How to Prepare For and Sell Your Janitorial Business

Thomas
May 3
3 min read

Selling your janitorial business can be a major financial decision and a significant life transition. Whether you're retiring, moving on to a new venture, or simply ready for a change, a successful sale begins with thorough preparation. Here’s a detailed guide to help you through the process—from valuation to finding the right buyer.

1. Preparing Your Janitorial Business for Sale

A. Organize Financial Records

Buyers will want to see a clear financial history. This includes:

At least 3 years of profit and loss statements
Tax returns
Accounts receivable and payable reports
Employee payroll records

Make sure these records are accurate, well-organized, and preferably reviewed or prepared by a CPA. This demonstrates credibility and makes due diligence smoother.

B. Systematize Operations

A janitorial business with standardized processes is more attractive to buyers. Document the following:

Cleaning procedures and quality control measures
Employee training materials
Supplier and vendor relationships
Customer contracts (especially long-term or recurring agreements)

A turnkey operation is more valuable and lowers perceived buyer risk.

C. Evaluate Staff and Contracts

Ensure you have reliable staff and long-term client contracts in place. Buyers are typically looking for businesses that don’t rely too heavily on the owner for daily operations and have predictable recurring revenue.

2. Valuing Your Janitorial Business

Key Valuation Factors

The value of a janitorial business is generally based on its earnings and stability. Common valuation methods include:

SDE (Seller’s Discretionary Earnings): Often used for small businesses. It includes the owner’s salary and benefits, interest, taxes, depreciation, and non-essential expenses.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Used for larger companies with more formal structures.

Typical Multiples

Small janitorial businesses (under $1M in revenue): 1.5x to 2.5x SDE
Larger businesses with recurring commercial contracts: 2.5x to 4x EBITDA

For example, if your business has $200,000 in SDE, you could expect a valuation between $300,000 and $500,000, depending on contract length, client diversity, location, and operational structure.

3. Timeline: How Long Will It Take to Sell?

On average, it takes 6 to 12 months to sell a janitorial business. Factors influencing the timeline include:

Business size and profitability
Clean financials
The strength of recurring contracts
Buyer financing availability
Market demand

A well-prepared business with a strong buyer package may sell faster, while underprepared or owner-dependent businesses could take longer.

4. What Type of Buyer to Look For

Understanding your ideal buyer helps target marketing and smooth the transition.

A. Individual Buyers

Often first-time business owners, they may be attracted to:

Low overhead
Steady cash flow
Recession-resistant services

They may require seller financing or transition support.

B. Strategic Buyers

These are other janitorial or facility service companies looking to expand. They typically:

Have the resources for a quicker close
Seek operational or geographic synergies
Value your client base and contracts more heavily

C. Private Equity or Investment Groups

These buyers are usually interested in larger operations with $1M+ in EBITDA. They seek:

Scalable models
Recurring commercial contracts
Potential for roll-ups or franchising

They offer professional dealmaking but may be more demanding during due diligence.

5. How to Find a Buyer

You can find buyers through:

Business brokers (especially those specializing in service industries)
Online marketplaces like BizBuySell, BizQuest, or LoopNet
Industry networks and trade associations
Direct outreach to competitors

A broker can assist in valuation, marketing, negotiations, and paperwork, but will charge a success fee (typically 8-12%).

6. Final Steps in the Sale Process

Once you have a buyer:

Enter into a Letter of Intent (LOI) detailing terms
Complete due diligence, including financial and operational reviews
Draft and sign a purchase agreement
Close the deal and transfer assets, accounts, and contracts

Be prepared to offer post-sale support or training (commonly 30 to 90 days) to ensure a smooth transition.

Conclusion

Selling your janitorial business can be a profitable and rewarding process—if done right. Focus on organizing your operations and financials, understanding your business’s value, and targeting the right type of buyer. With patience and the right preparation, you can secure a successful exit and maximize the value of the business you've built.