Knowing When You Need a Lawyer Vs a Broker to Do That Deal
One thing is for sure, you definitely need a lawyer when selling or buying an alarm business.
Lawyer or broker, which is right for you?
When buying or selling an alarm business or alarm accounts do you need a broker, lawyer, or both?
Can both sides use one broker or one attorney?
A lot of people probably have opinions on this topic, especially the brokers. Let’s start with a few easy propositions.
You definitely need a lawyer when selling or buying an alarm business. It’s a legal transaction. Can you survive if you don’t have a lawyer? Perhaps.
Can you drive cross country if you don’t have a driver’s license and your only companions are Johnnie Walker and Jack Daniels? Perhaps. But you might have a problem.
Maybe a little problem; maybe a big problem. Don’t expect Johnnie or Jack to back you up.
Brokers and lawyers serve different roles in a transaction. Brokers help find and connect the buyers and sellers, help structure the deal, find financing, and sometimes assist with due diligence depending on what the buyer or seller requests and is willing to pay for.
Lawyers can do that too, but generally don’t. Lawyers should be able to assist with structuring the deal, making sense of the deal and properly documenting the transaction.
In hundreds of deals, I’ve never had a client ask me to perform due diligence. One example of that would be checking each contract being purchased. It would be too costly to have me do it. While brokers are generally paid on commission, lawyers will be paid for their time, some worth more than others.
Of course you’re better off with a broker and lawyer who know the alarm industry. That’s what we spend our working time doing. Can your lawyer figure out how to get you sold or how to buy the alarm accounts? Sure.
RELATED: How to Reap Success by Doing Your Due Diligence
But unless your lawyer is a specialist there is going to be a big learning curve, and you’re going to pay for it, either in more money, a bad deal for you or a deal that has problems during and after the closing.
Can you use one broker or one attorney? Well generally there is one broker, usually representing one of the parties. The seller pays the broker, with buyer’s money at closing. The broker could be representing the seller, but even those who specialize in representing sellers won’t turn down a large buyer seeking to accumulate accounts.
You need to know who the broker represents and owes allegiance to.
Since many deals are really straightforward and routine, at least for the alarm industry broker, there often aren’t too many contentious issues. When there are, they are business issues that a buyer or seller should be able to figure out on their own.
A lawyer is bit different. Some deals are relatively small and the parties may want to keep legal expenses down or it may be a friendly deal among friends or relatives. I’m not one to make a mountain out of a molehill. I confess, I’ve represented both sides.
Sometimes it’s a situation in which I’ve represented both sides for a long time and neither would feel comfortable using another attorney. I suppose I could tell both of them that I won’t handle the deal for either, but instead I let them know and prepare a simple, straightforward agreement that is fair for both and easily understood by both.
I never had a transaction fail or have had post-closing problems, at least not because of the paperwork or the deal struck.
If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!
About the Author
Ken Kirschenbaum, SSI Contributor
Security Sales & Integration’s “Legal Briefing” columnist Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.
Related Content
Security Is Our Business, Too
For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Commercial Integrator + Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add to your bottom line.
A FREE subscription to the top resource for security and integration industry will prove to be invaluable.
