Industry guide for buyers
Term, assignment, pricing clauses and labour costs — how to review the contracts that hold the value in a maintenance or cleaning business.
Build a register of every contract before anything else.
Assignment and change-of-control clauses can need customer approval.
Fixed prices without adjustment clauses squeeze margins.
Wages are paid before customers pay invoices.
Quick answer: When buying a facilities maintenance or commercial cleaning business, review each major contract for term, renewal, termination and assignment or change-of-control clauses, how prices adjust for wage and cost increases, and customer concentration. Then test operating costs — labour, subcontractors, fleet, materials, insurance and compliance — and the cash-flow gap between paying staff and getting paid. The contracts are the value; the costs decide the margin.
This guide applies to building maintenance, facilities services and commercial cleaning businesses — all of which are built on recurring service contracts and labour. Most of the value sits in customer contracts and the relationships behind them. If key contracts can end on short notice, need customer consent to transfer, or don't adjust for rising costs, the earnings you are paying for may not last.
So start where the value is: the contract register.
Ask the seller for a register of every contract, then add the columns a buyer needs. If the seller can't produce one, building it yourself from the contracts is the most useful due diligence you can do.
| Column | Why it matters |
|---|---|
| Customer, scope and sites | Shows what you are actually delivering, and where |
| Annual value | Ranks contracts by how much they matter |
| Start date, end date, renewal options | Reveals when income could stop or be re-tendered |
| Termination for convenience | Shows which customers can leave early |
| Assignment or change-of-control clause | Shows which customers must consent to the sale |
| Price adjustment mechanism | Shows whether rising wages can be recovered |
| KPIs, audits and penalties | Shows the cost of under-performing |
Map when contracts expire. Several large renewals falling in the first year after settlement is a material risk, because a new owner is often asked to re-quote or re-tender. Government contracts may carry specific assignment, probity or re-tender conditions, so check them early.
Check whether contracts allow termination for convenience, and whether they can be assigned to a new owner or include change-of-control clauses that require customer consent. These clauses work differently in a share sale and an asset sale — some apply even when only the ownership of the company changes — so your solicitor should review each major contract. Know before settlement which customers must agree to the transfer.
How do prices change? Look for CPI, award-wage pass-through or rise-and-fall clauses. With modern award rates increasing 4.75% from 1 July 2026, fixed-price contracts without an adjustment mechanism can squeeze margins quickly — particularly in commercial cleaning, where labour is most of the cost. A contract that looks profitable on last year's numbers may not be on this year's wage rates.
What share of revenue comes from the largest one to three customers? Are any contracts held through government or corporate supplier panels that may need re-approval under new ownership? Losing one large customer in a concentrated business can change its value overnight.
Planned preventive maintenance and scheduled cleaning are more predictable than reactive call-outs. Check the split, and the KPIs, service levels, site audits and penalty regimes attached to each. Reactive work can carry better margins but is harder to forecast and harder to explain to a lender.
A business-wide profit figure can hide contracts that lose money. For each major contract, estimate the true cost of delivering it: labour hours at current award rates and on-costs, supervision, materials and consumables, travel between sites, and any subcontractor cost. Compare that with the contract price. Contracts with thin or negative margins are a renegotiation task at renewal, and contracts that carry most of the profit are the ones whose renewal dates and assignment clauses matter most. Doing this exercise also shows a lender that you understand where the earnings come from.
Review employee numbers, awards and agreements, overtime patterns, and reliance on subcontractors. Confirm subcontractor agreements, insurance and licences — and whether key technicians, supervisors and cleaning staff will stay. Site supervisors often hold the customer relationship day to day.
Trade licences — for example electrical, plumbing or fire services — are often held by individuals, and requirements vary by state. Check who holds them, whether they are staying, the business's WHS record, and that insurances suit the contracts.
Ask for a vehicle and equipment register — including cleaning machinery — with ages, condition and any existing finance. Vehicles and equipment may be funded separately through asset finance, subject to lender assessment, and older vehicles need a replacement plan in your budget.
Maintenance and cleaning businesses pay wages and materials before customers pay invoices, and large customers may have long payment terms. Review debtor days by customer. Invoice finance may help bridge that gap for some businesses, depending on the customer base and lender criteria.
| Area | Ask for |
|---|---|
| Contract register | Customer, scope, sites, value, start and end dates, options |
| Clauses | Termination for convenience; assignment or change of control; government conditions |
| Pricing | CPI, wage pass-through or rise-and-fall |
| Concentration | Top three customers' share; panel positions |
| Scope | Planned, reactive and scheduled cleaning; KPIs, audits, penalties |
| Labour | Payroll, awards, subcontractor agreements |
| Compliance | Licences, WHS record, insurances |
| Fleet and equipment | Vehicle and machinery register; existing finance |
| Cash flow | Debtor days by customer |
See our due-diligence guide for the factors lenders commonly assess in any acquisition, and our acquisition calculator to model repayments.
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Check each major contract's term, renewal options, expiry date, termination-for-convenience rights, assignment or change-of-control clauses, pricing adjustment mechanisms, service levels and penalties. Also check how much revenue depends on the largest customers and whether any panel positions or government contracts need re-approval.
Not necessarily. Many contracts need customer consent to assign, and some include change-of-control clauses that apply even in a share sale. Your solicitor should review each major contract so you know which customers must agree to the transfer before settlement.
Labour is a major cost, and modern award rates rose 4.75% from 1 July 2026. Contracts with CPI, wage pass-through or rise-and-fall clauses can recover some of those increases; fixed-price contracts without them may see margins shrink until renewal.
Vehicles, tools and cleaning or maintenance equipment may be funded through asset finance, subject to lender assessment, separately from the business purchase. Check first whether existing assets are under finance, and include replacement timing for older vehicles in your budget.
The business pays wages and materials before customers pay, so long payment terms create a cash-flow gap. Review debtor days by customer and plan working capital. For some businesses, invoice finance may help, depending on the customers and lender criteria.
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This information is general in nature only and does not take into account your objectives, financial situation or needs. Consider your circumstances and seek appropriate professional advice before making a financial decision.
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