How to Build a Fireproof Business

The fire safety space has attracted significant investment of late as investors recognise the merits of a large, resilient market underpinned by regulation, robust growth tailwinds and a highly fragmented provider landscape. Different strategies have been successfully deployed with a view to value creation in acquired businesses from aggressive buy-and-build (with more than ten PE-backed platforms competing to snap up smaller businesses) through to expanding service across a broader range of building compliance areas (the “one-stop-shop” route).

Yet, execution and strategic focus are key as top-performing businesses generate much higher margins than the industry average (i.e. +5-10% EBITDA margin uplift).

In our experience, four value creation levers are often overlooked…

Segment Choices Matter – Which irons to put in the fire?

Choosing where you want to build pockets of speciality is important, particularly when considering client verticals. These can range from social housing where £1bn+ of annual spend, high-density routes, and sensitivities in service delivery (e.g. liaising with more vulnerable tenants) can justify higher price potential, through to data centres where stringent requirements and higher stakes require more complex (and expensive) fire stopping solutions (e.g. gas suppression systems).

Some niches have higher barriers to entry and so are harder to serve (e.g. vetting on MoD sites to clinical restrictions in healthcare), but those who can crack the code are able to lock in defensible, higher-margin contracts.

Push Proactive Sales – Light the spark early

Over-reliance on competitive tenders drives margin compression.

We see that high-performing businesses use events, seminars and other proactive business development to spark engagements early and outside of a competitive context – the market is not as reliant on formal tenders as some think. Cross-selling without being pushy (a common customer complaint) also helps.

Separating brands delivering surveys/inspections and installation/maintenance can ease potential client concerns over conflicts of interest, while still leveraging the advantages of site and customer knowledge. So, what is a proven path to success for an end-to-end provider? Using surveys or inspections as an entry point (e.g. diagnosing FRA gaps or compliance failures), cross-selling to remediation activities and ultimately long-term recurring maintenance services.

Tender Strategically & Price Well – Fan the flames

That said, bidding effectively is a necessity to scale as larger opportunities are more likely to be competitively tendered. In any competitive process, applying appropriate controls can ensure that a successful bid does not come to the detriment of margin.

Be selective and proactive in allocating bid-writing firepower to higher-margin opportunities based on end-market, service lines required and any nuances that could make them more challenging for competitors to serve. There is often margin left on the table as there is a large pricing variation from the fragmentation of supply (especially for smaller, more regional tenders) – many providers have a simplistic approach for how to price, and those that understand how to price better can extract the difference.

Subcontract Selectively – Call in the fire brigade

Subcontracting does not necessarily equate to weakness, but rather it is often a necessity to balance spikes in demand while maintaining a broad service offering (and stop customers needing to look elsewhere). Anecdotally, operators should aim to deliver 60-80% of work in-house, leaning on subcontractors to help deliver for large projects and bulk out geographic density where needed. What matters more is how the subcontractors are managed to ensure quality while extracting margins.

For example, subcontractors may be paid based on “per job” (rather than hourly rates) but still have an incentive for the quality (e.g. % first time fix, CSAT) to avoid sloppy work. The goal is to ensure scalability and flexibility without compromising service standards. Practically, aim to maintain a broad network of subcontractors and track performance / aim to retain high performers with higher job rates, longer-term engagements and advantaged terms.

The UK fire compliance market is fragmented, margin-variable, and fiercely competitive. But for investors, the winners will be those who methodically build businesses that are fireproof by design.

How OC&C can help

We work closely with investors, management teams and boards across fire safety and wider building compliance to define winning strategies, prioritise value creation levers and support execution at pace. If you are exploring an acquisition, scaling an existing platform or pressure-testing your investment thesis in this space, our experts would welcome a conversation. Get in touch with our partners below to discuss how we can support your ambitions in the fire compliance market.