Commercial cleaning is an attractive industry that is growing rapidly and sustainably, and is reasonably recession-proof.
However, selling a commercial cleaning company can be a challenging process if you don’t have professional guidance. While many company owners are experts when it comes to their industry, few have equivalent experience with selling a cleaning business. If you don’t know what you’re doing, you’ll likely end up leaving money on the table.
With this in mind, let’s take a closer look at everything you need to know when selling a commercial cleaning business.
Rigorous Planning and Preparation
Successful exits begin with early diligence. To help ensure that the process goes smoothly, it’s important to get your financial ducks in a row well ahead of time. This means collecting all of your accounting ledgers and other bookkeeping data, creating a spreadsheet of your assets, and compiling a list of your contracts.
Your accounting data should cover the life of your firm, but buyers and investors will be especially focused on the prior 12 to 36 months. Therefore, it’s imperative to have this data organized, complete, and readily accessible. Your spreadsheet of assets should include tangible items, such as equipment and real estate. However, intangible assets, such as your company’s reputation, will also play a role in determining your value.
You should also think about the composition of your client accounts. Potential buyers may be dissuaded if a single client is responsible for too much of your total revenue.
Developing an Accurate Valuation
Properly valuing a cleaning company is a critical part of any transaction. All of the financial data we’ve just discussed, including assets and revenue, will undoubtedly play a key role in establishing your company’s value. However, fixing a value on tangible and intangible assets is only part of the equation. You’ll also need to conduct an analysis to determine whether it’s a buyer’s or seller’s market. This, too, can play an important part in establishing a fair market value for your business. It’s also a good indicator of whether the time is right to put your company up for sale.
Developing a valuation figure can be tricky. Aim too high, and your cleaning business will sit on the market for years without selling; aim too low, and you’ll end up leaving money on the table. This is one of the areas where the help of a qualified business broker can make a significant difference. Business brokers typically have deep expertise in terms of analyzing both assets and underlying market conditions. Therefore, they can help you settle on an ideal valuation.
Marketing Your Business and Identifying Prospective Buyers for Commercial Cleaning Companies
Creating a plan to market your business effectively is an essential part of any sales strategy. First, you’ll need to create a company history and develop materials that position your firm in a flattering light. Once those are ready, you’ll need to list your business for sale in various places. These can include digital platforms and industry publications.
To ensure a timely sale, it also helps to have insight into local buyers. Without this, selling a commercial cleaning company can be a prolonged process. Once again, a qualified business broker can play a crucial role here, as they’ll have a list of potential buyers within your market. Not only does a good business broker keep an eye on the companies being sold, but also who is buying them. Because of this, a broker can often arrange a smart match between sellers and buyers based on their existing knowledge and relationships.
Mastering the Art of Negotiation
Negotiation is both an art and a skill, and those without experience rarely do it well. There is also often an imbalance between buyers and sellers in terms of negotiating. This is because many owners will only sell a remediation company one time, whereas buyers will make multiple acquisitions as they seek to expand their footprint. When one party is an experienced negotiator, and the other is entering a serious negotiation for the first time, it can often result in a bad deal for the seller.
Working with a business broker can eliminate this imbalance, as qualified brokers are expert negotiators. They know when to push for a better number and when to cede ground to keep a deal from falling apart.
What Factors Motivate Buyers?
If you’re selling a commercial cleaning business, you want to present the opportunity in the most compelling form possible. To do this, you need to understand the common elements that attract buyers. If your business can hit these marks, there’s a good chance you’ll have multiple interested parties bidding against each other, which is the ideal scenario for sellers.
Here’s a short list of the factors that intrigue buyers:
- Strong revenue growth in the last three years
- Competitive moats or differentiators
- A diverse list of clients without too much revenue generated by too few companies
- No legal or regulatory issues in the company’s history
- Strong sales volume and good vendor relations
- Growth potential
- A robust local market for cleaning services
- Strong economic growth within your market
- Skilled management staff
If your business can check off most of the items on this list, you’ll likely be in excellent shape when it’s time to sell.
Why Work with VR New Haven?
At VR New Haven, we have the experience to close even the most complex cleaning company deals. Our brokers are experts at helping clients position their companies in a positive light, and we have the contacts and relationships necessary to find potential business buyers. Plus, we’ll employ our proven 9 step sales process to ensure your deal closes in a timely fashion.
If you’re ready to exit the cleaning industry on favorable terms, we urge you to contact VR New Haven today.