Fire and Security Gold Rush: Inside one of the Fastest-Consolidating Sector in the Lower Middle Market

0:00This is Why We Like It, a quick dive into the industries capturing our attention in the lower middle market in the United States. We're asking the questions that unlock why and where we see value in the lower middle market. I'm Sam, and each episode I'll share why a sector stands out. We're going to bring in the voices who know it best, and we'll point to where we think the future's moving.

0:24Welcome to Why We Like It. Fire and security is one of the hottest sectors in the lower middle market right now. In 2025 alone, over 240 deals were done in this space. Private equity firms are piling in, the strategics are consolidating, and the valuations are reflecting it. But when you look at a market moving this fast, you need both sides of the story. You need the person advising on the deals and you need the person actually building the platform. And that's what we brought you today. Today, we're joined by Luke Webb. Luke's a managing director and co-head of business services at Lincoln International.

1:07And he understands the fire and life safety deal landscape as well as anyone out there. He's advised on hundreds of transactions and he's personally led some of the most high profile deals in the sector. Cert to Site to API Group, Guardian Fire Services Sale to InvestCore, Alters to Apex, and many, many more. He's got the kind of pattern recognition in this space that only comes from being at the center of it for nearly two decades. And Scott Elkins, a great friend of mine and a friend of Access, part of the Access family, is the CEO of Zeus Fire and Security. And he's a second generation fire and security entrepreneur.

1:52He spent over 30 years building Universal Atlantic Systems and then founded Zeus in 2022. And in under three years of our partnership, he's completed over 20 acquisitions. He's scaled to eight regional hubs and nearly a thousand team members, doubling profits and winning awards left, right, and center, including the iconic 2025 EY Entrepreneur of the Year Award for Greater Philadelphia. Today, we're going to get into why capital keeps on flowing into this space and what it actually takes to build a platform from the inside and where the industry goes from here. Luke, Scott, welcome. Thanks, Sam.

2:36Thanks for having me. Thank you, Sam. Thrilled to be here. Good to see you guys. And Luke, I'm going to start with you and get some market perspectives. Fire and life safety is seeing, as I said, close to nearly 50 deals a quarter and attracting serious institutional capital. What do you think the investment thesis is that's driving that level of activity? Why do people like it so much? So fundamentally, it's built on a space that has durability, fragmentation. There are multiple levers for value creation. And when you unpack that, it's really a couple different core drivers. One is you're in a space that has mission criticality.

3:17It's non-discretionary. It's driven by code compliance, recurring inspection requirements. And if you think about security, it's increasingly tied to risk mitigation as well as operational continuity. These are recession resilient models, right? And the core driver is looking at recurring revenue. So if you look at inspection and monitoring and service contracts, they all create really high visibility and really strong cashflow characteristics. And then you combine that with a really highly fragmented market where M &A is wide open, Sam. So you've talked about roughly 50 acquisitions per quarter.

3:57That's in combination of those that are announced and not announced. The opportunities that exist for buy and build scalability and platforms is massive. So as you think about where you can acquire a platform and then the add-ons, there's massive multiple expansion. So if you combine all of this, that's what's driving the continued interest in the space. There are thousands of independently owned fire and security companies across the United States. Why is this industry consolidating now and how much runway is left? When a space is hot and everyone's joining the party, it tends to signal that maybe it's not the best time to get into it.

4:37Interestingly enough, if you think about the consolidation that's been occurring in this space, I'll leave with the punchline, which is we think that we're in the third or fourth inning, and we can back that up with a bunch of data that we spent a ton of time kind of parsing through. And if you think about the development of the larger platforms over the last five to 10 years, so the pie markers, the summits, the APIs of the world, I think that the growth of those platforms have generated more awareness of the space. And then also, there are those investors that have done more work in the space.

5:13And I think we all understand now that the TAM of the space, it's 35 to 40 billion, where I think historically we didn't think it was that large, plus the number of acquisition targets. We've seen number of parties that have invested in the space, they've exited in the space, and now they realize that we're still in that third or fourth inning and they're coming back into that space because it's so strong. And that's driven by kind of an aging ownership base. So you've got all the founders and entrepreneurs that are getting older, they're looking for transitions out of their platforms that they've created, and also looking at increasing complexity.

5:51So if we think about the entrepreneurs and the founders, the smaller players in the space, it's becoming so much more complicated for them to compete against the larger players. And therefore, they're kind of turning to, I should probably be exiting my business now versus waiting. I know you've seen deals of all different shapes and sizes. What separates the businesses that command a premium and those that don't in today's market? The first part is just competitive differentiated within markets. So are you doing something that's truly different within a market versus you're a fire and life safety or security provider, but you're not truly differentiated?

