Acquisition Strategy for a Specialized Fire Protection Services Company Using SBA 7(a), Contract Recurring Revenue, and Regulatory Compliance Upsells

Specialized Fire Protection Services Company

July 02, 20255 min read

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:

  1. 25% clawback on seller note if over 15% of recurring inspection contracts cancel in first 6 months

  2. Seller earns a bonus if buyer adds $500K in new monitoring contracts within 12 months

  3. 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:

  1. Introduce quarterly safety and compliance training with NICET sponsorship

  2. Launch technician performance bonuses tied to inspection retention and upsell volume

  3. 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:

  1. Hire business development rep focused on hospitals, Class A commercial, and schools

  2. Launch bundled service plans: inspections + monitoring + emergency response

  3. Target security alarm companies for co-referral partnerships

  4. 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

  1. Audit all current contracts for upsell opportunities (bundling, expanded coverage)

  2. Roll out “Total Compliance” plans with all-inclusive pricing for inspections and monitoring

  3. Meet AHJs in each jurisdiction to ensure licensing and compliance continuity

  4. Recruit junior techs into training pipeline for certification and route expansion

  5. 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.

Co-Founder and COO of Eagle Dawn Capital

Danny Carlson

Co-Founder and COO of Eagle Dawn Capital

LinkedIn logo icon
Back to Blog