Re: going rate for purchase of alarm accounts?
- From: "Bob Worthy" <securinc@xxxxxxxxxxxxx>
- Date: Thu, 9 Feb 2006 10:45:24 -0500
"Charlie" <xalarmguy@xxxxxxxxxxxxx> wrote in message
news:xDyGf.1230$Ly6.429@xxxxxxxxxxxxxxxxxxxxxxxxx
Robert L Bass wrote:
I sold the business during my divorce and really just wanted toIf I'd wanted to hold out I suppose I could have gotten more but
get it done. One guy I know who had 3-year recurring contracts
was able to get 42 months less prepayments.
The 1st offer I got was waaay less than what you mentioned
That is because he doesn't know his ars from page 8 about most of what he
posts to. RLB has this never ending problem of being the industry mavin. In
other words, he has a story, an opinion or some sales pitch for every item
that pops up here. Some of what he says is true, which, by just hanging out
here gets him some knowledge, but as far as putting to much faith is what he
says, my suggestion is to get a second opinion.
so I figured it was worth asking here.
There is alot to consider by both parties and the market has it peaks and
valleys. There are people funding accounts, and people buying companies. The
big competition to buy accounts between some of the bigger companies has
slowed a bit, so those high multiples are hard to find. To tell you the
truth, if your accounts are relation type accounts, you may not want to sell
to these type companies anyway. The next item is the amount of accounts you
have. The multiple is higher for larger volumn. The language contained in
the contract is important. Are they, contractually, assignable? Do they
contain limits of liability, third party indemnification, ect.? Do you have
service records on these accounts? Do you have alarm activity records on
these accounts? Do you have AR records on these accounts? Are they
residential or commercial or what percentage of each? If commercial, are any
of them UL certified? Are there radios or cell units on these systems? New
contracts are worth more than ones that are in a renewal cycle. What I am
getting to is that multiples will ultimately be decided upon, after there is
a due diligence exercise. There will be (usually) a hold back on what ever
multiple is agreed upon. If you do not stay involved, through this hold back
period, don't expect it to be there after the term expires. There will be
fall out and the other company will charge you back for these. By you
staying involved to actually handle your account base for the buying
company, through the hold back period, will eliminate the majority of this.
Bottom line is there is no cut and dry answer to your question. It is a
supply and demand type scenerio. Presently, I have heard of 24 to 32 times
from ligitimate buyers. Anything higher is most likely a tickler to get in
the door and ends up less after due diligence. The only two deals that were
a ligitimate 42 times were from Devcon with a 50 million dollar and a 65
million dollar acquisition, and there were two full blown UL central
stations that went along with the deals. At any rate, before you start
talking to mulitple people, get a confidentiality agreement signed from
each, because they will be into your records.
Good Luck!
.
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- From: Charlie
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