How To Sell Your Alarm Accounts

1. Funding

As a seller, there are a number of options you have as a company to sell your accounts. Some common methods include:

Dealer Programs

One of the main purposes of dealer programs is to provide security companies with cash to continue their operations. Dealer programs can do a lot of good for a budding security company, but there are some inherent risks when choosing to sell accounts to a dealer program.

Pros
The biggest benefit of joining a dealer program is the immediate income. Instead of serving an account for years, simply selling the account and getting the profits upfront is the ultimate benefit. This can be especially beneficial for small companies who don’t have enough accounts to generate the cash flow for new equipment or other costs.

Cons
There are some things you should be aware of if you are considering selling your accounts to a dealer program. The first thing to consider is that most dealer programs require your accounts to stay in good standing for at least one year after they are sold. If one of those accounts expires for any reason, you will have to pay the full life of the contract in full. You can also make this cost up by signing a new account and essentially giving it to the dealer program for free. Often times these “chargebacks” have additional costs to losing a contract, so the cost could actually be greater than just the penalty of paying the life of the contract.

Attrition can become a real issue with signing on dealer programs. Almost all partnerships require the dealer to service the accounts for free for a year after the sale. So, in a scenario when you lose an account after the sale, but you pick up another account, you not only lose out on the RMR, but the cost of equipment, installation of the equipment, tech costs and commissions are all sunk. If that continues to happen, your costs can soon outweigh your income.

It’s important to remember that attrition can be completely out of your control. Accounts can be lost from death, job loss, moving, divorce and a number of different reasons. To think that you can avoid attrition is unwise.

In terms of contracts, most dealer program contracts run for three years. These contracts are airtight, so it becomes basically impossible to break a contact with a dealer program after the contracts are signed.

Security Equity Partners is a unique funding program that can customize advancement plans to help your company with contracts.

Brokers

An experienced broker can help you sell your accounts in a number of different ways. Brokers can provide insight on the industry, negotiate the terms of the sale, and provide account valuations. Here are some ways that brokers can help with the sale of your accounts.

Pros

Evaluating Your Accounts
A broker can help determine the sale value of your accounts. RMR is one of the most important factors in determining the value of your accounts.

Finding Qualified Buyers
Brokers can help your company find a qualified buyer for your accounts. Brokers can help you find a buyer that will pay the most amount of money for your accounts.They also can provide buyers from outside of your sphere of influence – widening the pool of potential buyers, and making it easier for you to sell your accounts.

Negotiation
There are many things that can be negotiated during the sale of accounts. A broker can help you get better terms of sale, help with attrition and other negotiations.

Cons

Fees
The fees from broker to broker can vary, and keep in mind that all brokers fees are always negotiable. The typical fee range is anywhere from 3-6% of the sale. But keep in mind there are many variables to fees – how many accounts are being sold, passthrough costs, buyer’s terms, etc.

The Alarm Financial Services Inc. offers a number of services to get funding for your alarm accounts.

Bank Loan

Just like you would go into a bank for a business loan, industry banks can loan you money based on the value of the contracts you hold. Much like a dealer program, you can bring your future revenue forward from the contracts.

Pros
Industry banks can offer competitive rates. It is also speedy process to get money because you  don’t have to wait or look for a buyer because the bank is the one purchasing or loan against your accounts.

Cons
Defaulting on your payments can ruin your credit.

The edmonds Group is an example of a bank that can help your company sell contracts.

5. Buyer Verification

Once the value of the accounts are determined and the buyer wants to proceed, the buyer will want verification of all records concerning the accounts. This is why it is so important to keep organized records of all your accounts. The buyer will want verification on:

Payment Records

It’s important to keep meticulous records of all forms of payment. This could be through a database, receipts etc. But it can’t be overstated that when the time comes to sell your accounts, having great records of your payments will save you the nightmare of tracking down payment records.

Service Activity

Keeping records of what accounts are still in service can help the buyer know the health of the accounts. If you don’t have any records of the service activity, the buyer will have no idea how stable the account is, and could potentially pull out of the deal.

Activity Records

Does the panel still communicate with the central station? When was the last time a test was run on the panel? These are the types of questions an activity record will answer, and these are important verifications for the buyer to have to know the health of the account.

The main takeaway is to keep good records of all of your financials and services. You will save yourself a massive headache in the long-run and keep the value up on your accounts when you are ready to sell. This game