6:30And so the first piece is being a market leader. The second piece is looking at the revenue quality. So the mix of inspection and monitoring and service contracts, if you look at the lower project concentration, which reduces your volatility in terms of earnings, and then look at the customer revenue retention as well as diverse customer base, all the revenue characteristics are critically important. And then look at scale and density. If you have certain geographies of which you're able to drive really strong density, then you're focused on route efficiencies and increasing your margins, as well as you're able to service multi-location customers, and all that's critically important.

7:17And then if you step back for a second, you think about operational sophistication. It's about the ERP systems and the scheduling optimization and technician productivity tracking. That's all critically important as to how you drive that premium outcome. And the other piece I would say, as Scott knows this all too well, you'll have industry experts that are management teams. And the more they know about the space and the proven track record of being able to grow and increase margin profiles, that creates a differentiation in the market. And when you have teams that are that deep and that strong, it's not about where you are as the size today, but it's really where you can be in the next three, five, seven years and how you're tripling, quadrupling the size of the business.

8:01I think Luke has access to all of our playbooks. Exactly. I was about to say it sounds like Luke sits in our investment committee each week. Those are the KPIs that we're very closely tracking with Scott to ensure that we get absolute optimization there and particularly the densification. That's a core part of the access holdings investment thesis. Scott, we're going to come to you. You are the embodiment of Zeus. You are the founder and CEO of the platform, been a brilliant partner of ours for many years now. And you've got a depth of experience that not many people have in this space. For those that don't know Zeus, perhaps as well as Luke and I do, can you give us the overview of how Zeus operates?

8:46What do you do with Zeus? So at Zeus, our mission, simply stated, Sam, is to protect people, property, and profits. And we do that by providing what we call the core four service, alarm, fire, access control, and video. We do that by partnering with quality companies in terrific geographies throughout the United States with a national account overlay that allows us to serve all North America. Today, Zeus has acquired 25 businesses coupled with organic growth to become the 12th largest provider in the entire industry. As we grow, Sam, we continue to densify the markets in which we operate. We continue to provide the core for service in a manner that most small providers can't do on their own.

9:35We give them an opportunity to do it with us. At the end of the day, Zeus Fire and Security is the preeminent, fully integrated fire and security services provider this industry has ever seen. At Access, we have a particular approach to partnering with operators and building those essential services businesses in the lower middle market. How has that partnership shaped the platform and what we've done together versus what maybe you wouldn't have been able to do independently? me. Access gave us the opportunity to build the type of business that I would actually want to sell my business to. So we'll unpack that for a moment.

10:15You spend your entire life building a business and then it's time, as Luke alluded to, whether it's succession or any other reason that you're ready to sell your business and transact. And then it's, where do I go? What type of business do I want to join? Whether I want to sell my business entirely or like at Zeus where you can sell part of your business and roll over some equity and become part of what we're building on a go forward basis, stay on. I got to help build that platform and I could have never built it without the team at Access. Access provides us with a level of tools and sophistication that would not be available to companies like my former business or most of the 15 ,000 companies that share the fire life safety space in the industry.

11:00So it's been an incredible partnership because AXS has given us tools, resources, and playbooks. We joked about playbooks a minute before, but playbooks that allow us to take a disciplined approach to building a business the right way. And most family businesses, most closely held businesses, most small businesses operate on gut. They operate on instinct. They operate on feel. Today, Sam and Luke, you know this as well, We operate on a predictable and repeatable model that is proven and that works and helps us scale and grow our businesses in ways that we never thought possible as independents that I never thought possible.

11:43I ran a successful business, but not like we're operating today. Let's double click on that just for a moment, Scott. When you're out there acquiring businesses, many of which have really deep local reputations, how do you preserve what made that business successful in the first place whilst integrating them into a much bigger national network? Yeah. So at Zeus, our thesis from day one, our business model was to be a house of brands. So when we acquire a business that's been around for 50 years, selling life safety, fire and life safety, that brand's name has equity in the markets in which we operate.

12:22It means something. And we want that owner to know that that brand is going to exist and going to continue long after the owner either sells and stays with us or sells and moves on. But that brand means something in the local market. But from the back end, Sam, we fully integrate these businesses so that we have all of the capabilities to help them operate better. And that means help their employees operate better and help their customers to have access to more tools and resources than they ever thought possible. So Luke alluded to ERP, one common ERP, one common CRM, one common CPQ, according to all, one common human resource system.

13:05everything common from the backend so that we can do what access does best, which is help us operate a sophisticated business, but let the team in the field continue to operate with the name brand that means something in the markets in which we operate, which we love so dearly. Scott, one of the core parts of your model is bringing scale and a more comprehensive integrated offering to each part of the market that you're operating in. You call it the core four. I'm going to go for it. Fire, intrusion, access control, and security. And video, right there. Video's four. I've been doing my revision at night.

