices, you will not lose
them. The money keeps on rolling in regardless.....big companies
demand contracts because they know their attrition rates are terrible
and this helps them minimize that (on the short term anyway). They are
a lot like bankers; they want everything guaranteed before the money
starts to flow.....:))

The vast majority of the smaller dealers in our area use month to
month contracts only, as do I. To a buyer who has the facts, they are
still worth 30 times monthly (at least hereabouts). PLUS it's easy to
compete against the ADT's of the world (whose contracts mimic the
complexity of buying a house.....)

However, to keep Jim in line (who's shorts must be twisting by now),
I'll say that generally speaking, the length of the contract
determines the total value of the payout (but there is a lot more to
it than just that.....). I would also guess it depends a lot on who's
doing the buying......