A buyer of your cleaning company is buying its contracts

Commercial cleaning and janitorial companies in Canada typically sell for 3.0 to 5.0 times adjusted earnings. A company whose revenue comes mostly from building contracts that run several years lands higher, at 3.3 to 5.3 times on our engine before size is counted. The notice periods in those contracts and the way crews are paid then move it within that range.

Where commercial cleaning sits on the multiple table

To sell a cleaning business in Canada at a fair price, start from the number buyers multiply. Commercial cleaning and janitorial companies sit in the Business & Professional Services row of the industry multiple table, at 3.0 to 5.0 times adjusted earnings. Adjusted earnings are the profit with the owner’s own pay and personal costs added back, the figure explained in SDE or EBITDA.

Our valuation engine then moves that range for the size of the earnings and for four answers about the business. For a janitorial company the answer that matters most is how much revenue repeats, since the building contracts are what a buyer takes over. Take, as an illustration, the company in the table below, with every other factor at its neutral setting.

Contracts alone move the same company $360,000 at both ends of the range. Size moves it further, because earnings above $1 million draw the private equity buyers who screen for that level, while below $500,000 the buyers are mostly individuals. A company that its operations manager already runs earns up to 0.4 more on top.

The contract register a buyer asks for

The first schedule a buyer requests is a list of your contracts, one row per building. Keep it as a spreadsheet you update each month, with these columns.

The clauses behind the third and fourth columns, and the way a buyer prices one client holding a large share of the work, are set out in customer concentration and the price of your business. The register adds the question of what each building earns.

Cleaning contracts are priced on hours of labour, and the minimum wage rises each year. Ontario’s general minimum wage went from $17.60 to $17.95 an hour on October 1, 2026, and the province indexes it to inflation each October. A three year contract at a fixed price per month loses margin with every increase, and a buyer will find it in the register.

Ontario’s rule when a building changes cleaners

Ontario’s Employment Standards Act gives building services a part of its own. Building services are defined as services for a building with respect to food, security and cleaning, and Part XIX applies when one provider replaces another at a building. The ministry’s policy manual on Part XIX sets out what each side owes.

• When your company takes over a building, section 75 makes it responsible for termination and severance pay to the previous contractor’s staff at that site whom it declines to hire, and their service with the previous contractor counts toward what they are owed.
• Staff you do hire from the previous contractor keep their service under section 10, where the gap before you hire them is 13 weeks or less.
• When your company loses a building and stops employing someone who worked there, section 76 requires their accrued vacation pay by the later of seven days or their next regular pay day.
• Under section 77, a bidder can ask the building owner or manager for prescribed information on the staff at a site, which the outgoing contractor must supply. Section 78 limits its use to complying with Part XIX.

A buyer will therefore ask which buildings you took over from another contractor and which staff came with them, since their earlier service now sits on your payroll. The sale of your own company is a separate event. In an asset sale, staff the purchaser keeps carry their service under section 9, covered in selling a business in Ontario, and in a share sale the employer stays the same company.

These are Ontario’s rules, and the other provinces set their own. An employment lawyer in the province reads this part of the file, one of the advisers listed in who to hire to sell a business in Ontario.

Workers’ compensation debts that follow the assets

Premiums the seller owes to the workers’ compensation board in its province can pass to the buyer in an asset sale. In Ontario the WSIB states that it may hold the purchaser liable for all amounts the vendor owes up to the date of sale, and a valid purchase certificate protects the buyer. The buyer has to request it before the date of sale, and it is valid for 30 days from the day it is issued.

In a share purchase the company keeps its own account, so the WSIB asks for the share purchase agreement and notice of any change of name or address instead. In British Columbia, WorkSafeBC warns that a firm’s assets may be subject to a lien where the seller owes it premiums, and it issues a clearance letter that protects the buyer. Bring the account up to date early, so the certificate can sit among the closing documents.

Cleaners paid as subcontractors

Some cleaning companies pay their cleaners as subcontractors, each invoicing the company for a building or a shift. The CRA decides employment status on all the facts of the working relationship, including the terms in practice, and the label in the agreement counts as one fact among them.

A cleaner who works the shifts you set using your supplies and equipment points toward an employee on two of the CRA’s factors, control and tools. A cleaner who hires their own helpers and carries the cost of their own equipment points toward self-employment. Where the CRA finds an employee, the employer pays both the employer’s and the employee’s share of any CPP contributions and EI premiums it failed to deduct, with penalties and interest.

In a share sale that liability stays in the company the buyer acquires, so expect a specific indemnity or a holdback sized to it. In an asset sale the buyer moves the crews onto payroll, and the employer costs that follow come off the adjusted earnings it multiplies. At 4.0 times, each $10,000 of payroll cost added takes $40,000 off the price. An owner who wants the question settled first can ask the CRA for a ruling with Form CPT1.

The year before a cleaning company goes to market

1. 01Put every building on a written contract with a term that runs past the likely closing date and a price adjustment at each minimum wage increase.
2. 02Build the contract register above, with staff and hours by site, and update it monthly.
3. 03Report contract revenue and one-off work on separate lines each month, so a buyer can check the recurring share for itself.
4. 04Review each subcontractor against the CRA factors, and move those who work as employees onto payroll a full year ahead, so the statements already carry the cost.
5. 05Bring the WSIB or WorkSafeBC account up to date, and note which buildings came with staff from a previous contractor.
6. 06Hand the client relationships to a site supervisor or operations manager, so building managers call someone other than you. The staff side of a sale is covered in what happens to your employees.

The sale has costs of its own, set out in what it costs to sell a business in Canada, and a formal opinion of value comes from a business valuator. To see where your own company sits in the 3.0 to 5.0 range today, the Quick AI valuation asks the recurring revenue question with three others and returns a range in a few minutes, before you give anyone your name.

The buyers, due diligence priorities and sector requirements are set out on InvestDeal’s home services M&A advisory page.

Questions owners ask

What is a commercial cleaning business worth in Canada?

Typically 3.0 to 5.0 times adjusted earnings, which is profit with the owner’s pay and personal costs added back. A company with $800,000 of adjusted earnings would fall between about $2.4 million and $4.0 million, and between $2.64 million and $4.24 million where most of its revenue comes from building contracts that run several years.

In Ontario, what happens to cleaning staff when a building changes contractors?

Part XIX of the Employment Standards Act makes the new contractor responsible for termination and severance pay to the previous contractor’s site staff it declines to hire, with their earlier service counted. Staff it does hire keep their service under section 10 where the gap is 13 weeks or less.

Does the buyer take on my WSIB account?

In an Ontario asset sale the WSIB may hold the buyer liable for amounts the seller owes up to the date of sale. A valid purchase certificate, requested before that date, protects the buyer. In a share sale the company keeps its own account and the WSIB is given notice of the sale.

Can I keep paying my cleaners as subcontractors through a sale?

The CRA decides status on all the facts of the relationship. Cleaners who work shifts you set with your supplies point toward employees, and an employer then pays both shares of missed CPP and EI with penalties and interest. Buyers price that exposure, so review it a year ahead.