How to value a cleaning business: SDE, multiples and worked examples

How to value a cleaning business, in short: work out seller’s discretionary earnings (net profit plus your pay, perks and one-time costs), then multiply by a number that reflects risk. Small cleaning companies mostly change hands at roughly two to three times SDE, with recurring clients, written contracts, a team that runs without you and clean tax returns pushing toward the top of that range. Solo operations sell for less, often as a client list.

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Written by BroombookPublished · Updated 14 min read 9 sections 5 sources cited

Key takeaways

  • SDE = net profit before tax + owner’s salary and benefits + interest + depreciation + documented one-time costs. Buyers pay for SDE on the tax return, not on a spreadsheet.
  • IBBA broker data put deals under $500,000 at about 2 times SDE in 2025, and $500,000 to $1 million deals at 2.8 to 3 times; IBBA’s 2026 report notes that at the smallest end buyers have more leverage and watch financing, margins and operating risk.
  • Two companies with the same SDE can be worth very different amounts: the one with 85% recurring revenue and 2% monthly churn carries far less risk than the one living on one-time jobs.
  • Contracts add value only if they are assignable and have real notice periods. A contract either side can end in 30 days is a relationship, not an asset.
  • The SBA lists three approaches: income, market and assets. For a cleaning company the asset approach is the floor; the market approach sets the price.
  • Most of the price is paid at closing, with the rest as a seller note or holdback, and the way it is split among assets changes your tax bill.

What is a cleaning business worth?

A cleaning business is worth a multiple of what it earns for its owner, adjusted for how likely those earnings are to continue after the owner leaves. For most companies under about $1 million in revenue, that means two to three times seller’s discretionary earnings (SDE), with solo operations below that and well-run commercial companies above it.

Where those multiples come from matters. The International Business Brokers Association publishes a quarterly Market Pulse survey of its members’ closed deals. Its Q4 2025 highlights chart average multiples by deal size, and for purchase prices under $2 million it expresses them as a multiple of SDE; the smallest band, under $500,000, sits at the bottom of the chart at 2.0 times SDE in every quarter of 2025, with the $500,000 to $1 million band at 2.8 to 3.0 (IBBA Market Pulse, Q4 2025 highlights). The Q2 2026 edition adds a useful warning from IBBA’s chairman: at the smallest end of the market, buyers have more leverage and are more sensitive to financing, margins and operating risk (IBBA Market Pulse, Q2 2026 highlights). Those are all-industry figures, not cleaning-specific. BizBuySell’s own reporting on cleaning businesses sold in 2025 (a 2.3 times cash flow average and a $325,000 median price) is quoted in our guide on selling a cleaning business; BizBuySell’s pages could not be read directly for this guide, so treat that figure as reported, not verified here.

So the honest answer to “how much can I sell my cleaning business for” is: take your SDE from the last tax return, multiply by two, and that is roughly the floor for a business with staff and recurring clients. Everything below is about where you land between two and three, and why.

How do you calculate seller’s discretionary earnings?

Start with net profit before tax from the tax return, then add back everything a new owner would not have to pay: your salary and benefits, personal costs run through the business, interest, depreciation and genuinely one-time expenses. The result is SDE: the cash one full-time owner-operator could take out of the business.

Worked example: a hypothetical commercial janitorial company

Every number below is assumed, to show the method.

LineAmount
Revenue$480,000
Cleaner wages and payroll taxes− $288,000
Supplies, equipment, vehicles, insurance, rent, software, marketing, other− $80,000
Owner’s salary, health insurance and personal truck− $75,000
Loan interest and depreciation− $8,000
One-time legal cost (a settled dispute)− $5,000
Net profit before tax$24,000
Add back owner lines, interest, depreciation and the one-time cost+ $88,000
SDE$112,000

At 2.0 to 3.0 times SDE this company would be priced between $224,000 and $336,000. The spread is $112,000: the whole game is proving you belong at the top of it.

Add-back rules buyers actually apply

  • Accepted: your W-2 or draw, your health insurance, interest, depreciation and amortization, and one-time costs with a paper trail.
  • Argued over: a family member on payroll who does real work (the buyer must replace them, so no add-back), a vehicle the business needs, and “one-time” costs that recur every year.
  • Rejected: income that never reached the return, and a manager’s salary added back because “the buyer could do that job”. The buyer is already counted as the one owner-operator in SDE.

