What should I ask about subcontracted crews when buying a cleaning company?
Ask who is actually in each crew and on what terms. Request every subcontractor agreement, proof of insurance, and how quality is checked. Then ask who the clients consider their cleaners to be. If the crews can walk away with the accounts, the business is less secure than its revenue suggests.
Begin with the arrangements. For each crew, ask whether they are a separate business or an individual working for the company, what the written terms say, and who supplies the equipment and chemicals. The label used and the way the work is directed can matter legally, so your lawyer and accountant should look at how these people are engaged.
Then ask about protection. Does each crew carry its own insurance, and does the company’s cover extend to their work? Request proof and check that it is current. If there is a claim for damage or injury, who pays? Clients may expect the company to stand behind everyone who enters their building.
Last, ask about loyalty and control. Do clients know the crews by name? Could a crew leader offer the same clients a lower rate after the sale? Check whether agreements restrict that. Ask how quality is inspected and how complaints reach the company. A buyer who cannot see or direct the work may not be buying much. Meet the crew leaders before closing if the seller agrees, and ask what they would need to keep working with you.
Key takeaways
- Read every subcontractor agreement and ask who supplies equipment.
- Request proof of insurance for each crew and check it is current.
- Ask whether crews could take clients to a rival.
- Find out how quality is inspected and complaints are routed.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Canada Revenue AgencyGovernmentEmployment status: Employee or self-employed
- 03Business Development Bank of CanadaGovernmentEquipment valuation: How to do it
- 04Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
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