Buying a security guard company in Florida

A security guard company supplies licensed officers to protect property and people: posts at apartment complexes and gated communities, construction sites, warehouses, hospitals, offices, retail stores, events and schools. Some officers stand at a gate or desk, some patrol in vehicles, and some are armed. Clients sign contracts priced by the hour for each post, and many posts run around the clock, so revenue repeats as long as the contract holds.

The business is mostly payroll, and margins are thin. The gap between the hourly rate the client pays and the cost of each officer (wage, taxes, insurance, uniforms and training) has to cover supervisors, scheduling and profit. Contracts often renew yearly or run until either side gives notice, and many go back out to bid on price every few years.

A typical company has a large group of hourly officers (with high turnover), field supervisors who check on posts, schedulers who fill shifts when officers call out, a licensed manager, and an owner who often sells contracts and handles the biggest clients.

• Many contracts, with no single client dominating hours billed.
• Long-standing clients that stayed through rebids, which shows they value the service and not just the price.
• Contracts that allow rate increases when wages rise, since officer pay is most of the cost.
• Reliable scheduling and a bench of fill-in officers, so posts are rarely left uncovered.
• Supervisors and a licensed manager who run daily operations without the owner.
• A low claims history for liability and workers' compensation.
• Every officer's license, renewal date and training tracked in one system.
• Armed posts only where the price covers the extra risk and insurance.
• Software that logs patrols and incidents, lets clients see them, and helps defend claims.

The Division of Licensing at the Florida Department of Agriculture and Consumer Services (FDACS) regulates private security (chapter 493, Florida Statutes). The company needs a Class B security agency license, which covers one location, and a Class BB license for each branch (section 493.6301). Each agency and branch needs a licensed manager, usually with a Class MB license, though a Class D officer licensed for two years can serve (section 493.6106). Officers need a Class D license and must work for a licensed agency. Armed officers also need a Class G license.

The agency must keep at least $300,000 of general liability coverage, or its license is suspended (section 493.6110). Every partner and principal officer files an application with fingerprints and must be approved before starting (section 493.6105). New or departing partners and corporate officers must be reported within 5 working days (section 493.6112).

Officer licenses belong to the officers, and chapter 493 doesn't address a sale. If you buy the company itself, its license should stay with it, but you and any new corporate officers need approval. If you buy the assets through a new company, expect to apply for a new Class B license. Confirm the steps with the Division of Licensing first.

• Contracts: term, notice period, rate increase rights, and whether they can be assigned or end when ownership changes.
• Gross margin by contract after wages, payroll taxes, workers' compensation and overtime.
• Overtime: round-the-clock posts create it easily, and clients often won't pay for it.
• Liability claims and lawsuits, including incidents at posts, use of force and negligent security claims.
• Insurance premiums, and whether coverage for armed posts is getting harder to buy.
• License status: every working security officer should hold a current Class D license, and their hires and departures should have been reported to FDACS within 15 days, as the law requires.
• Officer turnover, what it costs to recruit and train each new officer, and how many officers are close to license renewal.
• Payroll tax filings and compliance with wage and hour rules.

• What are your largest contracts, and when do they come up for renewal or rebid?
• How do you cover a post when an officer doesn't show up?
• What share of your hours are at armed posts?
• Who is the licensed manager, and will they stay?
• Have incidents at any post led to claims or lawsuits?
• When did you last raise rates, and how did clients take it?
• How long does a typical officer stay?