Service Business for Sale in the UK: Contracts, Staff and Vehicles

If you're looking at a service business for sale, such as a cleaning company, gardening round, pest control firm or maintenance contractor, most of what you're paying for is recurring work, the people who do it, and the vans and kit that get them there. Check those three things properly and you'll know whether the asking price is fair. Skip them and you could end up paying for a customer list that leaves with the old owner.

What makes a service business for sale worth buying?

Unlike a shop, there's rarely much stock or valuable premises. The value sits in recurring revenue, the margin left after labour, and how well the business runs without the seller.

Before you go further, ask for:

• The last two to three years of accounts, plus management figures for the current year
• A customer list showing monthly value per customer (names can be anonymised until you're further along)
• A staff list with roles, hours and pay rates
• An asset register covering vehicles, equipment and software

Then look at concentration. Ask what share of turnover the top three customers make up. If one client is a big slice of the business, losing them would change everything, and the price should reflect that.

How secure are the customer contracts?

"We have 40 contract customers" can mean signed agreements with notice periods, or a handful of long-standing verbal arrangements. Sort them into groups.

Contract type	What to check
Written, fixed term	End date, renewal terms, notice period
Rolling contract	Notice period, when prices were last reviewed
Verbal or handshake	Payment history and how long they've been a customer
Tendered (councils, facilities managers)	Re-tender date and whether the contract can transfer

Ask your solicitor to read the main contracts for assignment and change-of-control clauses. In an asset purchase, contracts usually have to be assigned or novated to you, which may need each customer's consent. In a share purchase the company stays the same, but some contracts let the customer walk away if ownership changes.

Map every renewal over the next 12 to 18 months. If several large contracts come up just after completion, consider asking for part of the price to be deferred or linked to those contracts renewing.

Does the business depend on the current owner?

In many small service firms, the owner prices the jobs, handles complaints and is the person clients phone. Ask who the main contact is for each key customer, and check whose name appears on emails and in the booking system.

If the answer is mostly "me", build protection into the deal:

• A handover period in the sale agreement, with personal introductions to the top customers
• Restrictive covenants stopping the seller from competing or approaching customers and staff for a reasonable period
• An earn-out, where part of the price depends on revenue retained after the sale

A supervisor or office manager who already deals with clients is worth a lot. Find out whether they plan to stay.

What happens to the staff when you buy?

When a UK business transfers as a going concern, employees usually move across automatically under TUPE, keeping their existing terms and length of service. You inherit the employer's obligations, including some past problems.

Request employment contracts, pay rates, accrued holiday, pension auto-enrolment records, right to work checks and details of any disputes or tribunal claims. In cleaning especially, check minimum wage compliance, including how travel time between jobs is treated, because underpayment can become your liability.

If the business uses self-employed cleaners or subcontractors, ask your accountant whether they really work like employees. Misclassification can lead to tax and employment claims. Also check whether staff working in schools or care settings have the DBS checks those clients require.

Vans, equipment and software: what's included in the sale?

For each vehicle, ask for the V5C logbook, MOT and service history, and confirm whether it's owned outright or on finance or lease. Finance has to be settled or transferred, so agree who pays. Insurance doesn't transfer, so you'll need your own van cover, employers' liability (required by law for most employers) and public liability.

For equipment, check the age and condition of the larger machines and whether COSHH assessments exist for the chemicals used. If the business carries away waste, check whether it needs waste carrier registration and that this is in place.

Software is easy to overlook. List every scheduling, invoicing and accounting subscription, who holds the account, the monthly cost and whether customer data moves with it. Make sure the business phone number, website domain and email addresses transfer too. Customers call the number, not the owner.

Red flags in job records and repeat work

Ask for 12 to 24 months of job records from the scheduling system and compare them with invoices and bank statements. Watch for:

• Repeat bookings that don't match the claimed recurring revenue
• A big one-off job inflating a single year
• A cluster of customers cancelling in recent months
• Cash jobs the seller mentions but that aren't in the accounts
• Frequent complaints or jobs that had to be redone

If the records are thin or only exist in the owner's head, treat the revenue as less certain and adjust your offer.

When you're ready to compare options, you can browse service businesses for sale on BizMarketplace, narrow it to service businesses for sale in London, or look at businesses for sale near you if you'd rather run a round close to home.