Private Equity Firms Pursuing Businesses Across the Fire Protection Industry
The fire protection industry has always been in high demand within M&A—and it’s heating up. Its dependable recurring revenue has made it a favorite among investors of all sizes, and in 2020 alone, there were a total of 20 deals announced on the market.
The fragmented nature of the industry means that fire protection businesses are ripe for a roll-up strategy. The industry’s need for regional coverage has created the perfect opportunity for private equity to take advantage of roll-up strategies to concentrate efforts on a single regional market. There are two reasons driving demand for fire protection services: regulatory updates and real estate development.
Regulations in fire safety
Fire safety inspections require the input of several layers of government (local, state, and federal), as well as private regulatory bodies such as the National Fire Protection Association (NFPA) and Underwriters Laboratories. At a minimum, these regulations are updated every three to five years, creating a demand for new equipment specific to each region’s unique regulations or for equipment that provides a particular function. This can even get as granular as certain pieces on certain systems needing to be regularly checked and/or replaced, increasing the areas for opportunity.
Real estate needs
Real estate development also creates demand for fire protection businesses. The NFPA requires that new commercial constructions be equipped with new fire protection systems and that those in older buildings be updated. This creates a need for all varieties of real estate, both old and new.
Since regional opportunities can streamline compliance with regulatory bodies, a roll-up strategy can be an effective tool within fire protection M&A. Acquiring small, specialty fire protection businesses and rolling them up into one effective regional supplier creates an optimized flow for regulation check-ups, a one-stop shop for regional customers, and maximized profit for the buyer.
Looking into an M&A strategy for a fire protection business? If you’re interested in pursuing this, please contact us for a confidential discussion of your specific situation. We have experience helping business owners across a variety of industries sell their businesses, as well as relationships with buyers who are interested in partnering with owners.