FIRE PROTECTION PRODUCTS: With the adoption of wireless technology, Fire Protection products such as Fire Detection Systems, Fire Management Systems, Fire Response Systems, and Fire Analysis Systems & Software are advancing technologically. Other new technology advances include smart buildings, building automation, and intelligent sensors with networking capabilities. These innovations are increasing protection capabilities and efficiencies while lowering operating costs and fire losses. Prominent product technology players – Honeywell, Johnson Controls, Siemens, Orcus, Tyco, etc. – are expanding market presence through acquisitions and geographic expansion.
FIRE PROTECTION SERVICES: Companies providing design consulting, installation, maintenance, monitoring, and certification of fire protection systems are benefiting from a robust U.S. economy, construction-industry activity, and added fire protection regulations. Prominent installation and maintenance players – API Group, ADT, Pye-Barker, FLSA, etc. – are expanding their brands aggressively through acquisitions and industry specialization. The primary challenge for this sector of Fire Protection is the limited technician labor supply.
INVESTOR INTEREST: Private Equity and Strategic Buyers are attracted to Fire Protection for its consistent growth, high profit margins, recurring revenue, diverse customer base, competitive entry barriers, and heavy regulation. For Fire Protection businesses focused on commercial and residential customers, the following performance attributes create significant investor interest and enterprise value for owners:
- Revenue growth exceeding 8-10% annually;
- Gross profit margins above 40% and EBITDA margins above 15%;
- Minimal annual revenue above $5 Million;
- Higher revenue mix of service, inspection and monitoring versus installation;
- Industry concentration beneficial to market value – multi-family, industrial, etc.;
- High quality management team in place; and
- Technician recruitment/training/certification programs in place.
A combination of these performance attributes may create significant enterprise value, in excess of traditional investment returns.