I run a small commercial cleaning company with about 40 employees. We've been in business for 18 years and I'm ready to exit. I listed with a business broker six months ago and have had maybe three serious inquiries. I've tried reaching out to competitors directly and even posted on a couple of acquisition marketplaces. Nothing is sticking. I'm starting to think my expectations are way off or I'm missing something obvious. Has anyone else been through this?
Selling
Why my search for a buyer isn't going anywhere
Three serious inquiries in six months isn't actually terrible for a service business, depending on size. But what are you asking for? That usually explains most of it.
I looked at buying a cleaning company a while back. The ones that got my attention had clean financials and weren't asking for a multiple that assumed I'd keep the owner in place for years. A lot of sellers want a premium price but stay vaguhe on why the business is worth it without them.
how much recurring revenue vs one-off jobs?
About 70 percent recurring contracts. The rest is project work. I'm asking roughly 3.5x SDE. I feel like that's reasonable but but maybe I'm wrong.
3.5x isn't crazy but it's on the higher end for a business that depends heavily on the owner's relationships. Buyers will dig into whether those contracts stick around post-sale. Do you have a manager who could run it?
i sold mine last year, different industry. The thing that changed everything for me was getting the financials properly recast and putting together a real information packet. Before that I was basically just talking on the phone. Buyers want to see numbers before they invest time.
Also reach out to private equity groups that focus on facility services. They don't always show up on the basic listing sites. It's relationship-driven.
Been there. My first year trying to sell went nowhere because I was working with a broker who had no experience in my sector. Switched to someone who actualLy knew the industry and had a buyers list. Completely different process. Might be worth asking your broker who they've actually sold to.
Did your broker give you any feedback from the people who looked and passed? Sometimes that tells you more than the ones who just don't call back.
One said we were too small small for them. Another wanted to know why I wasn't willing to do seller financing. Honestly I wasn't expecting that to be such a common request.
Seller financing comes up a lot. Buyers are taking on risk they can't fully verify. If you're firm on all cash, that narrows the pool considerably.
Agreed. i carried a note for part of mine. Not ideal but it got the deal done.
could also be the market. lots of small service businesses for sale right now and buyers hnave options
One more thing: make sure your numbers are easy to read without a CPA explaining them. If a buyer has to ask basic questions about your P&L, they'll move on to the next listing.
This is helpful. I think I've been assuming the business should sell itself and it's becoming clear it doesn't work that way. Going to have a hard conversation with my broker about what we are actually doing.