Reduce The Risks Of Selling A Janitorial Company


When the owner of a contract cleaning company decides its time to sell, there are three things he or she should do before even attempting to sell: have your business valued; implement a de-risking initiative; and, create a life after ownership plan. Performing these three tasks will not only establish a solid foundation for an exit plan but will also enable you to more clearly envision the most logical buyer and position your cleaning company accordingly.

In this tip I will cover de-risking.

Once you’ve received a valuation, the next step is to evaluate whether or not it makes sense to sell under the various scenarios outlined in the report. We recommend that you meet with a wealth advisor who can evaluate your investment portfolio and income requirements in retirement. When you sell you’ll receive a lump sum payment but are also likely to give up your annual income, if not immediately then after whatever transition or employment term to which you agree. Can you afford this?

If the answer is yes, it’s now time to evaluate your estate plan. Are you positioned to minimize taxes, protect your heirs, and leave behind the legacy you’d like? Your wealth advisor should be able to conduct a preliminary assessment of your estate plan, and an estate planning attorney can advise on which alternatives are best and draft the necessary documents.

De-risking naturally applies to your business as well. The valuation likely identified several weaknesses in your business, some of which may depress the valuation and others that may cause buyers to decline the opportunity altogether. A strong de-risking plan will help to improve the valuation, improve the terms of any potential sale, and increase the number of buyers willing to meet your valuation expectations.

Peter Holton is the Managing Director for Caber Hill Advisors and has been in the service industry for nearly 20 years and is well known and respected throughout facility maintenance industry. He manages the firm's practice facility maintenance sectors. Peter offers valuations, exit planning, consulting and buying or selling business. He has performed numerous speaking engagements for organizations such as ISSA and BSCAI. He can be reached at peter@caberhill.com or by visiting www.caberhill.com.