I run a small commercial cleaning company with about $1.2M in annual revenue. I need to sell within 90 days due to a family situation. Is there a specific formula or rule of thumb for pricing to move quickly? I'm not looking for a full valuation process, just a practical way to set a number that attracts buyers fast.
Valuation
What formula shows how to price a business to sell in under 90 days?
There's no universal formula. Quick sales usually mean pricing at a discount to what a strategic buyer would pay. For a service business your size, a multiple of seller's discretionary earnings (SDE) is common, but the discount for speed is the real variable.
Glennon is right. What multiple are you seeing in your industry? Commercial cleaning might be 2-3x SDE for a normal sale. For 90 days, maybe 1.5-2x. But that's a guess.
Have you considered a broker? They might have a formula or at least know what moves. I sold a landscaping business in 4 months by pricing at 2x SDE and offering seller financing.
I haven't talked to a broker yet. I was hoping to avoid the commission if possible. Seller financing is an option though. Did you find that helped attract buyers?
Not the person you asked but yes. Offering to carry a note can speed things up because buyers don't need to qualify for as much bank financing. But it also means you're taking on risk.
One formula some use is to take your annual SDE, apply a multiple, then subtract a 'time discount' of 10-20% per month you want to accelerate. But that's not standard. Honestly, if you need to sell in 90 days, you might need to price at liquidation value or just above.
That seems harsh. 90 days is tight but not impossible. I'd look at what similar businesses havve sold for on marketplaces like BizBuySell. That gives you a realistic range.
Also, are you including assets in the sale? Equipment, contracts, etc. That can affect the price. If you have long-term contracts, that's a selling point.
We have some recurring contracts, but most are month-to-month. Equipment is mostly older. I'll check BizBuySell for comparables. Thanks for the input so far.
Another thing: consider selling to a competitor. They might move faster and pay a decent price for the customer list. I'd approach a few local competitors directly.
That's a good point. Strategic buyers can be quicker and might not nickel-and-dime you on due diligence if they already know the market.