B2B Janitorial and Facilities Maintenance Company
This acquisition targets a commercial janitorial services company operating in a tri-county metro area with dense industrial, medical, and office space coverage. Established over 17 years ago, the company offers recurring cleaning contracts, post-construction cleanup, floor waxing, window washing, and day porter services for a broad mix of office buildings, medical clinics, schools, warehouses, and event venues.
The company generates $4.8 million in annual revenue with adjusted EBITDA of $910,000. More than 86% of revenue is derived from long-term recurring contracts ranging from nightly to weekly service frequencies. The business maintains approximately 135 active contracts across 92 locations and employs 78 part-time and full-time cleaners, 4 field supervisors, 2 operations managers, and 3 administrative personnel.
This type of company is ideal for SBA 7(a) acquisition due to its high contract renewal rate, recurring billing cadence, low AR days, and consistent staffing model. However, buyers must be aware of wage pressures, client-specific compliance requirements (HIPAA, OSHA, etc.), and employee classification when structuring the deal.
SBA 7(a) Transaction Structure
A reasonable structure for this transaction under SBA 7(a) could be:
Purchase Price: $3.3 million (3.63x EBITDA)
SBA Loan: $2,475,000 (75%)
Buyer Equity Injection: $330,000 (10%)
Seller Financing (Subordinated): $495,000 (15%), interest-only for 12 months, then amortized over 48 months with revenue retention clawbacks
Given the contract-heavy nature of this business, the seller note must include provisions that allow forgiveness or offset if more than 15% of active recurring revenue is lost within the first 120 days post-close due to non-renewal or cancellation attributable to the change in ownership. This will ensure the buyer isn’t unfairly burdened by early churn resulting from client loyalty to the outgoing owner.
Contract Review and Client Retention
The backbone of this business is its B2B service agreements, 92% of which are formally contracted and renewable annually. These agreements typically include:
Defined scope of work (daily, weekly, monthly tasks)
Service frequency and hours of access
Supplies responsibility (client vs. vendor-supplied)
Emergency or supplemental billing language
30–60 day cancellation clauses
A pre-close review must include:
Assignment Clauses: Ensure contracts can be transferred to buyer without client renegotiation
Pricing Escalators: Verify if CPI-based or fixed percentage increases are allowed
Indemnity Language: Review liability for property damage, theft, or biohazard cleanup
Client composition includes:
Medical (32% of revenue)
General office (26%)
Industrial/warehouse (18%)
Government and educational (15%)
Event space and hospitality (9%)
Client concentration is low the largest client represents only 5.4% of total revenue. Top 20 clients contribute approximately 43% of revenue. These clients must be prioritized for pre-close introductions and should receive onboarding materials, assurances of staff continuity, and optional contract extensions at current rates.
Staffing Model, Classification, and Labor Risk
The company employs a hub-and-spoke model with three geographic sub-regions each overseen by a field supervisor. Cleaners are mostly part-time W-2 employees with some full-time day porters and one or two 1099 contractors used in overflow or specialty cleaning jobs.
Buyers must:
Audit worker classification for misclassified 1099s
Verify I-9s and employment eligibility documents
Review payroll logs for wage compliance (state-specific)
Assess worker's comp and unemployment insurance claims over the last 36 months
Retaining field supervisors and operations managers is critical. Offer stay bonuses or updated contracts tied to KPIs such as:
Contract renewal rates
Complaint reduction
Overtime reduction
On-time scheduling compliance
New ownership should evaluate benefits like bonus pools, night-shift incentives, and cleaner referral programs to ensure labor supply in a tight hiring market.
