Specialized Fire Protection Services Company
This case study examines the acquisition structure and post-close strategy for a specialized fire protection services business focused on inspection, maintenance, and installation of commercial fire suppression systems. The company services office buildings, apartment complexes, manufacturing plants, schools, hospitals, and government buildings with a mix of required fire inspections, sprinkler system repairs, alarm monitoring, and suppression equipment installations.
The business generates $5.5 million in annual revenue and $1.06 million in adjusted EBITDA. Approximately 72% of the company’s revenue is recurring in nature—driven by mandated quarterly, semi-annual, or annual fire system inspections and monitoring subscriptions. The remainder is generated from installation and upgrade projects, equipment replacements, and emergency service calls.
Given the regulatory environment, high switching costs, and mandatory service cadence, this business is ideal for SBA 7(a) acquisition. Additional opportunities lie in geographic expansion, bundling security/alarm services, acquiring small independents, and partnering with property managers or builders on retrofit and compliance projects.
Proposed SBA 7(a) Deal Structure
Due to its recurring revenue, high margins, and industry-critical services, this company supports a traditional SBA structure with seller financing:
Purchase Price: $4.2 million (3.96x EBITDA)
SBA Loan: $3.15 million (75%)
Buyer Equity Injection: $420,000 (10%)
Seller Financing (Subordinated): $630,000 (15%), 6-year amortization with a 12-month interest-only period
Risk protections and incentives:
25% clawback on seller note if over 15% of recurring inspection contracts cancel in first 6 months
Seller earns a bonus if buyer adds $500K in new monitoring contracts within 12 months
Seller remains as industry licensing qualifier and technical advisor for 9 months
Customer Segmentation and Revenue Streams
Client breakdown:
Commercial office and retail buildings: 32%
Multifamily and residential complexes: 28%
Healthcare and medical campuses: 18%
Industrial manufacturing and warehouses: 12%
Schools, universities, and government: 10%
Revenue mix:
Recurring inspections (quarterly, semi-annual, annual): $2.2M
Alarm and monitoring subscriptions: $760K
Sprinkler and fire suppression repairs: $950K
Equipment installations (retrofit and new build): $1.35M
Emergency dispatch and code violation response: $240K
Most customers are on multi-year agreements for inspections and monitoring, with built-in CPI increases and regulatory compliance clauses. Top 50 customers make up 62% of revenue, with no client exceeding 4.5%.
Field Operations and Licensing Requirements
Technician team:
6 fire system inspectors (NICET-certified)
3 sprinkler fitters and repair specialists
2 alarm and monitoring techs
1 emergency response crew
2 permit/logistics coordinators
2 admin staff (billing, compliance logs)
1 operations manager
All technicians are NICET Level II or above and trained in NFPA standards. The company holds state fire alarm contractor licenses, suppression system permits, and general contracting certifications.
Dispatch and scheduling:
Powered by BuildOps (CRM, route management, inspection logs)
Automatic reminders for compliance testing
Mobile app for technician reporting and photos
Techs equipped with tablets and real-time GPS logging
Post-close workforce strategy:
Introduce quarterly safety and compliance training with NICET sponsorship
Launch technician performance bonuses tied to inspection retention and upsell volume
Maintain seller as licensing qualifier until buyer or employee passes licensing requirements
Facilities, Equipment, and Infrastructure
Facilities:
6,800 sq ft warehouse with:
Inspection tool storage
Inventory of valves, fittings, and heads
Dispatch office and training room
Compliance documentation archive
Fleet:
9 service vans (equipped with parts inventory and water flow testing kits)
2 supervisor vehicles
FMV: ~$460,000 (owned)
CapEx needs:
Replace 3 aging vans over 24 months: $105K
Upgrade technician mobile devices: $6K
Expand fire panel diagnostics inventory: $10K
Sales and Marketing
Current client acquisition:
Referrals from contractors, builders, and AHJs (Authorities Having Jurisdiction)
Google Ads and keyword SEO (ranked top 3 in region)
Mandatory inspection reminder marketing
Partner programs with property management companies
Marketing budget: ~$4,800/month
Post-close growth initiatives:
Hire business development rep focused on hospitals, Class A commercial, and schools
Launch bundled service plans: inspections + monitoring + emergency response
Target security alarm companies for co-referral partnerships
Expand geographic footprint into nearby county where licensing already allows operation
Financial Summary
Revenue: $5.5M
COGS (labor, parts, monitoring platform fees): $2.87M
Gross Profit: $2.63M
SG&A: $1.57M
Adjusted EBITDA: $1.06M (19.2%)
Margins:
Recurring inspections: 60–65%
Alarm monitoring: 80%+
Installation/retrofit projects: 35–45%
Emergency services: 70%
Revenue is evenly distributed with recurring billing and quarterly inspection cadences. Emergency work adds seasonal variability, especially in winter months when code audits increase.
Legal and Regulatory Compliance
State fire alarm and suppression contractor licenses are current
All technicians are NICET-certified with ongoing CE hours
Fully insured: $2M GL, $1M E&O, $1M umbrella, $1M workers comp
OSHA and AHJ-compliant documentation available for all routes
Buyers must obtain relevant state licenses or retain seller/employee as RMO or qualifier. Contracts are assignable with client notification provisions.
Working Capital and Transition Plan
Payroll float: $100K–$120K
Licensing and compliance support: $20K–$30K
CRM and tech upgrades: $12K
Seller consulting: $35K
Tech bonuses and recruiting costs: $25K
Ideal Buyer Profiles
Technical service entrepreneurs with compliance or inspection background
PE-backed home and building services platforms seeking fire safety exposure
Fire safety, alarm, or security company owners expanding vertically
Electricians or contractors with fire suppression licensure ambitions
Post-Close Execution Plan
Audit all current contracts for upsell opportunities (bundling, expanded coverage)
Roll out “Total Compliance” plans with all-inclusive pricing for inspections and monitoring
Meet AHJs in each jurisdiction to ensure licensing and compliance continuity
Recruit junior techs into training pipeline for certification and route expansion
Launch commercial real estate initiative targeting property managers and developers
Conclusion
This fire protection business offers regulated, recurring revenue with long-term client stickiness and essential safety compliance. With SBA 7(a) financing and moderate equity injection, buyers can acquire a well-run, cash-flowing platform with high visibility and limited competitive intrusion. The key to success lies in expanding bundled services, absorbing smaller providers, and maintaining a strong technician pipeline in a niche industry with long-term contract value and required service frequency.
