Re: Brinks & Broadview Takeovers

[tourman <robercampbell@xxxxxxxxx>]

On Oct 5, 10:25=A0pm, Jim <alarmi...@xxxxxxx> wrote:
> On Oct 3, 6:43 pm, tourman <robercampb...@xxxxxxxxx> wrote:
>
> Robert,..... coincidently, I just got this from Ken Kirshenbaums blog.
> It was topical so I'm reposting it. If you don't know, Ken is one of
> very few US. nationally known alarm trade attorneys.
>
> =A0 =A0 =A0 =A0 =A0 =A0 Valuing Your Business Oct 5 2009
>
> =A0 =A0 How do you go about valuing your business? =A0I get several calls=
 a
> month asking me that, and asking me to give a quick valuation over the
> phone. =A0Just the other day I had a broker specializing in brokering
> alarm company deals in my office. =A0We kicked around acquisition issues
> and it was clear to me that there are very different ways to approach
> the valuation of your business. =A0Of course what some buyer is willing
> to pay is the ultimate value. =A0There are things you can do to enhance
> that value, and there is no better time to start then right now.
>
> =A0 =A0 Recurring monthly revenue, RMR. =A0You know that alarm companies
> sell subscriber contracts for a multiple of the RMR. =A0But why is some
> company getting 12 times, others 45 times and more? =A0Why are some
> companies surprised that there is no one interested in buying the
> subscriber accounts?
>
> =A0 =A0 You should take some comfort knowing that you are in a business
> that deals with subscriber contracts as negotiable instruments. =A0The
> contracts have intrinsic value, are assignable, tradable, and have
> real value. =A0That $30 a month subscriber account can be worth $360 to
> $1500. =A0If you have 1000 or 5000 or more of those subscriber contracts
> you have a valuable business to protect.
>
> =A0 =A0 What makes certain subscriber contracts worth less? =A0Here's a l=
ist
> of what to avoid or not do at all:
> Use equipment or installation techniques that are not customary. =A0You
> decide to use some obscure panel or application that other companies
> don't use.
>
> provide services that other companies don't or won't, such as 24 hour
> service, pick up cash, cash discounts, opening closing reports at no
> charge, pay the false alarm and permit fees and fines, etc.
>
> Don't use contracts
>
> Use old out of date contracts
>
> Let contracts go into renewal without new contracts and updates
>
> dont bother carrying errors and omission insurance
>
> Don't have your own line at the central station
>
> If you are a central station, use obsolete technology to monitor the
> accounts
>
> If you're a central station, don't use three party contracts or have
> contracts with your dealers
> finance or sell of your RMR as you struggle along; you won't have
> anything to sell.
>
> =A0 =A0 Well, that's enough of a list of what not to do. =A0So, what can =
you
> do to enhance the
> =A0value of your business:
>
> diversify your accounts, with a mix of residential and commercial
>
> diversify types of alarms; burglar, fire.
>
> lease commercial accounts; sell small commercial and residential; use
> service
> and monitoring contracts
>
> use updated contracts and have all subscribers execute them
>
> all subscribers on your own line into the central station
>
> all systems remote programmable
>
> all systems compliant with code, UL, NFPA, trade custom standards
>
> provide customary services; don't try and reinvent the wheel
>
> get new contracts rather than rely on renewal terms
>
> keep all subscribers geographically located
> .
> maintain good service records for subscribers
>
> stay on top of your receivables; keep them current
>
> keep your debt to a minimum; you'll end up with lots more at the
> closing.
>
> =A0 =A0 The difference between 32 times and 38 times, where most small to
> mid sized companies can expect to sell subscriber accounts, can amount
> to a lot of money. =A0To command 40 times or more you have to have paid
> attention and adhered to most if not all of the above
> recommendations.
>
> Or maybe you just get lucky.

RHC: Good post....useful information !