$4.2M Security Business… With $773K Revenue?!

0:24Welcome to Acquisitions Anonymous.

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2:00So yeah, we're getting more and more on the fly with these podcasts, Bill, because we used to wait until we figured out what deal we were doing before clicking record. Now I just click record. Well, I love it. If there's any doubt about the show being live, this is the hot, unfiltered takes on deals. uh connor connor has a deal wait san antonio texas i'm in how much is it oh hot connor's good at this man he's good at this yeah wait wait till you hear um yeah wait till you hear below the san antonio headline and we'll see if you're still in but so so a highly profitable security business for sale they're asking 4.28 million with gross revenue of 773k They do not disclose EBITDA, but by that asking price, I'm going to hope their margins are within striking distance of 100%, but we'll see.

2:56All right, so security services franchise with recurring revenue and growth potential. The Signal Franchise Network is dedicated to providing peace of mind to communities and building a profitable, sustainable business. This isn't just about stepping into revenue. It's about growing something bigger. Why Signal? Why this opportunity? Immediate revenue and clients. You'd be stepping into a business that's already generating cashflow with active contracts in place. This means you'll see revenue right away instead of waiting to build a client-based. Industry leadership, Signal is ranked number one in security services, number 20 in fastest growing franchises, number 63 in the 2025 franchise 500.

3:30Remind me to come back to that because it's fake. This credibility, quote unquote, makes it easier to win new contracts and expand the business. Bullshit. Lower operational costs and higher margins. affordable ownership with financing, payroll lending, and exclusive insurance savings, signal offers, flexible financing options that cover most startup costs and making franchise ownership more accessible than competitors requiring large upfront investments. Advanced technology for growth. So this is basically a staffing business for security, like patrol and guard services is how I understand it.

4:08I'm actually not super familiar with this brand. But it's talking about this lot, which I'm assuming is what they mean a territory contains a population of 2.7 million opportunities, 1 ,100 commercial businesses. They talk about distribution facilities, manufacturing companies, industrial entities. Right now, independent security companies face increasing challenges, rising insurance costs, administrative burdens, and competition from larger well-branded providers. The security industry is projected to grow from 117 billion in 2023 to 211 billion by 2030. And now is the time to position yourself for long-term success.

4:45So what does this business do, Bill? So they staff mall security guards, basically? That's what it sounds like. I mean, metaphorically, but right, just private security? Are the segues included? um so is there any is there any differentiation or this is just generic rent-a-cop stuff i think it's generic rent-a-cop stuff but i do think that it's more like it sounds like they're targeting trying to find where it said that they're targeting commercial security so it sounds like this is um office buildings um apartments um distribution facilities manufacturing companies, et cetera. So my business here is that I have some vehicles, a brand.

5:36I go out to commercial sites who have security needs, whether it's gate watching, patrolling apartments, all that kind of stuff. I sign a contract with them, which is maybe month to month, maybe longer if I'm lucky, to provide X services. And then every day I have to wake up and make sure that$10 an hour employees show up and do their job patrolling these apartment buildings and then deal with the inevitable kind of craziness when something wacky happens at two in the morning. That's the whole business? Yes. Your thoughts? Did I make it sound great or no? I think you nailed my number one concern with something like this is that you are never going to be rewarded for doing a good job.

6:16You're only going to be punished for doing a bad job. Whenever something happens, no one's going to be like, oh, this is wonderful. We didn't have a break-in today or we didn't have an incident, but all hell is going to be unleashed when there is something that happens on your watch. And to your point, Michael, you're not exactly staffing a skilled and highly qualified workforce here. This is lower level security. This sounds like a very challenging business to staff adequately. Yeah. My son, I don't think I told you, Bill, My son just took a job full-time as a valet parker at a mid-priced budget hotel here in San Antonio.

6:57And some of the stories we hear are like, yeah, I showed up to work today. My boss had been fired. I don't know what happened. They're promoting me. It's just like all this stuff where it's like, oh, wow, the bar is low. The bar is low. And there's a reason why the hotels and the apartments, they don't staff these things themselves. They outsource it to victims like the owner of this business, just because it's just such a nightmare. So, Connor, what is the Franchise 500? Oh, that's the list that, yeah, if you look at the Franchise 500 list, you'll see it's like either the highest profile business that you could come up with, like McDonald's and Taco Bell and everything.

7:44Like that'll be like the first few. And then you'll notice it'll just drop in like, you know, Bill's barbecue or like Michael's lawn care or whatever, something that nobody's ever heard of. And it's because it's paid marketing. It's because, you know, brands are paying to get on this list and be mixed amongst McDonald's and Taco Bell and the ones that everybody already know. So the point is, is it's nothing merit-based. You shouldn't read into that like it's anything other than what it is, which is paid marketing PR, you know? Then so moral of the story again is you can't trust anything on the internet.

