Cleaning & Janitorial Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating janitorial and cleaning service businesses relative to industry standards.

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Highlights of Cleaning Businesses Sold on BizBuySell

Cleaning service businesses listed and sold on BizBuySell are comprised primarily of locally owned small businesses engaging in residential cleaning services, janitorial services in commercial and office settings, and specialized cleaning services such as window cleaners, gutter cleaning, solar panel cleaning, and industrial applications. These businesses generally operate recurring revenue models, maintaining ongoing service contracts with individual homeowners, small businesses, and/or corporate clients.

Cleaning and janitorial is a heavily franchised space, so a significant portion of businesses listed and sold are franchise units, and included in this report.

Janitorial & Cleaning Service Business Transaction Trends

The median sale price of cleaning and janitorial businesses has grown along the same trends as the average of all businesses sold on BizBuySell. The median sale price of cleaning businesses rose dramatically in 2020 due to demand caused by the pandemic and associated cleaning protocols, but has since leveled off, down 8% in 2024.

Cleaning & Janitorial Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth. For janitorial and cleaning service businesses reported sold on BizBuySell, valuations have increased along with the rest of the market, with the average earnings multiple growing from 2.0 to 2.3 before settling around 2.2 in 2024. The average revenue multiple improved from 0.66 to 0.71 during the same time.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most valuations will hinge on the earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its overall sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of cleaning service businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are generally higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context. Local business sale comps by sales class suitable for pricing and negotiations are available in BizBuySell's Business Valuation Report.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Lower volume businesses with thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of janitorial and cleaning service businesses are valued between 1.5 and 2.6 times their annual seller discretionary earnings, with 25% of exceptional, large businesses trading above this range, and 25% of smaller, less desirable businesses trading below.

Financial Benchmarks

To determine how a business compares in terms of revenue and earnings relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated industry financial ranges useful for comparing an individual cleaning service business to its peers in the market.

Cleaning & Janitorial Business Revenue and Earnings Trends

Median revenue and earnings of cleaning service businesses sold on BizBuySell has been volatile, and heavily affected by pandemic related slowdowns, inflation, and the sustained interest rate hikes that followed. From 2020 through 2024, median revenue decreased 12%, while median seller's discretionary earnings was largely flat on improving profit margins.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other businesses traded on the market. Below you will find discretionary earnings ranges for janitorial and cleaning service businesses sold over the past five years, as well as recent for sale listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of janitorial and cleaning service businesses sold over the past five years, as well as recent for sale listings.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Larger janitorial and cleaning service businesses that generate higher sales (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a cleaning company consistently generating over $600k annually may sell for an earnings multiple around 2.6, where a smaller cleaning business with sales below $250k may trade around 1.5 times earnings.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.

Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader service sector when benchmarking cleaning and janitorial service businesses. The chart and table below includes key metrics from sales of service businesses on BizBuySell between 2020 and 2024.

Compared to other businesses in the service sector, janitorial and cleaning service business values fall in line with the sector average relative to sales volume. When buying or selling a cleaning services businesses, the primary factor driving up valuations is size. The larger the business, greater the number of recurring cleaning contracts, and higher its overall sales, the higher the valuation multiples it will sell for.

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