In a share sale your cleaning contracts stay with the company, so the question is whether any contain a change-of-control clause letting the client end the contract when the owner changes, while in an asset sale each contract usually needs the client's consent to move to the buyer by assignment or novation.
Most clients agree when they are asked once the deal is firm, by the person they already deal with, and are introduced properly to the new owner.
A change-of-control clause says that if ownership of the cleaning company changes, the client may end the contract, or must be told, or must give its consent first, and these clauses are common in contracts let through facilities management companies, public sector frameworks and larger corporate clients, and rare in the short service agreements used for offices, surgeries and small retail units.
Many cleaning contracts can also be ended on notice for any reason, often 30 or 90 days, so buyers read the notice period alongside the change-of-control clause, since a client with a one-month notice period can leave whatever the clause says. Before we list a business we build a contract schedule with the owner showing each client, the monthly value, the start date, the notice period, any change-of-control or assignment clause and the share of turnover, because a buyer will ask for it and any client above about 15 to 20% of turnover gets most of the attention.
Assignment passes your rights under the contract, such as the right to be paid for the cleaning, to the buyer, while the obligations generally stay with you unless the client agrees otherwise, and many contracts forbid assignment without the client's written consent.
Novation replaces your contract with a new one in which the client releases you and the buyer takes over both the rights and the obligations, and it needs all three parties to sign, so solicitors usually use it for larger commercial contracts where the buyer must take on the obligations as well. For a small domestic or window cleaning customer with no written contract, neither applies in a formal way, and the buyer carries on the service with the customer's agreement, so in those sales a clear customer list with addresses, frequency and price is what the buyer is really paying for.
Ask too early and a client may hear about a sale that later falls through, or start looking at other contractors, so we normally wait until the price and terms are agreed, the buyer has finished most of its checks and the solicitors are close to exchange.
Every buyer agrees to our confidentiality terms before seeing the client names in our sales pack, and early material describes clients by sector and contract value without naming them, so a client or a competitor reading a listing cannot identify the business. Supervisors and cleaners are told at the agreed point so that no client hears about the sale from someone on site before hearing it from you.
A client who has paid regular invoices for years on agreed prices is still a client a buyer will pay for, though a buyer will pay less for income it cannot evidence, so we gather the invoice history, emails confirming prices and frequency, and any price rises the client has accepted.
Where there is time before a sale, sending regular commercial clients a short service agreement setting out the scope, frequency, price and notice period puts the relationship in writing without changing it, and domestic and window customers can be sent updated terms of service with the next invoice.
The clients that stay are the ones whose cleaners, supervisor and service do not change, so we encourage buyers to keep site teams in place and to hold prices for the first few months, and we agree with you a handover period in which you introduce the buyer to each main client.
Buyers often ask for part of the price to be paid later and linked to clients staying, usually called deferred payment or an earn-out, and we keep any such link to clear, measurable terms. If your contracts raise questions like these, we are glad to go through them with you, and our guide to how long a sale takes shows where consents fit in the timetable.
A client can end the contract if it has a change-of-control clause allowing it, or on its normal notice period if it has one. In an asset sale a client can also refuse to consent to the contract moving. In practice most clients stay when the same cleaners carry on and the new owner is introduced properly.
You only need consent where a contract says so, because in a share sale the company remains the contracting party. Some contracts require the client to be told of, or agree to, a change of control, so every contract is checked before the sale is agreed.
A novation agreement replaces your contract with the client by a new one with the buyer, signed by all three parties. The client releases you from the contract and the buyer takes on all of its rights and obligations.
Tell them once the price and terms are agreed and the buyer has finished most of its checks. The conversation should come from you, in person or by phone, with the buyer introduced shortly after.
The buyer will usually want to renegotiate the price, change the deal so that part of the payment depends on that client, or leave the contract out of the sale. This is why large clients are approached first, before the rest of the sale is finalised.
A free valuation from us looks at your contracts one by one and comes back with a figure and the reasoning behind it.