13:48When we think about growing the business inorganically, it creates a huge amount of organic opportunity as well through cross-sell and up-sell opportunities. how do you think about that delivery to customers and where are you seeing the most like strongest cross-sell traction sam you know this this is a question that came up literally the first day i met the team at access and it was hey we acquire a business what are we going to have them sell and it's an interesting question but maybe not the right question because each company that we acquire has their own dna companies grow up in this industry so they grow up as fire businesses or they grew up as security businesses, they grew up as video businesses.

14:29And it's not so easy just to flick the switch and say, you've done intrusion alarms for the past 50 years. Let's go install sophisticated high-end fire alarm systems tomorrow. That's not going to happen for a number of reasons, some of which are very obvious and some of which are less obvious. What we do at Zeus is to ensure that each business that we partner with has the capabilities to deliver the core four over time. So if we acquire a business that does a lot of fire, but a little bit of video, a little bit of access, and a little bit of intrusion, we want to increase their penetration with fire while growing the other three.

15:09And if we acquire a business that doesn't have all four, we'll literally fly in that fourth resource or we'll acquire that fourth resource, package them together so that H1 can provide the core four. What does that mean in terms of cross-sell and up-sell? I know Luke loves to hear cross-sell and up-sell. It means that we can now provide a full suite of services to each physical location that we provide. And at the end of the day, we went from selling on average one, one and a half systems per customer location to two and a half systems. We have a five-fold increase across Zeus on multiple systems than we had the day we acquired these businesses.

15:54The growth opportunities are tremendous, but more importantly, the value we provide to the customer is so important because we don't require the customer to go out and find a provider for alarm, a provider for video, provider for access and provide, we do it all. So it gives the customer one back to pad and it gives us one opportunity to serve the customer as efficiently as possible. The reason why that works so well, it's not just the comprehensive solution you've created that's available to the client. It's because you've established a trust with the client. So that client wants you to have more and more services because he knows that the job's going to get done the right way and they're protected.

16:33Yeah, Luke, that goes back to being the trusted partner. If we were the trusted partner for fire alarm systems 30 years ago, we can be trusted today for alarm and video and access control. And that trust matters. Let's talk about the technology. I mean, I remember the team telling me that you were an early innovator in remote video monitoring. Technology is changing all the time and it's getting better and better for safety. How is that technology evolution changing what customers expect from their fire and security provider, and how do you stay ahead of it? So it goes back to something Luke had mentioned earlier as to why there's an increase in the level of M &A activity in our space.

17:12It is coming harder and harder for companies, particularly smaller companies, to keep up because the technology has changed more in the past five or 10 years than in the previous 40. With the technological changes come deep investment. Again, And we've got a partner that supports us there. But it also requires a lot of training and a lot of resources to deliver. The services that we provided 10 years ago, Sam, you know, they were largely analog. The services we provide today are not just digital, but they're AI-based. So we're providing a service today that we didn't dream of providing 10 years ago.

17:51So the technological changes this industry has seen in the past 10 years is unsurpassed. And our ability to make investments, not only in technology, but in terms of our teams, to train them on how to support this technology has been breathtaking. Remember, companies like the companies that Luke had mentioned, we all have a lot of legacy customers that we're supporting. So on the one hand, we're supporting legacy customers. On the other hand, we're selling new technology to new customers. And then most importantly, we are the natural progression. We're the natural go-to for our legacy customers to evolve over time as their systems either require upgrades, their needs change, or they want something different.

18:37We're going to be the provider of choice because we're the trusted provider to actually help them with that. And that benefits us as well. I've got a question that I want to ask both of you now. And it's around where the highest growth segments are. And it's interesting, the more I studied the space, the more I realized that different things are driving different parts of the market. On the fire side, you've got the regulatory demand underpinning the sector. That's inspections and compliance and changing standards. And then on the security side, you've got the customer expectations shifting all the time and the cost of systems going down and the cost of failure going up.

19:18And there's a lot of different contributing factors here. So Luke, maybe we can start with you. What are you seeing as being the highest growth segments right now in this space? I think you've called that properly, which is that FPA and the HJ standards and the requirements there. It's also the increase in the insurance requirements. As you think about kind of the basics, right, Sam, you said inspection and testing and maintenance. All that's regulatory driven. And what's interesting is when you step back and look at the changes in technology that's occurring that Scott highlighted. So, for example, digitization of inspection reporting.

19:56So now you're able to increase your efficiencies and look at utilization. And that's actually across all different types of end markets, if you will. So I don't think there are specifically, there's no specific end markets that are driving increased growth. Although you can look at data centers and the evolution that's occurred there in such a short amount of time and where that's going. I would say that those are kind of core areas where people tend to be focused, but it's all based on technology and how to leverage the technology in each one of those end markets and customers. Yeah, I would just argue that video is changing in a way that couldn't have ever been contemplated five or 10 years ago.