If you want to see your own margin before you run this, the cleaning business profit calculator lays out revenue, labor and overhead per month.

What moves a cleaning company’s multiple up or down?

Risk. The multiple is the buyer’s answer to “how sure am I that this SDE shows up next year without the seller?” Recurring clients, low churn, a stable team, no big client concentration and several years of clean returns all raise it. One-time work, an owner who cleans and schedules everything, and cash income lower it.

FactorToward 3x and aboveToward 2x and below
Revenue type80%+ from weekly, biweekly or monthly schedules and contractsMostly move-outs, deep cleans and one-off jobs
ChurnRecurring clients stay years; you can show the numbersClients turn over every few months, or nobody tracks it
Owner’s roleOwner manages; a lead or office manager runs the dayOwner cleans, quotes, schedules and answers every call
ConcentrationNo client above 10% of revenueOne property manager or building is a third of revenue
RecordsThree years of returns matching the books and the bankCash jobs, mixed personal and business accounts
TeamEmployees on payroll, low turnover, documented training1099 cleaners who work like employees, constant hiring
GrowthSteady or rising revenue and marginDeclining year, or a spike from one big job
SizeSDE above roughly $150,000, enough to pay a manager and still pay the buyerSDE under $50,000, which is a job, not a company

The IBBA’s 2026 commentary on small deals, that buyers are more sensitive to financing, margins and operating risk, is this table in one sentence. A buyer paying with an SBA loan needs SDE to cover the loan payment and their own living costs with room to spare, so thin margins and shaky records cut the price even when revenue looks fine. The worker classification line is one buyers price hard, and our guide on W-2 versus 1099 cleaners explains why.

Why does recurring revenue change the value so much?

Because recurring revenue tells the buyer how much of next year is already booked. A client on a biweekly schedule with 2% monthly churn will, on average, stay about 50 months. A one-time client is gone the day the invoice is paid. Same dollars this year, completely different dollars next year.

Two hypothetical companies, same SDE

Both earn $120,000 of SDE. Company A gets 85% of revenue from recurring schedules and loses about 2% of those clients a month. Company B gets 30% from recurring work and loses about 6% a month; the rest is move-outs and one-time deep cleans it has to sell again every week.

Company ACompany B
SDE$120,000$120,000
Recurring share of revenue85%30%
Monthly churn of recurring clients2%6%
Average client lifetime (1 ÷ churn)50 months17 months
Recurring clients still here in 12 months, no new sales78%48%
Multiple a buyer might pay (assumed)2.8x1.9x
Indicative value$336,000$228,000

The $108,000 gap is the price of predictability. It is also why the single best thing you can do for your valuation, years before you sell, is to move clients onto schedules and keep them there. Our guide to growing a cleaning business covers converting one-time clients to recurring.

Be ready to prove the churn number. A buyer will ask for a client list with start dates, end dates and visit frequency, and will test it against the bank deposits. If your schedule, client history and payments live in one system, that export takes minutes. In Broombook, every client has a record with their recurring schedule and visit history, and card-on-file billing means the deposits match the visits.

Do cleaning contracts add value, and which ones?

Written contracts add value when they are assignable to a buyer, have a real term or notice period, and the client has been renewing. A contract either side can end on 30 days’ notice is still worth more than a handshake, because it documents price, scope and payment terms, but a buyer will value it as a relationship, not a guarantee.

What a buyer checks in each agreement

  • Assignment clause. Can the contract move to a new owner without the client’s consent? If it needs consent, the buyer will want that consent before closing, or a holdback until it arrives.
  • Term and notice. A 12-month term with 60 days’ notice is an asset. Month to month with no notice is a schedule.
  • Renewal history. A client who has renewed three times is worth more than one in month four of their first term.
  • Price and scope in writing. Scope creep that is not in the contract is margin the buyer will lose.
  • Payment terms. Net 30 with a history of paying on time. Residential clients with a card on file are the commercial equivalent of a signed contract.

