Insight

Fire and safety: The opportunity for PE firms

See why PE firms are actively investing in fire and safety businesses.

Philip J. Isom

Philip J. Isom

Principal, Global Head of M&A, KPMG Corporate Finance LLC

+1 312-665-1911


The fire and safety market has seen increased private equity (PE) interest over the last few years as PE firms recognize the highly fragmented nature of the industry as well as the stable nature of the sector given the number of regulations that businesses must comply with.

The fire and safety market at a glance

 

8.8%

projected compound annual growth rate (CAGR) globally from 2019 through 20251


 

 

9.3%

projected CAGR for the suppression segment, the fastest-growing segment1

  
 

 

24%

of global insurance claims between 2013 and 2018 were related to fire/explosion; this is the top cause of loss based on total value2

 

#1

cause of corporate insurance  losses in Canada, China, Germany, and United States2

 



What’s driving growth?

  • Technology advancements: Whether it’s the use of automation or connectivity with Internet of Things and the cloud, new capabilities are able to enhance prevention, speed up response times, and increase safety of first responders.
  • Regulations: With fire and safety codes enforced by cities and states, businesses must comply or risk being fined. Given this risk, staying up to date with the right technology is not optional.
  • Automation: Building owners are increasingly focused on the safety and security of their buildings and automation is one way to do that.


Why PE firms are interested in the fire and safety subsector



Technology is giving companies the ability to invest in new ways.



The sector is highly fragmented. There are opportunities to consolidate companies into more cohesive and unified offerings.

What PE firms are looking for from their fire and safety investments



Technology capabilities



The sector is highly fragmented. There are opportunities to consolidate companies into more cohesive and unified offerings.


Fire and safety M&A activity


Notable U.S. PE acquisitions in 2019

  • Riverside Partners has acquired Performance Systems Integration, Corp., a provider of automation and management services for life safety systems, from Peterson Partners LP.3
  • Bow River Capital Partners, LLC has acquired Dynamic Energy Services, LLC/Dynamix Engineering Ltd., an energy services company that focuses on implementing and installing energy and technology solutions.4
  • Highview Capital, LLC has acquired Frontier Fire Protection, LLC, a provider of installation, inspection, maintenance, and energy response services to fire sprinkler and alarm systems.5

Key takeaways

  • Fire and safety companies are an attractive target given increasing regulation and the opportunity for consolidation.
  • PE firms are expected to continue investing in this space given the growth potential.


 

 

 



Fire and safety
The opportunity of PE firms

Footnotes

  1. Grand view research, Fire Safety Equipment Market Size, Share & Trends Analysis Report (June 2019).
  2. Allianz Global Corporate & Specialty, Global claims review (2018).
  3. Crain’s Cleveland Business, Riverside buys next fire, life safety services platform in Performance Systems Integration, Jeremy Nobile (August 19, 2019).
  4. Smart Business Dealmakers, Dynamics Energy Services, Dynamics Engineering sale closes, Jayne Gest (June 24, 2019).
  5. Business Wire, Highview Capital Acquires Frontier Fire Protection (April 4, 2019).

 

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