Cleaning Business Valuations
Independent valuations for commercial and specialist cleaning businesses across Australia.
Green Standard values commercial contract cleaning businesses, specialist cleaning operators and cleaning franchise units. Two cleaning businesses with the same revenue can be worth very different amounts, and the difference is usually found in how secure the contracts are and how the labour is engaged and paid.
A business that holds contracts across offices, medical centres, schools and strata buildings, pays its cleaners correctly under the award and has supervisors who run the sites is a different asset from one that holds a handful of short contracts on thin margins, relies on subcontracted cleaners and depends on the owner to keep every client happy.
We examine the contracts, the labour model, the customers and the margin by site, then form a view on the earnings a new owner could reasonably expect to keep.
How much is a cleaning business worth?
A cleaning business is worth what its maintainable earnings support after a market wage for the owner, adjusted for how secure its contracts are and whether its cleaners are being paid correctly. Because margins are thin and the business owns little, the value rests on the contracts: how long they run, how quickly a customer can leave, and whether the labour cost built into them is realistic. The worked example below restates labour cost using illustrative figures.
Cleaning businesses we value
What affects the value of a cleaning business?
These are the questions we work through when we value a cleaning business. In a business with thin margins and few assets, small differences in contract security and labour compliance move value more than they would in most trades.
Contracts and customers
Contract terms and notice periods
Some cleaning contracts allow the customer to end them on short notice, whatever term is written on the front page. We read the term remaining, the termination for convenience clause, the notice period and any change of control or assignment provision, because these set how long the revenue is realistically protected.
Tender and rebid cycles
Larger customers retest the market on a cycle, and each rebid puts the price and sometimes the whole contract at risk. We look at when each major contract next comes up, how often the business has won or lost tenders, and whether it has held accounts through a rebid before.
Customer concentration
A business that earns a large share of revenue from one building owner, one school group or one facilities manager carries a risk that the profit and loss statement does not show. We measure it by customer and by site over several years, not one.
Sector and site mix
Offices, medical centres, schools and strata buildings differ in hours, standards, supervision and how often they retender. Healthcare cleaning needs infection control training and records, which is harder for a competitor to copy but raises the cost of getting it wrong.
Price reviews and variations
Award wage increases reach the business on a set date each year, but a contract price may only be reviewed on its anniversary, or not at all. We check whether the contracts let price follow wages and whether the business has actually obtained the increases.
Labour and compliance
Labour as the dominant cost
Wages, superannuation, leave, workers compensation and payroll tax on cleaners make up most of the cost of delivering a contract. We rebuild labour cost per site from hours and award rates and compare it with what the customer pays, because that is where margin is made or lost.
Award rates and loadings
Contract cleaning is generally covered by the Cleaning Services Award, with penalty rates and loadings for evening, night and weekend work. We check that classifications, hours and allowances in payroll match the award, because an error repeats across every cleaner and every pay run.
Labour hire and subcontracting
Labour hire and subcontracted cleaners give flexibility but move margin, quality and compliance risk around rather than removing it. We look at how much work is done this way, who carries the cost of award compliance, and whether the arrangements would continue under a new owner. Some states also require labour hire providers to hold a licence.
Sham contracting and underpayment risk
Treating cleaners as independent contractors when they are in substance employees, or paying below award rates, creates a liability that may not appear in the accounts. We ask how workers are engaged and paid and treat any exposure as a due diligence issue a buyer will price, with the legal position a matter for your lawyer.
Supervision structure
Sites run well when supervisors or team leaders inspect, train, cover absences and deal with the customer. We look at who does this, what it costs, and whether the owner does it, because a buyer would have to replace that time.
Owner involvement
In smaller cleaning businesses the owner often wins the work, manages the relationships and covers shifts. We deduct a market cost for those roles before any multiple is considered, and check whether customers deal with the business or with the owner personally.
Margin, mix and assets
Margin thinness
Contract cleaning margins are thin, so a small rise in labour cost, a lost site or an under-priced tender can remove a large part of profit. We calculate gross margin by contract and test how earnings would respond to a modest change in price or hours.
Specialist and periodic cleaning
End of lease, carpet, window, high-rise rope access and post-construction cleaning are priced and won differently from routine contract work. They can carry better margins but are usually project based, referral driven or seasonal, and rope access depends on qualified technicians and strict safety systems.
Franchise models
Cleaning franchises vary: in some the franchisor holds the customer contracts and the unit owner delivers the work and pays fees, in others the owner holds the customers directly. We read the franchise agreement for who owns the contracts, the fees, any required purchases and the conditions for a sale or transfer.
Low asset base
A cleaning business needs vehicles, machines and consumables but little else, so asset backing adds little and value rests on the contracts and the earnings from them. We still check the condition of floor machines, carpet extraction and access equipment, and any finance owing.
Rosters and quality records
Rosters, time and attendance records, site inspection reports and complaint logs show that the work is being done and paid correctly. They also give a valuer evidence of hours by site that is otherwise hard to obtain.
How a buyer reads a cleaning business
Buyers of cleaning businesses include larger commercial cleaning companies adding contracts and territory, facilities services groups adding a service line, and individuals buying their way into ownership. They are all asking how much of this contract revenue will still be here once the current owner has gone, and whether the cleaners are being paid correctly.
Businesses with a spread of customers, contracts with time remaining, documented award compliance and supervisors who run the sites tend to attract the widest interest. Businesses that rely on one or two large customers, on subcontractors whose status is unclear, or on the owner personally are usually priced more cautiously, however good the recent profit looks.
