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How to Sell Your Cleaning Business

Cleaning businesses have become a popular option for those who are looking to buy a business ever since Covid-19 put the industry in the spotlight, which means you are in luck if you are a cleaning company owner who is looking to sell your business.
We’ve certainly noticed an increase in the amount of buyers in our business brokerage who are looking to buy a cleaning business. The majority of buyers approaching us are looking to get into the industry for the first time, this is a change from previous years when the vast majority of cleaning business buyers were those who already have an existing company that were acquiring to grow.

How to Value a Cleaning Business

There are multiple formula’s which can be used to value cleaning businesses –

  • 50-70% of total revenue
  • 2-3x EBITDA
  • 1x SDE (seller discretionary earnings)
At the end of the day, every business is unique and it’s just not possible to do an accurate valuation based off a formula. None the less, the methods above are still good as a rough guide or as a starting point if you plan to sell the business privately without the assistance of a business broker.

What Factors affect the Price of a cleaning business?

  1. Do you have contracts? A cleaning business with contracts is always worth more than one which hasn’t
  2. How many contracts do you have? Businesses which aren’t reliant on 1 very large client to remain profitable are worth more
  3. What is your role in the business? The less involvement you have, the better the selling price
  4. Are there systems in place? Systems allow an easy transition for a buyer
  5. How do your new customers find you? Having lead generation methods which can be passed on is attractive to buyers
  6. What are the barriers to entry? The harder it is for someone to startup a similar business, the more your business is worth
  7. How much do you charge your customers? Having good margins will increase the selling price of your business
  8. Is the business growing? Your business will be worth more if the revenue is trending up as opposed to down

Documents Required

  • 3 Years profit & loss statements
  • 3 Years BAS statements
  • 3 Years Tax Returns
  • Ledger showing credits & debits
  • List of assets & equipment
  • Employee list & organisation structure
  • Contracts for clients

Confidentiality Agreements

Since you will be sharing sensitive information about your business with buyers, it’s crucial you protect yourself by preparing a well worded confidentiality agreement for them to sign before disclosing any information or handing over any documentation.

Steven Ung

Steven Ung

I'm the owner of Business Brokers Sydney and have many years experience selling cleaning businesses. Feel free to call me for a free consultation if you are interested in selling your business.