Filing Flows › Federal Signal (FSS) › Takeover & LBO
Is Federal Signal (FSS) a takeover target?
A leveraged buyout at today's price plus 30% ($146.47 a share) would return about 4% a year to a private-equity buyer over 5 years; the most a buyer could pay for a 20% return is $91.54 a share (−19% against today's $112.67). Historically 3.3% of companies with its figures were bought within a year (0.67× the average).
The buyout, step by step
| Entry | Amount | How |
|---|---|---|
| Offer price a share | $146.47 | today's $112.67 plus 30% |
| × shares | 61.5 million | |
| = Equity value | $9.0B | |
| + Debt refinanced | $422M | |
| − Cash | $73.7M | |
| = Enterprise value | $9.4B | 18.4× EBITDA of $508M |
| Fees | $187M | 2% of the price |
| New debt | $2.8B | 5.5× EBITDA at 7.65% a year; the limit that binds: 5.5× EBITDA |
| Buyer's own money | $6.7B | 71% of the cost |
5 years under the buyer
| Year | Revenue | EBITDA | Interest | Free cash flow | Debt left |
|---|---|---|---|---|---|
| Year 1 | $2.8B | $549M | $214M | $220M | $2.6B |
| Year 2 | $2.9B | $586M | $197M | $262M | $2.3B |
| Year 3 | $3.1B | $618M | $177M | $303M | $2.0B |
| Year 4 | $3.2B | $644M | $154M | $343M | $1.7B |
| Year 5 | $3.3B | $664M | $128M | $381M | $1.3B |
The exit and the buyer's return
| Exit | Amount | |
|---|---|---|
| Exit multiple | 14.3× EBITDA | today's trading multiple, before any premium |
| Enterprise value at exit | $9.5B | |
| − Debt left | $1.3B | |
| = Buyer's equity | $8.2B | |
| Money multiple | 1.22× | on $6.7B put in |
| Buyer's yearly return (IRR) | 4.0% |
Price against return
What the buyer makes at other premiums over today's $112.67; the IRR reaches 20% at $91.54 a share.
| Premium | Price a share | Buyer's IRR |
|---|---|---|
| 10% | $123.94 | 9.0% |
| 20% | $135.20 | 6.3% |
| 30% | $146.47 | 4.0% |
| 40% | $157.74 | 2.0% |
| 50% | $169.00 | 0.1% |
The figures used
| Figure | Amount | |
|---|---|---|
| Revenue, last 12 months | $2.5B | |
| EBITDA, last 12 months | $508M | 19.9% of revenue |
| Depreciation and amortization | $95.3M | |
| Capital spending | $37.7M | |
| Debt | $422M | |
| Cash | $73.7M | |
| Share price | $112.67 | on Oct 30, 2026 |
Fixed rules, the same as the interactive view's starting point: the shares are bought at today's price plus 30%, the company's debt is refinanced and fees take 2%. New debt is the least of 5.5× EBITDA, 65% of the price and the amount whose interest EBITDA covers 2 times, at 7.65% a year (SOFR 3.89% plus the high-yield B spread 3.26% plus 0.5%, rates of Oct 15, 2026). Revenue grows 8.0% in the first year — the company's own rate, held between −3% and +8% — fading to 3% by year 5; the EBITDA margin, depreciation and capital spending stay at today's share of revenue; working capital takes 10% of each year's added revenue; tax is 23% of profit after interest. Every dollar of free cash flow repays debt. After 5 years the buyer sells at today's multiple of EBITDA.
What a takeover could cost
Takeovers on record paid a median premium of 32.5% over the share price before the deal (the middle half 20% to 51.8%), according to the 1,437 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Federal Signal would cost about $149.29 a share, $9.2B for all its shares.
| Premium | % | Price a share | All shares |
|---|---|---|---|
| Low end (a quarter of deals paid less) | 20% | $135.20 | $8.3B |
| Median | 32.5% | $149.29 | $9.2B |
| High end (a quarter paid more) | 51.8% | $171.03 | $10.5B |
The odds, from history
Historically 3.3% of companies with its figures were bought within a year (0.67× the average). Its figures put it in decile 3 of 10 (10 = the most likely to be bought). The odds come from a model of every merger proxy, tender-offer response and going-private statement filed on EDGAR since 2011, set against each company's size, margins, debt, cash flow and growth the year before.
Federal Signal's latest quarter
Federal Signal, Q3 2026: revenue $656M (+18% year over year), operating margin 17.0%, net earnings $79.6M, operating cash flow $91.4M. The chart follows the revenue to costs, profit and cash.
Questions
Is Federal Signal being acquired?
No headline, 8-K or 13D about a sale is on file in the last year.
Could private equity buy Federal Signal?
A leveraged buyout at today's price plus 30% ($146.47 a share) would return about 4% a year to a private-equity buyer over 5 years; the most a buyer could pay for a 20% return is $91.54 a share (−19% against today's $112.67).
What would a takeover of Federal Signal cost?
Takeovers on record paid a median premium of 32.5% over the share price before the deal (the middle half 20% to 51.8%), according to the 1,437 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Federal Signal would cost about $149.29 a share, $9.2B for all its shares.
Updated Nov 8, 2026. Read automatically from SEC filings and public data; errors are possible. Not investment advice.