What comes to mind when you think about buying or selling a business? Valuation and purchase price are normally at the top of the list for most people, regardless of whether they are buying or selling. Buyers then tend to think about their acquisition criteria – location, service lines, price range, etc. Sellers on the other hand think about money, retirement, and all the potential their business possesses for a new owner who really knows how to capitalize on it. While all of this is important, there is one factor that trumps all others: customers. In the janitorial industry, like in many business services sectors, the ability of one owner to properly transition their customer base to a new owner defines the valuation and determines whether the deal will be a success or a failure. It doesn’t matter if you generate $200,000 in annual revenues or $20,000,000 – if I can’t rely on the same customers producing the same volume of sales then I’m not sure I want to buy your business. When performing due diligence to understand a company’s sales dynamics and the key contributions to revenue, four key aspects must be analyzed: 1. Recurring vs non-recurring revenue 2. Contracts 3. Customer Relationship Management 4. Customer concentration