B2B Commercial Janitorial Services Company
This case study focuses on a B2B commercial janitorial services provider with deep contractual ties to medical offices, outpatient centers, private schools, and municipal government buildings. The company has built its operations around night-shift cleaning crews, weekday porters, and facility-specific hygiene protocols. With a 22-year operating history, the company has become a preferred vendor for over 70 recurring contract clients, some of whom have been with the firm for more than a decade.
Annual revenue is $4.9 million with adjusted EBITDA of $885,000. Approximately 92% of revenue comes from renewable cleaning contracts with 1–3 year terms. The company also performs one-time post-construction clean-ups, disinfection projects, emergency janitorial services, and facility shutdown clean-outs.
This business is highly SBA 7(a)-financeable due to its reliable recurring revenue, low capital intensity, diversified client base, and mature labor structure. However, the buyer must take special care to preserve key contracts, navigate state procurement rules, retain crew leads, and avoid labor misclassification exposure—making deal structure and diligence essential.
Proposed SBA 7(a) Transaction Structure
Due to its profitability and contractually locked revenue, the business may be acquired with the following structure:
Purchase Price: $3.5 million (3.95x EBITDA)
SBA Loan: $2.625 million (75%)
Buyer Equity Injection: $350,000 (10%)
Seller Financing (Subordinated): $525,000 (15%) amortized over 5 years, interest-only for 12 months
Terms should include:
25% clawback if more than 15% of contract revenue is canceled within 120 days of close
Additional 10% bonus to seller if the business renews two expiring government contracts within 6 months post-close
Seller to remain on a 6-month consulting agreement focused on regulatory handoff and crew lead introductions
Client and Contract Overview
The company’s client base spans:
Medical (clinics, dental offices, surgical centers): 40%
Educational (charter schools, private institutions, early childhood centers): 25%
Municipal (city halls, public buildings, police/fire): 15%
Professional offices and corporate parks: 10%
Miscellaneous (fitness, warehouse, retail): 10%
Contracts are typically structured as:
Fixed monthly rate based on square footage and service scope
Terms of 1–3 years, with 60- to 90-day cancellation clauses
Renewal provisions tied to performance KPIs (e.g., inspection scores)
Porter service or day-time staff optional add-ons
No client represents more than 8% of revenue. The company services approximately 3.1 million square feet per week across all contracts.
The buyer must review:
Assignment language and approval requirements for all active contracts
Wage and hour clauses for government and education clients
Service level agreements tied to disinfection standards (especially post-COVID)
Labor Model and Compliance
The company operates with:
68 janitorial team members (W-2), primarily part-time
7 full-time supervisors
2 area managers handling scheduling, QC, and supplies
1 HR/payroll coordinator and 1 general manager
Crews work overnight (6 PM–2 AM), while porters operate 8 AM–4 PM. Supervisors perform weekly inspections, schedule sick-day coverage, and report supply needs.
All employees are W-2 and have documented I-9 files. The company uses a biometric clock-in system tied to jobsite GPS locations, minimizing labor fraud or buddy punching.
Post-close labor strategies include:
Expanding W-2 conversion to any legacy 1099 roles (required for SBA)
Implementing tiered bonuses for attendance, client satisfaction, and tenure
Cross-training supervisors on QC inspections and basic client communication
Benchmarking pay against other janitorial companies in government bids
Operations and Route Management
Cleaning crews are assigned by region and building cluster. Company vans deliver supplies weekly, and supervisors inspect sites using iPad checklists with photo uploads. High-touch buildings (e.g., schools, clinics) have dedicated day porters who replenish soap, paper goods, and handle incident reports.
Scheduling and dispatch software: Swept + QuickBooks Time + Google Drive
Buyer should upgrade to:
Jobber or Aspire for unified crew dispatch, inspection, and client communication
GPS-linked timecards with route optimization
Dynamic rescheduling for inclement weather or holiday building closures
Financial Summary
Trailing twelve-month financials:
Revenue: $4.9M
COGS (wages, payroll tax, supplies): $3.15M
Gross Profit: $1.75M
SG&A (rent, admin, insurance): $865K
Adjusted EBITDA: $885K (18.1% margin)
Revenue split:
Nightly contract cleaning: $3.6M
Day porter services: $670K
One-time cleans and post-construction: $370K
Emergency response: $260K
Billing is on a monthly basis with net-30 terms. Government contracts sometimes delay to net-45 or net-60, but cash flow is stable due to contract layering.
No customer defaults or write-offs over the past 36 months.
Marketing and Business Development
The company has minimal outbound sales.
Current customer acquisition sources:
RFP responses (especially for schools and municipalities)
Referrals from property managers and general contractors
Reputation on Google (4.7 rating), Yelp, and business directories
Past performance cited in bid submissions
Post-close, the buyer can:
Hire a full-time proposal writer or BD rep to expand government bids
Launch a referral program with incentives for client introductions
Run targeted email outreach to building managers and school admins
Develop vertical-specific service packages (e.g., “school-ready”, “clinic standard”)
Assets and Lease
The business leases a 2,800 sq ft industrial office with:
Supply warehouse (cleaning chemicals, paper goods, equipment)
Training space with mock room setup
Admin offices
Rent: $3,200/month gross. Lease is assignable and has 3 years remaining.
Assets include:
2 delivery vans
Floor scrubbers, vacuums, and buffer machines
Inventory of gloves, mop heads, sanitizer, PPE
Computers, iPads, and inspection hardware
CapEx needs:
Van maintenance: $15K–$20K
Equipment upgrade reserve: $10K
Software and system integrations: $10K–$15K
Legal and Regulatory Compliance
Fully compliant with:
State labor laws (W-2, overtime, recordkeeping)
OSHA regulations and workplace signage
City vendor registration and active business license
Contract-specific background check standards for school sites
Insurance policies:
$2M GL
$1M auto
$1M workers comp
$1M umbrella
No open lawsuits, citations, or prior wage claim judgments.
Buyers should audit:
Crew handbooks and employment agreements
Government contract wage requirements
Vendor status in state procurement systems
Working Capital and Transition Needs
Payroll float: $90K–$110K
Equipment servicing: $15K
Software improvement: $10K–$12K
Seller consulting: $25K
Marketing rebrand or proposal creation: $10K
Ideal Buyer Profiles
Facility service firms (HVAC, landscaping, pest) seeking recurring janitorial revenue
Entrepreneurs with operations or HR experience
PE-backed platforms rolling up commercial services with strong EBITDA
Minority-owned acquirers targeting government set-aside contract eligibility
Post-Close Execution Plan
Confirm contract assignment with top 20 clients
Retain area managers and perform pay benchmarking
Launch CRM-driven bid tracking and sales outreach
Upgrade supervisor and inspector reporting tools
Prepare renewal proposals 90 days before expiry on top 10 contracts
Conclusion
This janitorial company offers a compelling opportunity to acquire a mature, government-penetrated, and contract-heavy business with scalable infrastructure. The SBA 7(a) model provides low-cash buyer entry, while the operational focus on compliance, crew management, and QC inspections makes the company defensible and replicable. For the right buyer, this is a strategic foothold in recession-resistant recurring services with multi-vertical expansion potential.
