Security Sales & Integration July 2023 - 60

EXECUTIVE DECISIONS
Legal Briefi ng by Ken Kirschenbaum
ken@kirschenbaumesq.com
Steps to Selling Your 'Baby'
If you don't
already have a
buyer (or seller
if you're the
buyer), then
you engage a
law fi rm to fi nd
you a buyer/
seller.
▶ A READER WRITES: I am considering
selling my company. I'm a small integrator
with sales of several million dollars a year and
all my work coming from commercial and industrial
customers. What steps should I take to
start this process?
Th ere are many knowledgeable people in the
Ken Kirschenbaum, an
SSI Industry Hall of Famer,
has been a recognized
counsel to the alarm industry
for 45 years and is
principal of Kirschenbaum
& Kirschenbaum, P.C.
(kirschenbaumesq.com).
The opinions expressed in
this column are not necessarily
those of SSI, and not
intended as legal advice.
60
" guidance " business of selling your company
( " baby " ). Th at includes most of the professionals
writing in to or posting their services on
Th e Alarm Exchange (kirschenbaumesq.com/
page/alarm-exchange), which is curated by
myself and my fi rm, K&K. I am probably not
going to add much more than you'd fi nd there.
However, for this integrator, it sounds like it's
time for real professional services, not self-help
DIY legal, accounting and tax services.
I have clients who often tell me that they've
been involved in more than 10, 20, 30, 50
deals in their time. Impressive for sure. But
for me it's not hundreds that I have been involved
with, it's many hundreds. And, as far
as DIYing the deal, remember, " A lawyer who
represents himself has a fool for a client. " A
non attorney who tries to represent himself is
more likely to end up with the short stick, or
lose the deal, which might be the better outcome.
Th is is not to suggest that clients aren't
knowledgeable and helpful in the transaction,
perhaps the most knowledgeable, but still an
independent objective evaluation of the transaction
is necessary for best results.
So, where do you start? With a Retainer
Agreement whereby you engage a fi rm specializing
in the security industry, such as K&K,
to be your lawyer and you agree to pay legal
fees. If you don't already have a buyer (or seller
if you're the buyer), then you engage a law
fi rm to fi nd you a buyer/seller. Th e legal work
is billable on the clock and the fi nder fee is
contingent of fi nding another interested party
with whom you consummate a transaction. As
an example, K&K's fi nder's fee is about onethird
of what the alarm brokers charge, and
that part of your relationship doesn't have to
Security Sales & Integration JULY 2023
be exclusive. In other words, it does not lock
you into any time period. In fact, if I am involved
and don't fi nd someone to strike a deal
with within weeks, a reputable broker may instead
be engaged.
The next step will be discussing what you
can do to enhance the value of your security/
fire alarm business; though honestly, unless
you've contacted an attorney well in advance
of your readiness to sell it's probably a little
too late to make changes. However, you
and your counsel could still look to make a
transaction that will nevertheless provide the
opportunity to " cure " some of your company's
prior bad habits and enhance its purchase
price.
Anyone interested in finding out about
your business will need to sign a nondisclosure
agreement (NDA). These agreements are
not all the same. I prefer the K&K standard
nondisclosure agreement version. Next will
be due diligence. That will entail the prospective
buyer seeking information and documentation
from you; it will involve a lot of your
time, especially if you haven't maintained
great records and business practices, but even
so, a lot of time. If so engaged, that is not
something I would help with. So be ready
to provide the information or find someone
to assist. Newly named SSI Industry Hall of
Famer Jim Wooster (alarmfunding.com) just
started that service.
Next comes the letter of intent (sometimes
called the letter of interest) and what I often
call a waste of time, because the next step is
the purchase agreement. If due diligence is
done or almost done, then it's time to start
working on the purchase agreement, not a
letter of intent that the slick buyer is going
to try to turn into the purchase agreement.
After the purchase agreement, the documents
for closing the transaction will be assembled.
Then the deal, hopefully, will close, relieving
your stress and allowing you to be semi or
fully retired - and semi or fully richer!
securitysales.com
http://www.kirschenbaumesq.com/ http://www.alarmfunding.com http://www.kirschenbaumesq.com http://www.securitysales.com
Security Sales & Integration July 2023

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