How much is my cleaning business worth?
A cleaning company usually sells for about two and a half to three times what it earns its owner in a year. Where you land inside that range depends on what a buyer can verify without taking your word for it.
I have been in this industry since the 1980s. I started my own company in 1991, built it to hundreds of recurring customers and more than 150 workers, put systems under it, and sold it. So I have sat on the seller’s side of the table. I can tell you the question a buyer asks most is some version of this one: what happens to these accounts when you leave.
I had a conversation this year with an owner who has run a steady commercial cleaning company for thirty years. Good customers, good margins, the kind of business that throws off cash every month. Now he wants to sell and he wants to know what it is worth. The honest answer was that the business was worth a lot, and that he could not yet prove most of it. Everything a buyer would want to check lived in his head.
The multiples buyers use
Small businesses are priced as a multiple of earnings. Peak Business Valuation publishes the ranges it sees for cleaning companies, and they are a sound starting point for a first estimate.
| Measure | Published range | Used for |
|---|---|---|
| Seller's discretionary earnings (SDE) | 2.47x to 3.03x | Owner-run companies, where the buyer will run it too |
| EBITDA | 3.41x to 4.11x | Larger companies with managers in place |
| Revenue | 0.57x to 1.01x | A rough cross-check, rarely the basis of an offer |
Peak’s own worked example puts a company with $395,000 of SDE at 2.72 times, which comes to $1,074,400. On a company that size, the gap between the bottom and the top of the SDE range is about $220,000. That gap is what this article is about.
Working out your SDE
Take last year’s net profit. Add back your own salary and benefits, the truck your spouse drives, interest and depreciation, and any one-time cost such as the lawsuit or the equipment you replaced after the flood. The total is what the business earns for one owner working in it full time. A buyer’s accountant will rebuild the figure from your books, so every add-back needs a receipt behind it.
What moves you up the range
Buyers are paying for next year’s revenue. Everything that makes next year look safer pushes the multiple up. Peak lists recurring contracts, customer diversification, the commercial and residential mix, staff retention and revenue consistency among the drivers. Here is how I would rate each one as a buyer.
| Driver | Pulls the multiple down | Pushes it up |
|---|---|---|
| Contracts | Handshake accounts, month to month | Written contracts with renewal dates on file |
| Customer concentration | One account is 30 percent of revenue | No single account above about 10 percent |
| Retention | Nobody can say how many accounts left last year | Retention by year, with reasons for every loss |
| Quality records | The owner walks the buildings and remembers | Scored inspections per site, with photos and fix times |
| Owner dependence | Customers call the owner's cell | Supervisors own the accounts and the customers know them |
| Staff | High turnover, no records | Stable supervisors, documented site instructions |
Why the quality record matters so much
The biggest fear any buyer of a cleaning company has is the three months after closing. Customers find out the owner has gone. A few of them use the moment to put the contract out to tender. If the buyer cannot see how each building is doing today, every account looks like a risk, and they price that risk into the offer.
A company with two years of inspection history per site can show a buyer which buildings score well, which ones have a complaint pattern, and how fast problems get fixed. That turns a list of accounts into evidence. It also answers the owner-dependence question, because the record shows the checking happens whether or not the owner is in the truck.
The owner I mentioned had none of that written down. His business ran on him. It is a good business, and he will still sell it for less than it is worth unless he spends the next year building the record. Buyers call that an established system, and they pay more for one.
What to start this month
Get every account onto a written agreement with a renewal date, even a two-page one. Start scoring every building on a fixed checklist at least every two weeks, with a photo on anything that fails, and keep the record. The commercial cleaning inspection checklist is a fair place to begin, and KPIs for commercial cleaning companies covers the numbers a buyer will ask for. Track every lost account and the reason it left, which keeping cleaning clients past the 90-day drop goes into in more detail.
Then hand the customer relationships to your supervisors, one account at a time. A buyer who meets your supervisors and hears customers talk about them by name will pay a different number from one who meets only you.
Sources
Competitor details were accurate at the time of writing and come from the sources above. Product names and trademarks belong to their owners. Check current pricing with each vendor.
Common questions
What multiple do cleaning businesses sell for?
Peak Business Valuation publishes ranges of 2.47 to 3.03 times seller's discretionary earnings, 3.41 to 4.11 times EBITDA, and 0.57 to 1.01 times revenue for cleaning companies. Smaller owner-run companies are usually valued on SDE, and larger ones with a management layer on EBITDA.
What is seller's discretionary earnings?
SDE is the profit the business produces for one full-time owner. Start with net profit, then add back the owner's own salary, any personal expenses run through the company, interest, depreciation and one-off costs that will not repeat. It is the number a buyer who plans to run the company themselves cares about.
Is a commercial cleaning company worth more than a residential one?
Usually yes. Commercial accounts sit on contracts, bill monthly and renew, so a buyer can see the revenue coming. Residential work churns faster and depends more on the owner's personal relationships. Peak lists the commercial and residential split among the factors that move a cleaning company's multiple.
How can I increase the value of my cleaning business before selling?
Put your customers on written contracts, get your largest account below a fifth of revenue if you can, and keep records that prove the work gets checked. A buyer pays more for a company that runs without the owner, and inspection history, fix times and retention numbers are how you prove it does.
How long before a sale should I start preparing?
Two years is comfortable, and one is the minimum. Buyers look at two or three years of financials and want to see retention over the same stretch. A quality record started six months before the sale looks like what it is.