Operational Infrastructure
The business operates from a 2,600-square-foot headquarters that houses dispatch, a small inventory warehouse for cleaning supplies, and executive offices. Rent is $3,850/month with 2 years remaining and one 5-year renewal option. There are no material assets beyond:
3 branded cargo vans used for supply runs and emergency dispatch
Industrial vacuums, polishers, buffer machines, and carpet cleaners
Cleaning chemical inventory (rotates every 2–4 weeks)
Software stack includes:
Jobber for scheduling and field dispatch
QuickBooks for accounting
Dropbox and Google Drive for SOPs and client logs
Slack and group texts for cleaner coordination
Post-close, buyers can standardize operations using a mobile app like Swept, CleanGuru, or Janitorial Manager for:
Time tracking with GPS
Cleaner accountability (photos, completion logs)
Supply requests
Incident reporting
Revenue and Margin Breakdown
Revenue is segmented as follows:
Recurring Janitorial Contracts: 86%
Specialty Services (floor polishing, windows, carpet): 9%
Emergency Cleaning (biohazard, flood, post-construction): 5%
Recurring contracts average 12-month terms with automatic renewal. Pricing is typically per square foot per visit (e.g., $0.08 to $0.15 depending on industry and scope).
Gross margins average 48% on recurring services and rise to 61–66% on specialty jobs, which are billed at premium rates. Post-close margin improvement can be achieved by:
Repricing low-margin contracts based on frequency and square footage
Routing cleaners to avoid overtime and mileage inefficiencies
Switching supply vendors to centralize purchasing and negotiate volume-based discounts
Introducing optional service upsells at renewal (e.g., monthly deep clean or quarterly windows)
Customer Acquisition and Growth
The company relies on:
Word-of-mouth and referral from existing clients (47% of new accounts)
Organic website traffic and Google My Business (19%)
Local networking with BNI, chambers of commerce (14%)
Occasional RFP responses for government or education (11%)
Inbound from signage on service vans (9%)
There is no outbound sales team. Post-close, buyers should hire a dedicated B2B account rep or SDR to:
Identify multi-location businesses ripe for consolidation
Partner with property management firms with 5–15 building portfolios
Monitor government bid sites for recurring janitorial RFPs
Upside exists in vertical specialization (e.g., becoming the go-to for pediatric clinics or private schools) and white-labeling services through facility management aggregators.
Insurance and Legal Compliance
The janitorial industry carries liability for slip-and-fall, damage, and injury. Buyers should review:
Current general liability, bonding, auto, umbrella, and work comp policies
History of insurance claims (especially property damage)
Supplier and subcontractor agreements, including indemnity and coverage
OSHA logs and safety protocols for cleaners working in hazardous environments (e.g., medical offices)
All MSDS and safety documentation for chemicals must be current, accessible, and posted where applicable.
No outstanding litigation, open EEOC claims, or wage disputes exist per seller’s disclosure.
Working Capital Needs
At closing, expect the following working capital outlay:
Payroll reserve: $90,000 (due to weekly or biweekly cycles)
Cleaning supplies replenishment: $25,000–$35,000
Vehicle maintenance/reserve: $10,000
Software upgrades or licenses: $5,000
Marketing & SDR onboarding: $20,000–$30,000
Ideal Buyer Profiles
Blue-collar roll-up firms with janitorial or facility services exposure
First-time business buyers with ops management or dispatch background
Investors seeking a low-CapEx, labor-scalable model
Former B2B service franchisees who want to own without brand royalties
Post-Close Execution Roadmap
Meet with top 25 clients to confirm continuity, gather feedback, and offer incentives to renew early
Execute employment agreements or retention bonuses with ops team and field supervisors
Conduct a margin analysis by contract and reprice lowest quartile
Launch mobile app for cleaner check-ins, job logs, and incident tracking
Onboard SDR to identify consolidation targets and new commercial accounts
Conclusion
A regional janitorial company with strong recurring revenue, institutional contracts, and operational team in place offers durable cash flow and scalability. With a well-structured SBA 7(a) loan, buyer protections, and minimal client concentration, this acquisition can form the cornerstone of a facilities maintenance platform.
The opportunity lies in layering margin optimization, route efficiency, and outbound sales on top of a business that already possesses scale, repeatability, and a sticky customer base. With smart execution and systems investment, buyers can increase EBITDA by 25–40% in the first 18 months while positioning for regional dominance in a fragmented but essential industry.