20:36The pace at which video systems are actually being upgraded because of new technology is dramatic. Systems that we installed 30 years ago, you replaced with new technology, you know, 10 years later, 15 years later. Now a closed circuit television or a video system that was installed today has a shelf life of a couple of years. So there's a constant upgrade path. And we're ultimately the trusted provider is the provider that continues to deliver that upgrade path. And it's trusted by our end user, by our customer to make sure that they get the absolute best that they can from their provider. And then your clients are expecting more, right, Scott?

21:18So if you look at AI-enabled analytics, like real-time reporting, that now becomes much more common where they just expect you to be able to manage everything that's occurring where it's not their core competency, but yet Zeus can manage everything. And again, it gets back to being in the trusted partner. Yeah. So we went from an industry that has historically been about capture to an industry that has moved to prevention. So instead of waiting until a facility was broken into and hoping that you had a good image of the video so that you could figure out who broke into the facility and contact law enforcement, today we're able to identify those events before they occur.

22:04That means when somebody comes on your lot when they shouldn't be. We can get them off that lot or notify the police that they're on that lot and identify, by the way, that they're wearing a blue sport coat with a blue shirt. Like early, we want to get them exactly, we want to get them off the property before the event occurs. It used to be after they broke into the facility that we knew there was a problem. Now we know there's a problem beforehand. So we're moving from this notion of kind of a lagging indicator to a leading indicator of when we can bring in law enforcement or when we can remediate a situation.

22:40And that's moving not just from video, but it's moving to intrusion and ultimately move to fire soon as well. It's a terrible proxy, Scott, but you know, I think about for anyone out there who hasn't had much experience with these products, if you're a parent, my kids are six years apart and the baby monitor technology has improved dramatically even over those six years the first ones you couldn't see if your baby was even in the room so i can only imagine what it's like right at the cutting edge of technology like you guys are and to age myself sam you know baby monitors when our kids were little you were lucky if you got good audio there was no such thing video.

23:20Let's do a little bit of kind of blue sky thinking for a moment. And Scott, maybe we'll start with you. You're seen by many, in fact, everyone in this space is being a bit of an iconic figure in the sector. I know you eat, sleep and dream about fire and life safety. Where does the space go over the next decade? What does it look like? How does AI and new technology change what we can deliver for our customers and how safe we can keep our companies and our people and our families? Yeah, there's a few different ways to answer the question. I'll take a crack at a couple and I can see Luke chomping at the bit as well.

23:59Where does it go? It continues to grow because we're going to continue to provide more information and more data to our customers than they ever imagined possible. So being able to identify how many people in a particular location, how many cars were in that location, what the license plates were of those cars, who in some jurisdictions were physically in the location. So now you're tapping into marketing, you're tapping into route efficiency, you're tapping into labor efficiency, you're tapping into areas that are operational in nature, not just security. So all of a sudden, we go from being security providers, which is great, it's an essential service and it's important and required in many cases to one of the most important service providers that a customer has across their entire facility.

24:49We're the eyes, we're the ears to all of their systems and all of their technology. So I think we're going to continue to provide customers with more and more information that's going to help them operate their businesses more efficiently and ultimately become more profitable. In terms of the size of our industry, it's going to continue to grow. So we have always had interest from outside entrance in this space, and I'd say none more so than we have today. And they're going to help drive technology and help drive new products and services and help drive greater efficiency. Those are two areas where I think you're going to see dramatic changes over the next 5, 10, 15 years.

25:30I think there's always going to be a place in our space for a quality provider in a really good market to be that dominant player, but it's going to take them a lot more in terms of tools and resources. You could also say money and time to become that great provider than ever before. I think you're going to see the industry's middle be absorbed, and you're going to see growth at the top end and see growth at the bottom end of the scale as well. And to Scott's point, you know, the data and the customer visibility will continue to increase. And I think with that and the data that's available, you're going to start seeing some predictive analytics, right?

26:15So as Scott said, don't wait for the event to occur. Actually, you can diagnose it before it even happens. That's a different landscape. It's the same thing with the data that's become available. And how do you leverage that data now? So, Sammy, you asked kind of what happens the next three, five, 10 years. I think that's going to become much more embedded in terms of how we think about leveraging everything that we have at our fingertips. Completely agree. And I'm fascinated to see where the industry goes. Thank you both for your time. I know how busy you are, Scott. You're running a giant on a hockey stick trajectory.

26:55So I don't want to keep you any longer. And Luke, thank you for sparing time with us. It's been great to get some of those nuggets from what you're seeing in the market every day. Absolutely. Thank you, Sam. It's great to see you again, Scott. Thank you, Sam. Appreciate the opportunity. And Luke, as always, good to see you, my friend. Thanks for joining Why We Like It. Don't miss an episode. Be sure to subscribe. Expect big perspectives, big profiles, and big potential. Don't miss out.