Recurring Revenue Trapsmart_display

This fire safety service business has something most buyers chase — 95% recurring revenue.

Inspections and fire suppression systems that legally must be serviced every year.

On paper, that should make this a great deal.

But once you run the numbers, it falls apart.

Deal Snapshot

After Financing

Here’s what you actually keep:

You’re buying a $1.75M business… to make about $60K per year.

That’s the entire issue.

Where It Breaks

This deal is massively overpriced for what it produces.

• 5.83x multiple vs ~2–3x industry norm
• Only $60K post-debt cash flow
• ~5 year payback on down payment
• Recent 40% growth may not be sustainable

They’re pricing this like a premium, high-performing operation — but the returns don’t match.

Financing Reality

This is where most buyers get stuck.

At a standard 10% down payment, the DSCR is only 1.19 — below lender requirements.

To make this deal work, you’d need to bring over 16% down, or nearly $300K.

So now you’re putting in $300K… to make $60K.

That’s not leverage — that’s a weak return.

What Actually Looks Good

To be clear — the business model itself is strong.

• 95% recurring revenue
• Legally required services (non-discretionary)
• Established since 1979
• Stable, repeat customer base

This is exactly the type of business buyers want.

But great businesses still make bad deals at the wrong price.

What This Really Is

This is a classic example of:

• Strong underlying business
• High-quality revenue
• Completely broken entry price

Recurring revenue doesn’t justify overpaying.

BizHub Verdict

This deal scores a 2.9 / 10.

Great business model — but the valuation destroys the return.

Recurring revenue is powerful… but only if you don’t overpay for it.

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