8:22Correct. It did remind me when I started to subscribe the first time to Entrepreneur Magazine and I learned, oh, this is just a franchise promotion magazine. These are the only people that are in this thing. So yeah. It's like I got, you guys probably get the emails like, uh, Bill D 'Alessandro has been selected as business person of the year for a, you know, a feature fee of$2 ,000. And it's like, you know, they don't even know who you are. They clearly span, like, it's like a Mad Libs email, you know, and it's clearly spanned like thousands of people. We just mail. Why haven't you responded to me yet?

8:54I'm waiting for your check bill. Sorry. All right. That's like that. Why is that like the wine business we did a while ago that you can just like pay and you win the wine awards? Yeah. But at least then you get to drink wine. This business, you have to deal with your employees showing up drunk and doing stupid. I mean, because that's the other problem with this thing, right? Back to our deal. You have to inevitably, this$10 an hour person you have driving around pretending to be a cop is going to do something stupid. It is inevitable that they're going to do something stupid and you're going to have to go clean it up.

9:25You're going to end up in court, something like that. I mean, just a nightmare. If I was a franchisee of this, that is the place you would expect the franchisor to cover your butt, right? Insurance, you know the shit hits the fan they step in and help you defend the case etc but what will probably actually happen is they will completely evaporate and go this wasn't us this was this local business owner who's an idiot right maybe i don't know in smash like smash had an ongoing lawsuit because a franchisee got sued and the franchisor did a really good job stepping in and you know um defending them because that was the precedent that was needed to defend the rest of the system so So it depends on the brand.

10:04But the other thing to think about here is they're going to promote this as because security is super important. That's why brand matters. And that's why this is such an asset to be an established brand. But that can be a liability, too, because one signal franchisee has a situation with an employee on the other side of the country and it's negative PR. That can come back and bite you in the tail just as easily. So it's not always going to be positive from that perspective. One thing that really bummed me out about this one was, and Michael, who are ever screen sharing, maybe see Connor, have already found it.

10:41Flip over to the website. So this is like the homepage for it. And the thing that really bummed me out is the big headline is start a security franchise. The whole website is just about selling more franchises. franchises. Nothing about this website is about selling security services to the businesses who buy it. Like this would be like if you went to Chick-fil-A.com or McDonald's.com and it said, buy a McDonald's franchise at the front. Like this whole franchise or is just about selling more units. They're not at all about helping you create any revenue. This is such a bummer. If you scroll and you look very closely, you can see there's a button here that says become a Signal customer though.

11:22But it's below the Own a Signal franchise one, which is to the left. I mean, it's like, this is just a bummer, man. It's kind of gross. Yeah. I'm with you. Here's the reason, part of the reason I thought to talk about this today is there is going to be an increase in spending on security in some capacity. There has to be after the CEO of United that was assassinated. I don't know. There has to be an increase on executive security. I don't think that it will be on mall cop capacities like this, but I'm curious what you guys think about investing in an executive security business amidst the current climate.

12:09I think that's a much better business than this one. I agree. That's a totally different business than this one. Yeah. I think you have. Yeah. I think with commercial apartment buildings, they're checking a box. With the big difference is that somebody like UnitedHealth or somebody like that who's paying for executive level services, which I've read anecdotally, those services have all been just overwhelmed with demand lately. And then the Charlie Kirk thing doesn't help either. And then all the other political violence going on. With that stuff going on, I think that's a great business to be in right now because those people are willing to pay up because they don't want to die.

12:45That's what they're paying for. whereas with this like you're just checking a box for some portfolio manager probably doesn't even live in the same town as the apartment building and um so like i like that other business much better just because of the consumer dynamics i like it a lot better too michael but like one of us three squishy guys can't come in there and just buy this i mean they're staffing that thing with navy seals and like you know if you're the ceo of united healthcare like you don't want a mall cop you want a navy seal guy and that navy seal guy has probably also got to own the like you're running a mercenary army at that point, right?

13:19You know, they're not going to respect one of us to own in that business. Yes, but I actually would rather staff like Navy SEALs than the workforce that you would staff with this because you're going to pay them more, they're going to make more money and there's probably going to be a lower quantity of them that are higher quality employees than something like this where you're just staffing a bunch of folks. Oh yeah, but I'm just saying like, imagine like if you're going to own the business as staffs and maybe seals like you can't just come in and be like i know how to operate a business i know what a p &l is like as well like i could probably learn how to operate a restaurant or whatever i don't think i can learn how to like operate a team of private security operators and all of like the tactical you know strategy that is required to do threat models and all that you know the ceo is going to speak in this coliseum how we're going to make sure that he's safe i mean that's stakes that i don't want any part of Are you ready to take a leap into business ownership, but you don't know where to start?

