Buying a fire and security company in Florida

Fire and security companies install, inspect, repair and monitor the systems that detect fires and intruders, and in some cases put fires out. That includes fire alarm companies, fire sprinkler contractors, and installers of burglar alarms, cameras and access control. Many do several of these.

The best part of this business is the work that repeats. Fire codes require regular inspection and testing of fire alarm and sprinkler systems in commercial buildings, and building owners usually contract that out by the year. Alarm monitoring brings in monthly fees from homes and businesses. On top of that come new systems for new or renovated buildings, often bid to general contractors. Repairs that inspections turn up are often the most profitable. Most companies have installers and service technicians, inspectors, a project manager and office staff who schedule inspections and send reports, plus their own monitoring center or a contract with one.

• Monitoring and inspection contracts that make up a large share of revenue, with few cancellations. Buyers pay most for this part.
• Inspection findings turned into repair jobs, quoted and done before the customer calls someone else.
• Commercial customers spread across many buildings and property managers, so losing one doesn't hurt much.
• Technicians with the right state credentials and the industry certifications that inspections require.
• Monitoring contracts that can pass to a new owner, with a reliable monitoring center behind them.
• Careful estimates on project work, and little reliance on one general contractor.
• Inspection and service records in software, showing every building's schedule and history.

The Electrical Contractors' Licensing Board at the Florida DBPR licenses alarm work. An alarm system contractor I license covers all alarm systems, including fire. An alarm system contractor II license covers all but fire. A certified license is good statewide, and a registered one only locally. Monitoring counts as alarm contracting. Employees who install, service or sell alarms need a fingerprint background check and 14 hours of approved training. Monitoring-only staff skip the training (sections 489.518 and 489.5185).

The Division of State Fire Marshal separately certifies sprinkler and other fire suppression contractors, in classes Contractor I through V. The certificate is issued in the company's name, and it can't be sold or transferred. The certified person must be an employee or member who supervises the work. Servicing fire extinguishers and preengineered systems (such as restaurant hood systems) takes a separate State Fire Marshal license for each location, plus a permit for each technician.

Owners don't need these licenses. If the only alarm qualifier or fire protection certificate holder leaves, the company has 60 days to qualify someone else, or it loses that authority. Ask the State Fire Marshal how a sale affects the company's certificate. If a new company buys the assets, it will likely need its own.

• Monitoring accounts and inspection contracts in detail: value, terms and cancellations over three years.
• Whether the contracts can be transferred to you. That may depend on whether you buy the company itself or only its assets.
• The monitoring center agreement: cost per account, and who owns the customer relationship.
• Deficiencies (problems found during inspections) not yet repaired, and any liability if a system failed.
• Claims or lawsuits after fires or break-ins.
• Who holds each license and certificate, and whether they'll stay.
• Background checks and training records for every alarm employee, since gaps are a licensing problem for the company.
• Older alarm panels that report over phone lines or cellular networks that carriers have shut down.

• How much of your revenue comes from monitoring and inspections, and how has that grown?
• How many monitoring accounts and inspection contracts do you have, and on what terms?
• Who monitors your accounts, and could that agreement pass to a new owner?
• Whose licenses and certificates does the company work under?
• How many problems from recent inspections are still waiting on repairs?
• How much of your work is new systems bid through general contractors?
• Have you ever been sued after a system didn't work as expected?