Residential cleaners rarely have contracts, and that is fine: a signed service agreement with a cancellation policy, plus a card on file, does most of the same job. The cleaning contract template builds one you can send to every client today, and our guide on winning commercial contracts explains the terms buyers ask for on the commercial side.

Which valuation method should you use: income, market or assets?

Use the market approach (SDE times a multiple from comparable sales) to set the price, the income approach to sanity-check it against the cash the business will throw off, and the asset approach as the floor. The SBA describes the three: income looks at projected revenue and accounts for risk, market compares your business to similar businesses that recently sold, and assets subtracts total liabilities from the value of all assets (SBA: close or sell your business).

Asset approach, the floor

Add up what a buyer could resell: vehicles at used value, floor machines and vacuums at used value, supplies at cost, deposits and receivables. Subtract loans and unpaid bills. For a small residential company this is often a few thousand dollars, which is why nobody sells on it unless the business has no transferable clients.

Income approach, the sanity check

Ask what a buyer financing the purchase can afford. Hypothetical: a buyer pays $280,000 for the janitorial company above (2.5 times its $112,000 SDE), with 10% down and the rest on a 10-year SBA loan. Their loan payment plus their own salary must fit inside SDE with a cushion. If the payment plus a modest salary eats everything, the price is too high no matter what the multiple says, and the lender will say so first.

Market approach, the price

Comparable sales come from brokers and marketplaces, and from the IBBA data above. Ask a broker for recent cleaning company sales in your region with their SDE and price, not just asking prices. Asking prices on listing sites run well above what sells.

The SBA also points sellers to The Appraisal Foundation for formal appraisals. You rarely need one for a sale under a million dollars, but a bank financing the buyer may order one, and an appraisal settles arguments in partner buyouts, divorces and estates.

Three worked examples: solo cleaner, residential team, commercial company

Here is how the same method lands at three sizes. All figures are hypothetical, chosen to show how the multiple shifts with size and owner dependence.

BusinessRevenueSDEMultiple rangeIndicative value
Solo house cleaner
Owner does all the work; buyer is really buying a client list
$90,000$52,0000.8x to 1.3x$41,600 to $67,600
Residential team, 6 cleaners
Weekly and biweekly clients, lead cleaner runs the day
$420,000$118,0002x to 2.8x$236,000 to $330,400
Commercial janitorial, 18 staff
Written contracts, night crews, manager in place
$1,200,000$260,0002.5x to 3.3x$650,000 to $858,000

Why the solo cleaner’s multiple is so low

Almost all of the solo cleaner’s SDE is their own labor. A buyer has to either clean the homes themselves (then they are buying a job) or hire someone at market wages, which wipes out most of the SDE. So these deals are usually priced as a client list: a fixed amount per recurring client who stays, or a share of the first few months of revenue, paid as clients transfer. Our guide to buying a cleaning business shows how a buyer looks at that list.

Why the commercial company earns the top multiple

Written contracts, a manager, night crews that do not need the owner on site, and SDE large enough to pay a loan and a salary. The buyer is buying a system, and the IBBA data shows larger deals steadily earning higher multiples than the under-$500,000 band.

How do you raise the value before you sell?

Give yourself 12 to 24 months and work on the risk factors, not the revenue. Each one below moves the multiple, and most of them cost time rather than money.

  1. Convert to recurring. Offer every one-time client a scheduled rate. Track the recurring share of revenue monthly and aim for 80% or more.
  2. Measure and cut churn. Know how many recurring clients you lost each month and why. If you cannot answer that today, start a log now; a buyer will ask for twelve months of it.
  3. Step back from the work. Promote a lead, move your own homes to the team, and route calls and bookings to the business, not your cell.
  4. Clean up the books. Separate accounts, every job invoiced and deposited, personal costs out, payroll correct. Three clean returns are worth more than a story about cash jobs.
  5. Fix pricing. Clients paying years-old rates are a discount a buyer has to eat or a churn risk when they raise prices. See the house cleaning pricing guide for raising rates with notice.
  6. Paper the clients. Signed service agreements, cancellation policies and cards on file for residential; assignable contracts with notice periods for commercial.
  7. Spread the risk. If one client is more than 10% of revenue, go win three more like it before you list.

