CE Pro May 2022 - 37

seems logical ... it seems like
the way things are supposed
to happen. "
Prepping to
Pass the Torch
The ownership transition
was actually in the works for
a long period of time. After a
health scare a few years ago,
64-year-old Angst began
slowly handing over the reins
to 38-year-old Newsome
with the full transition happening
in April when Angst
turned 65.
" I was happier to do it
deliberately than just kick-off
and have somebody inherit
the business. I get to be
around for a while and do
what I want. It's still been
very emotional. I'm wondering
what happens when I'm
not 'Max at MAXSYSTEMS'
anymore, " he says.
Newsome and Angst have
operated the custom integration
business together for
many years.
" He oversees half the work
and I oversee half the work.
We run about 40 projects
at any given time in various
stages of completion. Our office
staff writes bids, checks
inventory and accounting,
and provides support. I have
another dozen guys in the
field. That's the business. It'll
operate pretty much as it
always has been, " says Angst.
" I call all the 30-year-olds
working with me 'my kids, "
says Angst affectionately.
" I know that not every
customer wants to talk to
somebody of my age and not
everybody wants to talk to
a 'kid.' By going out in pairs,
any time we meet a new
developer or a new designer,
we have our bases covered.
cepro.com
Whichever way it goes, one
of us becomes the dominant
conversation party. It's a
very young industry. For the
past several years, I have
not gone on any sales calls
without one of 'my kids.' So
just as we have been doing in
sales and on our projects, it
is a natural thing to hand off
the company to the current
generation. "
In terms of selling the
company, Angst considers
himself lucky that he has
Newsome on staff taking
over the business. Also, the
structure of the ownership
transition was made easier
because MAXSYSTEMS has
always focused on maintaining
strong cashflow. As Angst
noted in CE Pro's 2017 profile
article about the company,
his ability to maintain
$250,000 in cashflow at all
times enables MAXSYSTEMS
to pay out cash bonuses to
employees immediately.
" If you're a medium-sized
company, like we are, you're
not big enough to be swallowed
up, and even if someone
bought me for $3 million,
I'd pay big taxes. It's not the
same thing. I got lucky I had
Mark, " he says. " The company
is profitable and prosperous,
and we're all having a good
time. I think any integration
company owner would be
happy to turn over their business
to people in their own
business who are excited by
it. I'm excited. "
Angst says the ownership
transition will give him
income for the next seven
years. He and Newsome are
discussing a role in which
Angst looks for new business
opportunities for the
company.
" It's a good deal for me,
the company can well afford
it, and it was easy. It didn't
require him to mortgage his
parents' home. It was a little
more casual than it might've
been if I had suddenly decided
I wanted an exit plan.
It's something that we have
talked about for five or six
years, " adds Angst.
40 Years of Lessons
for MAXSYSTEMS
It was back in 1982 when
Angst first started in the
low-voltage business as an
employee for an alarm parts
company. Four years later
in 1986 he launched Max
Security, which eventually
became MAXSYSTEMS as
the company migrated beyond
just alarms.
" I originally wanted to just
operate an alarm company.
I wanted to have 1,000
people sending me $25 a
month. I thought that would
be a pretty good life. But
along the way, I kept getting
asked, 'Do you do this? Do
you do that?' We went from
offering just alarm systems to
installing phones, networks
and satellites. I thought
satellites were going to make
me rich ... and then they were
free. That led us to all of the
automation systems. We became
much less of a security
company and much more of
an integrator, " Angst recalls.
Today, only about 4% of
MAXSYSTEMS' revenues
come from alarm systems
with about $90,000 per year
in RMR from a few hundred
accounts.
" When it was just an alarm
company, I thought I would
retire to the account base
built on the recurring revenue.
Initially, the recurring
monthly revenue was 30% to
40% of our revenue. Today,
it's much less but we do dramatically
more work. When
we became an automation
company, when we became
an integrator, everything
changed, " explains Angst.
" If you're a
mediumsized
company,
like we are, you're
not big enough
to be swallowed
up, and even if
someone bought
me for $3 million,
I'd pay big taxes.
It's not the same
thing. "
-Max Angst,
MAXSYSTEMS
That change spurred Angst
to start looking at a different
business model and different
exit strategy.
" I learned that if you were
doing $2 million, $3 million
or $4 million a year, you
aren't not on the radar to
be acquired any big security
companies. But if you were
doing $7 million, $8 million
or $9 million a year, it is a
different thing, " he says.
" We haven't been able to
get there. We haven't had
May 2022 CE Pro | 37
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CE Pro May 2022

Table of Contents for the Digital Edition of CE Pro May 2022

CE Pro May 2022 - PresentationPage
CE Pro May 2022 - Cover1
CE Pro May 2022 - Cover2
CE Pro May 2022 - 1
CE Pro May 2022 - 2
CE Pro May 2022 - 3
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CE Pro May 2022 - Cover3
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