KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** how are fire suppression companies sold September 10, 2025 *********************** how are fire suppression companies sold ********************** Ken, Do you or does any other brokers know or can explain how fire suppression companies are sold? We service fire extinguishers and hood suppression systems and was looking to sell in the next year. Our RMR is billed different than a standard alarm account and we typically only use a contract for the hood suppression systems. I am not sure how the multiple would work and what is acceptable for proper company valuation. We do use your contract for the hood suppression services. No name please *********************** Response *********************** The fire protection business is different than the alarm business, though they often interact and the alarm dealer is monitoring the fire protection systems. Fire protection requires a different license and skill set. K&K does have a Fire Protection All in One Agreement that does provide for RMR for the repair service and inspection service. But the real money is likely in the installation. To the extent that the fire protection company has proper contracts with RMR revenue and services a multiple will be applied. Like the RMR for alarm contracts the multiple for service and inspection will be lower than the monitoring RMR because of the uncertainty in expense to provide the service. Alarm contract RMR for service and inspection can be 28 to 32 times, more or less. I would think that fire protection RMR would be viewed similarly, and like the alarm service and inspection RMR the buyer will do a deep dive to review the selling company's expenses to provide the RMR services, essentially coming up with an EBITDA valuation. Whether we are talking about RMR multiple or EBITDA valuation the same question is going to keep coming up, what is the multiple, the multiple for the RMR or the multiple applied to the EBITDA. RMR multiple is expressed in terms of months, so it can be 15 to 45,for example, and the EBITDA multiple is 3 to 10, as an example. I think both numbers should be relatively close unless the business is entirely RMR based in which case EBITDA is rarely considered [unless the buyer is a hedge fund or buyer has a lender use to that valuation exclusively]. Brokers may charge commissions of 3% [K&K's charge} up to 10%. Careful with the broker agreement; they are not all alike. Not all brokers specialize in fire protection business. One who I think does, and he's a good broker, is Rory Russell. You can find his listing, and other brokers, on The Alarm Exchange in the broker category. ********************* STANDARD FORM AGREEMENTS: To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** WEBINARS: https://www.kirschenbaumesq.com/page/alarm-webinars *********************** ALARM ARTICLES: You can always read our Articles on our website at www.kirschenbaumesq.com/page/alarm-articles updated daily ******************** Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth *********************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* PODCASTS: https://podcasts.apple.com/us/podcast/ken-kirschenbaum-presents/id1794851477 ************************* Getting on our email list / Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. ************************** Ken Kirschenbaum,Esq Kirschenbaum & Kirschenbaum PC Attorneys at Law 200 Garden City Plaza Garden City, NY 11530 516 747 6700 x 301 ken@kirschenbaumesq.com www.KirschenbaumEsq.com