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14:46So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. So I had one of my friends is a serial builder of zero to one government contracting organizations, Bill. And she's done some fascinating stuff, but there's been times where she's like hired Navy SEALs. She is not a Navy SEAL. And I think they own weapons, but not in that way. That's that type of family. So I think it's, I don't know. I think there's some level of business is business.

15:21But again, you're putting people's lives in your hands when you're taking on security, and it's got to get done right. So there's a level of expertise there. So I see the both of it. But man, hiring some SEALs, that would be pretty awesome. I did also spend some time last year with a guy who did private security. they would basically work on you in contracts and get flown around the world. He was not what you would expect. He was like 5 '3", like 120 pounds. But then you'd talk to him, he'd be like, oh yeah, this guy's really, really dangerous. But one of the things he said was when he would go on these security things, in general, they didn't arm themselves.

15:59They would be like in Ethiopia and places like that, they wouldn't carry arms. Because the whole aim of the thing was, how do you make sure that you don't need a gun? and if they armed themselves, they felt like it would get them in a position where they were more likely to get themselves in a situation where they would need a gun as opposed to just focusing all their effort on not doing any of that stuff, staying in the right place, traveling in the right way. So it's just a more of a deterrence thing than it is an actual avoidance. Avoidance. Basically, they don't want to, they're trying to avoid armed conflict and so they're going to not go in with guns because that, you know, I mean, that's like the saying, like if you're going to carry a gun, you need to be prepared to use it.

16:39Um, and it's, so these guys, they were, they didn't want to get in those types of altercations. And it wasn't worth it to try to go through customs with like, you know, with like a Beretta or whatever the handgun is like to get into Ethiopia. Like it was just, it was more, it was more trouble than it was worth. Yeah. Oh, I would feel like you obtain the weapons once you get to Ethiopia. And leave, and leave them in Ethiopia when it's time to leave. Again, more, and then you end up with a weapon you don't trust, like just more trouble than it's worth. That was his spiel on the whole thing. That's interesting.

17:12Yeah, I think if I owned this business, I would be immediately pivoting into executive security. And maybe that's why they're divesting this. But they need to price it a little better if that's what they're trying to do. Well, let's come back to the price last. I think one thing I definitely want to talk about here is the future for this business. Like you're seeing Flock Security. You're seeing all of these, like that's a startup that's growing really quickly, that's doing a lot of technology to replace this. A friend of mine owns a company, Bill, and I don't know if you've seen them, but those little portable units that are solar-powered and sit there and they're camera monitored on construction sites.

17:49He started one of the original, one of those. It's located here in San Antonio. It's turned into a huge business. Technology is coming for a lot of this stuff. I'm worried about that. Before we even start talking about that, the price is crazy. Yeah, that's true. Because a lot of like the, you know, mall security type stuff, you don't expect them to actually respond, right? Like they're just a deterrent in a uniform. And, you know, they try to get a description of the guy who did the crime, right? They're just trying to beat the official guy and give directions. And a camera can do that too. You know, that's a deterrent.

18:25And also, you know, just manning like entrance to whether it's a building or an apartment complex. I think what this kind of quote-unquote security is doing is just kind of manning the gate and letting people in. But there are all sorts of ways that apartment complexes are doing that between fobs and apps and all sorts of things that I think do a better job for a lower price. so I think to your earlier point Michael about how this kind of security is more for places that are checking the box rather than it is you know really moving the needle I think that there are ways that the box or boxes are going to be checked that don't involve putting an hourly employee on site yeah well let's maybe talk about the price before we close down my hatred of this deal so So they're asking$4.3 million for a deal that gross revenue-wise.

19:21So that would probably include salaries. So these guys are maybe taking home$150 in STE. So it says here, our locations operate at an average gross profit margin of 39%. Yeah, but I'm not buying those locations. I'm buying this crappy one in San Antonio. Right, right. Right. But I'm just saying, if it's the net margin, if the gross margin is 39%, the net margin can be nothing sexy. It's funny to me that with many generating over$1.2 million in annual revenue, that's the flex. And it's funny that it's not just, oh, many do over a million. It's like$1.2 million. I don't know. So what do you think they're taking home on this?

20:08so they say they have 773 ,000 in revenue. What do you think this one's taken off, given it looks like it's an underperforming location? Oh, maybe. Yeah, maybe that. It may be if the owner's running it full-time, perhaps, but I think that this is, I mean, probably close to break-even. Because if they were average, which they're probably below average gross profit margin, given that they're underperforming, almost certainly, but even if it was right at average, 40 % of 800K is, well, that's 300-ish of gross profit. And then you back out all of your operating expenses plus owner's comp. I mean, I doubt they're turning much of a profit, if any.

