Sale of Commercial Cleaning Company
The Company
A growing office and commercial cleaning company providing a comprehensive suite of cleaning services for businesses and organisations across South East England.
The business had developed a reputation for delivering a consistent, high quality service for a broad range of clients, demonstrating specialist knowledge and expertise to match specific client requirements. As a result, the business had built an impressive client portfolio, servicing a variety of premises including offices, leisure centres, manufacturing plants, retail outlets and educational institutions.
The full range of contract cleaning services offered by the company consisted of commercial cleaning, external cleaning, drainage services, property maintenance and tenancy services. In addition to cleaning services, the business provided an extensive product and equipment range and ancillary services as an integral part of its cleaning contract packages, supplying over 4,000 lines of janitorial products and equipment, promoting environmentally friendly cleaning chemicals, recyclable materials and cleaning practices.
The wide range of ancillary services delivered included floor and carpet cleaning, window cleaning, washroom services, IT equipment cleaning, end of tenancy cleaning and void and exit cleaning.
The company benefited from a small and agile team of contract managers, supported by an efficient administrative team. The business employed a team of cleaning operatives, with an emphasis on training and professional development to attain and exceed industry-recognised cleaning standards.
Full description of the business
The Situation
Over the years, this particular business had demonstrated adaptability and resilience to overcome a significant financial challenge within its trading history. The business consisted of two separate but related companies, with one entity catering to non-VAT registered businesses and organisations, such as charities, running alongside the second entity serving VAT-registered businesses. This presented the need for clarity in the Sale Information Memorandum for potential acquirers, in showing the relationship between the two companies for sale within this particular offering.
It was also important to clarify how the business had responded proactively to external professional advice, making adjustments to the company structure and streamlining the business in order to maintain future progress and to protect the interests of the staff. The various efforts carried out by the business owners had resulted in a significant turnaround and a return to profitability.
Having restored the company to a sustainable position of profitability, the owner, who had returned to the business as Director to affect the successful turnaround decided to sell the business, in order to pursue a personal property renovation project in France. The owner however intended to remain available to assist the buyer post completion of a deal to ensure a successful handover of the business.
The business also contained a Shareholders Agreement in which the General Manager had been issued 20% Class B Ordinary shares which were subject to defined revenue targets being met. The Shareholders Agreement also specified that in the event of a company sale, the General Manager would be required to transfer a specified amount of his Class B share issue back to the company in accordance with agreed revenue targets attained, and then receive his 20% share allocation.
What Hornblower Did
Given our well-established record for achieving over 80% of our business sale assignments within 12 months, we were able to deliver a sale for this challenging assignment in half the time. In this case, we took the business to market in April and achieved completion in October, resulting in a 6-month time period from marketing the business to our extensive database, to the final deal. As well as achieving a win-win deal for the vendor and buyer, we enabled the vendor to move forward quickly to new horizons and projects.
Taking the business to market among a targeted segment of our database generated 47 initial enquiries. Following careful and considered management of the enquiries generated, we secured 4 meetings between the vendors and pre-qualified buyers who had indicated serious offers for the business. As a result of this crucial part of the process, the vendor was in the position to consider 2 confirmed offers from potential acquirers.
The deal was completed on the basis of achieving a strong and realistic valuation multiple with 95% paid on completion. We also believe that the successful outcome was supported by the right details being disclosed to prospective buyers in the Sale Information Memorandum, enabling potential acquirers to make their best offers.
The process was managed throughout by our Business Sales and Acquisitions Consultant, Derick Humphrey from initial meetings with the vendor through to final offers and ‘Heads of Terms’.
A few words from our client:
"After checking out quite a few other business brokers and taking up references we chose Hornblower Business brokers to sell our Commercial Cleaning business. They were excellent... from the initial advertising of the company, selecting a buyer, through the due diligence process and finally arranging a suitable solicitor to handle the legal aspects of the sale. 100% professional and communicative throughout. There are cheaper online business sale options out there, but If you are serious about selling your business and want 'to get the deal done' then you wont find a better service than Hornblower." Richard J.