Then decide how to sell. Our guide to selling a cleaning business covers brokers and their fees, deal structure, seller notes and the handover.

How does the price turn into money in your pocket?

Not all at once, and not all of it. Expect most of the price at closing and the rest as a seller note or a holdback tied to client retention; then taxes depend on how the price is split among the assets you sold.

  • Deal structure. IBBA’s Q2 2026 highlights chart deal financing by size with cash at close as the largest share and seller financing covering most of the rest for Main Street deals (IBBA). On a cleaning company sale, a structure we suggest considering is a holdback released after 6 to 12 months if recurring revenue holds.
  • Taxes follow the assets. The IRS treats the sale of a business as the sale of each asset in it: capital assets produce capital gain or loss, depreciable property held over a year is a section 1231 transaction, and inventory is ordinary income (IRS: sale of a business). Goodwill, which is most of a cleaning company’s price, is generally a capital asset for the seller.
  • Agree the allocation. Both sides must report how the price was allocated on Form 8594 when goodwill or going concern value attaches (IRS: about Form 8594). The buyer wants more on equipment (faster write-off); you want more on goodwill. Settle it in the letter of intent.
  • Broker fees. A planning figure we suggest is a commission around 10%, often with a minimum, and it is negotiable.

Hypothetical: the janitorial company sells for $280,000. With 80% at closing, a 10% broker fee, and a 20% seller note paid over five years, the seller walks away on closing day with about $196,000 before taxes, and collects the note over the following years. This guide is general information, not tax or legal advice; the allocation and your entity type change the numbers, so bring an accountant in before you sign.

FAQ

Frequently asked questions

How much can I sell my cleaning business for?

Usually two to three times your seller’s discretionary earnings if you have staff and recurring clients, and less than that, often priced per client, if you clean alone. IBBA broker survey data put deals under $500,000 at about 2 times SDE in 2025, and $500,000 to $1 million deals at about 2.8 to 3 times. A $120,000 SDE business would list somewhere around $240,000 to $360,000 depending on churn, contracts and how much it depends on you.

What multiple do cleaning businesses sell for?

Small businesses generally change hands at roughly 2 to 3 times SDE, and larger companies with managers and contracts earn more. BizBuySell has reported cleaning businesses selling at about 2.3 times cash flow on average in 2025, a figure we could not check against BizBuySell’s own pages. Your own multiple depends on recurring revenue, churn, records and owner dependence.

What is SDE for a cleaning business?

Seller’s discretionary earnings: net profit before tax, plus the owner’s salary and benefits, interest, depreciation and documented one-time costs. It represents what one full-time owner-operator could take out of the business, and it is the number small-business multiples are applied to.

Is a cleaning business valued on revenue?

Rarely. Revenue multiples ignore margin, and two cleaning companies with the same revenue can have very different profit. Buyers and lenders value on SDE or, for larger companies, EBITDA. A revenue multiple is sometimes used as a rough check for client-list sales.

Does equipment add to the value?

Only at used market value, and it is usually included in the price rather than added on top. Vehicles and floor machines matter more for a commercial company than for residential cleaning. Make a list with ages and condition; the buyer and the IRS allocation will both need it.

Do I need a professional appraisal?

Not for most sales under a million dollars; a broker opinion of value and your own SDE math usually suffice. A bank financing the buyer may order an appraisal, and partner buyouts, divorces and estates often need one. The SBA points sellers to The Appraisal Foundation for standards.

How do buyers verify my numbers?

They match your tax returns to your profit and loss statements and bank deposits, ask for a client list with start dates and frequencies, check payroll records and worker classification, and read your contracts for assignment and notice terms. Anything you cannot document will not count toward the price.

Sources

  1. U.S. Small Business Administration: Close or sell your business (valuation methods)
  2. IBBA and M&A Source: Market Pulse Q4 2025 highlights (multiples by deal size)
  3. IBBA and M&A Source: Market Pulse Q2 2026 highlights (deal financing, chairman’s comment)
  4. IRS: Sale of a business
  5. IRS: About Form 8594, asset acquisition statement

General information for cleaning business owners, not legal, tax or insurance advice. Rules and prices vary by state and city.