MEP & Fire Protection Engineering Firm, 2006 Manhattan Consultancy

$2.5M

Revenue

$708K

SDE

2.3x

Multiple

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Full Editorial Writeup

This is a Manhattan-based engineering consultancy founded in 2006 that designs mechanical, electrical, and plumbing (MEP) systems with a specialization in fire protection and fire alarm design. The firm serves the educational, institutional, infrastructure, and aviation markets, and roughly 70% of its revenue comes from repeat clients. That kind of client stickiness in a project-based engineering business is the whole ballgame, because it means the firm is not starting from zero on each bid but instead pulling from a bench of relationships built over nearly two decades.

The operation is lean: seven people, of whom five are design engineers and two handle bookkeeping and admin. It runs out of a 3,800 square foot leased Manhattan office used for design work, coordination, and client meetings. On $2.5M of revenue and $708K of cash flow, that is a 28% owner-earnings margin, which is healthy for a services firm carrying professional engineering labor and NYC office overhead.

Fire protection and fire alarm design is a code-driven, non-negotiable specialty. Buildings in New York cannot occupy or renovate without compliant life-safety systems, which insulates this firm from the discretionary swings that hit broader design and construction work. The owner currently drives strategy, business development, and daily oversight, so the key question for a buyer is whether the engineering bench and repeat-client base can carry revenue while a new owner rebuilds the rainmaker seat the founder is vacating.

Why we like it

Earnings quality is strong for a services firm: $707,739 of cash flow on $2.5M revenue is roughly a 28% margin, and 70% repeat-client revenue means the earnings are not one-and-done project spikes. The asking price of $1.625M at 2.3x cash flow is a reasonable multiple, and the seller carrying 25% shows real skin in the game on the transition.
The moat is code and relationships. Fire protection and fire alarm design is a licensed, regulation-driven specialty where mistakes carry liability, so clients stick with proven engineers, which shows up directly in the 70% repeat-revenue figure across educational, institutional, infrastructure, and aviation accounts built since 2006.
Market tailwinds favor life-safety and MEP work. Aging NYC building stock requires continual renovation, code upgrades, and system retrofits, and fire code compliance is mandatory rather than optional, so demand persists through downturns when discretionary construction stalls.
The operator advantage is clear: the owner runs strategy and business development, which means there is a defined, addressable gap for a new owner who can install a real marketing and BD function. The listing explicitly flags energy and renovation-sector expansion as untapped, and a five-engineer bench already exists to deliver the work.

How to improve it

Install a formal business development engine in the first 90 days. The owner personally drove BD, so document the pipeline, systematize outreach to existing 70% repeat base for cross-sell, and hire or assign a dedicated BD lead to reduce founder dependency before the seller's two-year window closes.
Expand into the energy and renovation sectors the listing names as growth avenues. With five design engineers already on staff, adding energy code compliance, retrocommissioning, and renovation MEP work leverages existing licenses and relationships without proportional headcount increases.
Pursue recurring-style master service agreements with the institutional and educational clients. Converting repeat project work into standing on-call engineering retainers would smooth revenue, deepen the moat, and materially improve the firm's valuation on any future exit.
Raise utilization and billing discipline. Review engineer chargeability rates, fixed-fee versus hourly mix, and scope-creep controls, because in a seven-person shop a few percentage points of realization improvement flow straight to the $708K cash flow line.
Build a documented project delivery and QA/QC playbook. Codifying the design, coordination, and code-review process protects quality as the founder steps back and makes the firm scalable and less reliant on any single senior engineer.
Diversify beyond the aviation and infrastructure concentration. Add adjacent verticals such as healthcare, data centers, or multifamily where fire protection and MEP demand is heavy, spreading client risk while reusing the same engineering capability.

Diligence notes

Verify the durability of the 70% repeat-client claim by pulling three to five years of revenue by client. Confirm whether repeat business rests on institutional relationships that transfer with the firm or on the founder personally, because that distinction drives how much value survives his departure.
Quantify owner dependence in BD and project origination. Determine how many active accounts the seller personally sources versus those held by the engineering staff, and stress-test whether revenue holds if he exits before the full two years.
Confirm professional licensing continuity. Establish which PE stamps and NY fire alarm/protection credentials the projects require, whether they sit with the owner or staff engineers, and what licensure the buyer must hold or retain to keep operating.
Examine the project pipeline, backlog, and revenue recognition. Since this is project-based work, review signed contracts, work-in-progress, and any lumpiness in the $2.5M revenue to distinguish stable recurring flow from a temporary backlog bump.
Assess professional liability exposure and insurance. Fire protection design carries life-safety risk, so review claims history, E&O coverage limits, and any outstanding or past disputes before assuming the earnings are clean.
Review the office lease terms and NYC overhead. Confirm remaining lease length, rent escalations, and whether the 3,800 square foot Manhattan space is right-sized, since NYC occupancy cost is a meaningful drag on a seven-person firm's margins.

Source

Originally listed on BizBuySell. View original listing →