What is my cleaning or trade business worth? How service businesses are valued in Australia.
A cleaning or trade business is usually valued as a multiple of its maintainable earnings. Maintainable earnings are the profit after adding back one working owner's wage and other owner costs. Vehicles and equipment are usually part of the price, and any stock is added at value. What moves the price most is how much of the work is recurring, whether contracts and customers will stay with a new owner, how much depends on the owner's own licence and relationships, and whether the workforce is set up correctly.
This guide covers commercial and residential cleaning, and trades such as plumbing, electrical, air conditioning, landscaping, painting, pest control and building maintenance. These businesses usually have no shopfront, so buyers are really buying the customers, the contracts, the team and the systems.
Start with maintainable earnings
Start from net profit before tax and add back one working owner's wage and super, depreciation (often large, because of vans and equipment), interest, private use of vehicles and phones, and genuine one-off costs. Add-backs explained.
Then deduct what a buyer will have to pay that you don't:
- A second working owner, or a partner who does the quoting, scheduling or bookkeeping for little or no pay.
- The owner's own labour beyond one role. If you run the business and work on the tools full-time, a buyer who only wants to manage will have to employ a tradesperson or cleaner in your place.
What moves the price
Recurring work and contracts
Buyers pay most for predictable income. Regular cleaning contracts, maintenance agreements, strata or property manager work and repeat customers are worth more than one-off jobs.
- Check whether your contracts can be transferred. Many commercial contracts need the client's consent to be assigned to a new owner, or can be ended on short notice. Buyers will read them.
- Show how long each contract has run, how long is left, and the notice period.
- A schedule of recurring revenue (client, service, frequency, annual value, contract end date) with names removed is one of the most useful documents you can prepare.
Customer concentration
If one or two clients make up a large share of revenue, losing one after the sale could wipe out much of the profit. Buyers will ask for your top clients' share of revenue, and a business with a broad spread of customers is easier to sell and usually earns a better price.
Licences and the owner's role
Many trade licences are personal: they belong to the licence holder, not the business. If the business trades under your licence, a buyer will need their own licence or to employ a suitably licensed person, depending on the trade and the state. The fewer jobs that depend on you personally, whether that's your licence, your quoting or your relationships with builders and property managers, the easier the business is to sell.
Staff and subcontractors
Buyers look at the workforce closely:
- Wages for employees should meet the relevant award. If they don't, a buyer will recalculate the earnings at award rates and may see a legal risk.
- If workers are paid as subcontractors, a buyer will check they're genuinely contractors. Workers treated as contractors who are really employees can mean back-pay, super and tax exposure that buyers won't want to take on.
- Key staff who hold licences, run crews or look after big clients add value if they're likely to stay.
Vehicles, equipment and systems
- Agree which vehicles, tools and equipment are included in the price, and list them with their age and condition. Any finance on them needs to be paid out or transferred at settlement.
- Job management and quoting software, documented procedures and safety systems make the business easier to hand over.
- The business name, phone numbers, website, Google Business Profile and reviews are often where new work comes from, so include them in the sale.
Debtors and work in progress
Debtors (money owed by customers) and work in progress usually stay with the seller, and are collected or adjusted at settlement. Agree how they'll be handled in the contract, so you don't give away money you've already earned.
A worked example
All figures are illustrative, made up for this example, and are not industry data.
A commercial cleaning business has 12 contract clients. The largest is 30% of revenue. The owner manages the business and fills in on shifts. Their partner does the invoicing and payroll from home without pay. Net profit before tax was $72,000.
| Item | Amount |
|---|---|
| Net profit before tax | $72,000 |
| + Owner's wage and super | $70,000 |
| + Depreciation (vans and equipment) | $9,000 |
| + Interest on vehicle finance | $3,000 |
| + Private use of the owner's van | $3,000 |
| – Market wage for the partner's unpaid invoicing and payroll | –$15,000 |
| Maintainable earnings (PEBITDA) | $142,000 |
If buyers were paying, say, 1.3 to 1.8 times PEBITDA for a business like this (illustrative), it would be worth about $185,000 to $255,000, including the vans and equipment, plus any stock at value.
The client mix matters here. With one client at 30% of revenue, a buyer will worry about losing it, and that pulls the price toward the bottom of the range. If that client's contract can be assigned and has two years left, the worry eases.
What buyers of cleaning and trade businesses will ask for
- Two to three years of profit and loss statements, plus the current year to date
- A recurring revenue schedule, and your top clients' share of revenue (names removed at first)
- Copies of key contracts, including terms on assignment and notice
- The staff and subcontractor list with roles, hours, pay rates and licences held
- A list of vehicles and equipment, with any finance
- Licences, insurances and safety records
- Where new work comes from: website, Google reviews, referrals, builders or property managers
Selling it yourself? How to sell your business yourself in Australia. Run a mechanical workshop? What is my mechanic business worth?
What's your business worth?
Upload your P&L, and add your roster and key documents if you have them. AUS Brokers works out your maintainable earnings with the add-backs explained, applies the multiple range for businesses of your type and size, and checks comparable businesses for sale in your state. You can add a buyer-ready profile to market it yourself.
An indicative appraisal only. AUS Brokers doesn't provide valuations, and doesn't act for buyers or sellers. Selling in Victoria? Vic Brokers can sell it for you.
Frequently asked questions
How much is a cleaning business worth in Australia?
It depends mainly on its maintainable earnings: net profit plus one working owner's wage and other add-backs. That figure is multiplied by what buyers pay for cleaning businesses of that size. Recurring contracts that can transfer, a broad spread of clients and a correctly set-up workforce all push the price up.
How are trade businesses like plumbing or electrical valued?
The same way: maintainable earnings times a multiple, with vehicles and equipment usually included. Buyers look closely at how much work depends on the owner's own licence and relationships, how much work is recurring, and the team that will stay.
Do my contracts transfer when I sell?
It depends on each contract. Many need the client's consent to be assigned to a new owner, and some can be ended on short notice. Check your contracts before you set a price, because buyers will.
What if the trade licence is in my name?
Many trade licences are personal, so they don't transfer with the business. The buyer will need their own licence or to employ a suitably licensed person, depending on the trade and the state.
Are subcontractors a problem when selling?
Not if they're genuinely contractors. Buyers will check, because workers treated as contractors who are really employees can bring back-pay, super and tax exposure.
General information only, not financial, tax or legal advice. Figures in the worked example are illustrative.