20:51I don't know where they got that number. Well, I know where they got that number. So I was like, who is the broker? And it's over here, business listed by this guy, Eric Wallace. Eric Wallace works at Signal Security as a franchise development associate. So this is, I'm not even sure this is, I mean, maybe it's an existing territory. Maybe it's like an aborted startup, like, or maybe the franchisor had to seize the territory back from the franchisee or something. But I would say this is highly distressed. Highly distressed. Yeah, that was my first thought too. But usually if it's a franchisor that's trying to bait and switch you, like you see these ads on BizBuySell all the time where it's like eye-popping numbers between the asking price and the revenue and cash flow.

21:40And all they're doing is they're putting the startup costs for the franchise as the asking price and then putting the revenue and cash flow as like their average performance. But they're just trying to bait and switch you to get you to do an inquiry and then say, oh, just kidding. This isn't an existing location. Come check out our franchise. But that still doesn't represent 4.2 million. I mean, that's what's weird about that since it came from the franchisor. You know what? I bet it's if you call, they go, we were asking 4.2 million, but we'll give you 50 % off if you commit before the end of the month.

22:14I bet it's that type of thing. Yeah. And call now. This is a franchise sales organization based on the website, you know? Yeah. I don't know. I would steer very clear of this. Yeah. Can we skip to the part where I talk about how much I hate this? Wait, haven't we already been doing that, Michael, for 20 minutes? Yeah, we have. Oh, I was just going to reiterate all my - Yeah, we didn't get to the biggest issue with it, which is that this thing's in San Antonio. I mean, that's a - Who wants to live there? That's a problem. Only steers and idiots live there. Yeah. So, Michael, yes or no? What are you getting there?

22:52I'm a hell no on this. Like, I don't understand any part of this. There's every red flag in history about this. From the website of the franchisor to how much they're asking, to the type of business that it is, to the way it's written. I haven't seen one green flag on this other than it's written in English. That's the only green flag on this deal. So I have hated deals before. I have never hated a deal as much as I hate this deal. I hate this deal with the passion of the fry cooks at a million Chick-fil-A's. That's how much I hate this deal. That's an odd analogy, but okay. That's a good franchise.

23:29That is a good franchise. Well, is that a franchise? You can only have one. I guess it is a franchise. You just only get one. It's a bizarre setup. Yeah. Connor, you may want to talk about how Chick-fil-A is set up uniquely. I mean, it is not a franchise by definition of the law. They have an incentive structure set up for their operators where they're paid out part of the cash flow that the store generates without having to put up a lot of the money. But ultimately, they're highly paid managers. So they're not under legally a franchise system? I thought they were. Just it was bizarre that they had restrictions and they didn't have to put up much cash.

24:09But they're not legally a franchise? No, because, I mean, Chick-fil-A corporate owns everything. So they own the land, they own the business, they own the operating entity. And then basically the operating entities pay a royalty or like a management fee, I think is what they call it, your traditional percentage of sales to Chick-fil-A corporate. And then they back out the rent for, I believe, the building and the equipment. And then out of whatever's left, that's what they're assuming is like the operating profit of that location. that's what they split 50-50 between 50 % going to Chick-fil-A corporate and 50 % going to the operator.

24:44So the operators, which are basically what they would call their quote-unquote franchisees, they still end up making good money. They make several hundred thousand dollars a year, but it's not ownership. They don't own the business. They can't sell the business. They're not building value. Got it. Okay. All right. So there I'm a thumbs down. Yeah. You don't say. uh i'm so but other than all of that i love this deal anyway over to you i'm a thumbs down i mean this this shows you i think this is great connor i'm glad you brought it because it kind of showcases a lot of kind of what can be the predatory side of franchise sales completely and by the way i uh i'm obviously a thumbs down i don't like the business but um i would be interested in executive security i think somebody should start an executive security franchise that would be interesting um i have never heard of this franchise before for what it's worth usually i I have heard of franchises and have a strong opinion one way or another, but that was kind of the first red flag to me from the start is that I had not heard of them.

25:45So anyway, thumbs down for me as well. Why don't you start the executive security franchise war? To your earlier point, that's not really, you know, when you see a 5 '6", like 140-pound dude, I don't know that I really fit the profile of this dude. That's where you need a partner. Are you offering? I know nothing about security. I don't own any guns. Well, no, I'm sorry. If anybody's interested in this, I own a lot of guns. They're everywhere. They're all loaded. You can keep them in the elevator? We have a gun-evator. Your gun rack that goes up based on which floor? No, the key thing, you got to go find somebody who's a specialist in this and do a one plus one equals three.

26:27I think the scenario to incubate a franchise system like that is you bring the franchise expertise, the marketing knowledge, how to make the system work in the business building, and you go find somebody who's worked in private security, ideally as a mental manager or a leader, and they understand the business. And you guys, you know, you put together each thing that the other one is missing. So then you guys sell some franchises. If anybody out there is a former secret service agent and really wants to start a franchise, reach out. I know a guy who's been a rent-a-cop. I'll have him call you.