Because the asset base is small, a buyer is paying for contracts and the earnings from them, and will look hard at anything that could take either away. A valuation works through the same questions, independently and with the reasoning written down.
Adjustments we often make in cleaning businesses
Reported profit is restated to what the business earns on a commercial footing before any method is applied. Every adjustment is listed in the report.
Owner wages
Replacing drawings, or a salary set for tax reasons, with a market cost for the supervision, quoting and cleaning the owner actually does.
Family members on the roster
Relatives paid for cleaning or administration at rates above or below the award or market, or for hours not actually worked.
Cash and off-payroll labour
Cleaners paid in cash or through informal contractor arrangements, restated at award rates with on-costs so earnings reflect the true cost of labour.
Award underpayment and back-pay
Wages that should have been paid at award rates, with any back-pay, penalty or remediation cost separated from normal running costs and considered as a liability.
Contracts won and lost
Restating revenue and labour for a contract won part way through the year, or lost after it, so earnings reflect the contracts that will remain.
One-off specialist work
A single post-construction clean, a large strip and seal program or a one-off rope access job that would not recur at the same level.
Related-party arrangements
Rent, subcontract work or management fees paid to entities the owner’s family controls at other than market rates.
Information we typically review
You upload documents through the secure client portal after the engagement is confirmed. We send a list specific to your business; nothing needs to be gathered before the intake.
The financial pack
- Profit and loss statements, usually the last three years and the current year to date
- Balance sheets for the same periods
- Tax returns where relevant
- Payroll summary and employee information
- Vehicle, plant and equipment schedules
- Major customer information
- Recurring contracts and service agreements
- Revenue breakdown by service line
- Owner remuneration and drawings
- Unusual or non-recurring income and expenses
For a cleaning business, also
- Contract schedule: customer, site, start date, term remaining, notice period, termination clauses, price and last price review
- Tender history for the last three years: tenders won, lost and rebid, with reasons where known
- Revenue and gross margin by contract and by sector: offices, medical, schools, strata, specialist and periodic work
- Rostered hours and labour cost by site, with award classification and rate
- Split of workers who are employees, labour hire and subcontractors, with agreements and ABNs for subcontractors
- Evidence of award compliance: payroll reviews, time and attendance records, and any Fair Work Ombudsman correspondence or audits
- Subcontractor insurances and evidence of workers compensation and superannuation where required
- Supervisor and team leader structure, including who inspects each site and how often
- Franchise agreement, fee statements and franchisor correspondence, where the business is a franchise unit
- Equipment, vehicle and consumables schedule, including finance owing
- Customer complaint, site audit and incident records, and workers compensation claims history
What a cleaning business valuation costs
Fixed fees, confirmed in writing before work begins. The standard fee applies to most established cleaning businesses.
Independent Business Valuation
$1,995+ GST
For established trade and field-service businesses requiring an independent valuation.
- Review of financial information
- Normalisation of earnings
- Valuation methodology selected for the business and purpose
- Industry and business risk assessment
- Consideration of plant, vehicles and equipment
- Owner dependency assessment
- Goodwill analysis
- Valuation range and conclusion
- Professionally prepared valuation report
- Draft provided before finalisation
Accountant and Adviser Partner
$1,495+ GST
For accountants and professional advisers who refer valuation matters regularly.
- Streamlined client onboarding
- Adviser kept informed with client authority
- Independent report addressed to the client
- Secure document portal for the client
- Repeat-client workflow
- Partner pricing on every referred matter
Complex Valuations
From$2,995+ GST
For matters with more moving parts. Quoted as a fixed fee in writing before work begins.
- Multiple entities or divisions
- Significant plant and equipment
- Unusual ownership structures
- Partnership and shareholder disputes
- Complex normalisations
- Significant customer concentration
- Historical valuation dates
Fees are fixed and confirmed in writing before work begins.
Cleaning valuations: common questions
How much is a cleaning business worth?
A cleaning business is generally worth what its maintainable earnings support after a market wage is paid for the owner’s own work, adjusted for how secure the contracts are and whether labour is being paid correctly. Longer contracts, a spread of customers and clean compliance records support a higher value; thin margins and heavy dependence on a few customers reduce it. Our guide on recurring maintenance contracts and business value explains how contract revenue is weighed.
Does it matter that some of my cleaners are engaged as contractors?
Yes, because a buyer will want to know whether those workers are genuinely independent. If they are in substance employees, the business may owe award entitlements, superannuation and payroll tax that are not in the accounts, and a buyer will price or exclude that exposure. Whether a particular arrangement is lawful is a question for your lawyer or employment adviser; for the valuation we would normally restate earnings at award rates so they do not rest on labour costs a buyer could not repeat.
Is a cleaning franchise unit valued differently?
Yes, because the franchise agreement controls what can be sold. We read who holds the customer contracts, the fees and royalties paid, and the franchisor’s approval and transfer rights, since these decide what a buyer is actually acquiring. Where the franchisor must approve a sale, that is worth raising with them early.
Our biggest customer retenders next year. Can the business still be valued?
Yes. A pending rebid is common in contract cleaning, and we value these businesses by weighing the risk rather than ignoring it. The report looks at the contract’s share of revenue and margin, the incumbent’s record, the likely price pressure, and what earnings would be if the contract were lost. Our guide on customer concentration and business value explains how this is weighed.
Related industries and guides
Valuing a cleaning business? Start with a short intake.
An Independent Business Valuation is $1,995 + GST, with a draft before the report is finalised. Typical turnaround is 3 to 7 business days once all required information has been received.