Is buying a fire alarm company different from buying an alarm monitoring company?
Yes. A fire alarm company earns from installing, testing and inspecting systems for building owners, and depends on its technicians and its access to panel brands. An alarm monitoring company earns from a book of subscriptions and depends on contract terms and customer retention. The checks, the risks and the key people differ.
The two businesses sound close, and some companies do both. But what you are buying is different, so the questions you ask are different too. One is mainly skilled field work for building owners. The other is mainly a book of recurring subscriptions. Work out which one you are looking at before you read the financial statements, or the numbers will mislead you.
What a fire alarm company sells
A fire alarm company installs systems, tests and inspects them on a schedule, and returns to fix problems found along the way. Customers are building owners and property managers. Ask how much revenue is repeat inspection work and how much is one-off installation. Ask how deficiency follow-up work is won, and which customers send it. Installation work can swing from year to year; recurring inspections steady it.
What a monitoring company sells
A monitoring company sells a service that runs every day, usually under a customer contract. A buyer looks at how long customers stay, what the contracts allow, and who owns the monitoring centre or pays another to run it. The page on selling an alarm monitoring company shows how a seller presents that book, which helps a buyer read it.
What to check in a fire alarm company
- Which technicians hold the credentials the work needs, and will they stay after the sale?
- Does the company have access to the panel brands and programming tools it services, and does that access transfer?
- How are inspection records kept, and can you read them?
- Are there open deficiencies or disputes with building owners?
Related reading
11 pages on the same subject, grouped by topic.
Buying
- GuideBuying a fire protection and sprinkler company in Canada
- Expert answerWhat if the technicians leave after you buy an HVAC company?
- Expert answerHow do I judge an electrical contractor’s room to grow before buying?
- GuideBuying an elevator service company in Canada
- Expert answerIs buying a residential cleaning company different from buying a commercial one?
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02National Research Council CanadaGovernmentNational Fire Code of Canada 2020
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 04Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
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