Valuing a Cleaning Company
Cleaning companies generally provide interior and exterior cleaning services for residential and commercial clients. In recent years, we have seen an increase in demand for cleaning companies. This is a result of various factors such as increased health concerns and a growing number of businesses. According to IBIS World, the cleaning services industry generates over $18 billion in revenue each year. We can expect this number to continue to grow in the coming years. This is ideal if you are looking to buy, grow, or sell a cleaning company. However, it can be difficult to increase the value of a cleaning company in this competitive industry. To succeed, it is important to understand the principles of valuing a cleaning company.
There are many factors to consider when valuing a cleaning company. Whether you are buying, expanding, or selling a cleaning company, it is best to start with a business appraisal. During a business appraisal, an expert will help you understand the fair market value of a cleaning company. In addition, they will discuss the strengths and weaknesses of a cleaning company you are buying or selling. Peak Business Valuation, business appraiser, is happy to help! We provide business appraisals for cleaning companies across the nation.
In this article, we highlight a few factors a business appraiser assesses when valuing a cleaning company. However, the information provided in this article is only a guide. For more accurate guidance, receive a business appraisal for a cleaning company. Start by scheduling a consultation with Peak Business Valuation, business appraiser.
Market Multiples for a Cleaning Company
The following values are average valuation multiples for a cleaning company. Valuation multiples are financial ratios that help calculate the fair market value of a cleaning company. Business appraisers at Peak Business Valuation often use multiples when valuing a cleaning company.
- SDE Multiple Average Range: 2.47x – 3.03x
- EBITDA Multiple Average Range: 3.41x – 4.11x
- REV Multiple Average Range: 0.57x – 1.01x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How to Value a Cleaning Company
There are various valuation approaches a business appraiser may use when valuing a cleaning company. Often, they use the market approach and/or the income approach. However, the valuation approach can vary depending on the company, the type of transaction, and the reason for the valuation.
If you are buying, expanding, or selling a cleaning company, it is important to understand how to value a cleaning company. In the following paragraphs, we discuss key success factors for valuing a cleaning company. For more guidance, receive a business appraisal. To learn more about the value of a cleaning company, see Value Drivers for a Cleaning Service Company, How to Value a Cleaning Company, and Valuation Multiples for a Cleaning Company.
As a business appraiser, Peak Business Valuation can provide you with a business appraisal for a cleaning company. We can also discuss any questions you may have about valuing a cleaning company. Schedule a free consultation with Peak Business Valuation below!
Key Success Factors
Business appraisers may consider the following success factors when valuing a cleaning company. These success factors have a significant impact on the value of a cleaning company you are buying or selling. To learn more, receive a business appraisal. Peak Business Valuation is happy to help! Reach out to Peak Business Valuation now to get started!
Quality Control > Reputation
First, the most successful cleaning companies are those that provide the highest quality of service. To ensure high-quality service, it is important for cleaning companies to understand the specific needs of their clients. In addition, cleaning companies need to have efficient planning and management to ensure each job is thoroughly completed. With effective quality control, cleaning companies can strengthen their reputation. This can lead to an increase in sales revenue and profitability. Peak Business Valuation may consider quality control and reputation when valuing a cleaning company.
Skilled Staff > Recurring Revenue
Next, it is important for cleaning companies to have a skilled staff. Employees at a cleaning company should receive comprehensive training. This ensures thorough cleaning and reduces risks for a cleaning company. Having a skilled staff can help you strengthen your cleaning company’s relationship with clients. This promotes recurring revenue which has a significant impact on the value of a cleaning company. Peak Business Valuation will consider your staff and recurring revenue when valuing a cleaning company. To learn more about valuing a cleaning company, schedule a free consultation with Peak Business Valuation, business appraiser.
Location > Commercial vs Residential Mix
Moreover, the location of a cleaning company plays an important role in its success. The top markets for the cleaning services industry are commercial and residential clients. As such, it is beneficial to locate near highly populated areas. These locations are likely to have a large number of businesses and households. By locating near these key markets, you can increase the clientele of a cleaning company. This can result in an increase in revenue and profitability at a cleaning company.
Pricing > Maximize Margins
Finally, it is beneficial to offer competitive pricing at a cleaning company. The cleaning services industry is very competitive. By offering competitive prices, you can increase the demand and clientele for your cleaning company. To maximize margins, it is important to have effective financial planning and budgeting. In addition, having strong supplier relationships can help reduce expenses on cleaning supplies. This allows you to have more control over the price of your cleaning services. Peak Business Valuation can discuss more about pricing during a business valuation for a cleaning company.
Summary
If you are looking to buy, grow, or sell a cleaning company, it is important to understand the principles of valuing a cleaning company. The best way to learn how to value a cleaning company is by receiving a business appraisal. As part of a business valuation, you will learn about key success factors for a cleaning company. In addition, a business appraiser will determine the fair market value of a cleaning company. This information can help you take the next steps in maximizing the value of a cleaning company.
Peak Business Valuation, business appraiser, frequently works with individuals who are buying or selling a cleaning company. We are happy to provide you with a business appraisal for a cleaning company. In addition, we can answer any questions you may have on valuing a cleaning company. Start now by scheduling a free consultation with Peak Business Valuation below!
