Letter of Intent Template for Acquiring a Housekeeping Business

1. Parties and Business Identification

Identify the buyer entity, the seller, and the specific housekeeping business being acquired. Include the legal business name, DBA if applicable (e.g., 'ABC Maid Service LLC, DBA Sparkle Home Cleaning'), the primary service address, and whether the acquisition includes the legal entity (stock or membership interest purchase) or just the business assets (asset purchase). Most housekeeping business acquisitions at this size are structured as asset purchases to allow the buyer to avoid inheriting unknown liabilities such as prior workers' compensation claims or unresolved wage disputes.

💡 Sellers should confirm early whether the buyer is seeking an asset purchase or entity purchase, as this affects tax treatment significantly. Sellers in an asset sale typically face ordinary income tax on equipment and goodwill unless structured carefully. Buyers should insist on an asset purchase to reset the tax basis and avoid inheriting legacy liabilities including prior insurance claims, employee disputes, or IRS payroll tax issues — all common in labor-intensive housekeeping operations.

2. Purchase Price and Valuation Basis

State the proposed purchase price clearly, the EBITDA or SDE multiple being applied, and the trailing financial period used as the basis for valuation. Housekeeping businesses are typically valued on a 2.5x–4.5x EBITDA or SDE multiple depending on revenue quality, recurring contract percentage, staff stability, and owner dependency. Higher multiples are justified when the business has a strong base of recurring residential or commercial contracts, documented SOPs, and a supervisory layer that does not rely on the owner for daily operations.

💡 Buyers should anchor the multiple to verified recurring revenue. A housekeeping business generating 80%+ of revenue from weekly or biweekly recurring residential contracts commands a premium multiple. One-time cleans, move-out cleans, or post-construction cleans should be discounted heavily in the valuation model because they carry no forward-looking revenue certainty. Sellers should prepare a revenue schedule showing the split between recurring and non-recurring revenue before LOI negotiations begin — it will strengthen their position and justify a higher multiple.

3. Deal Structure and Financing

Outline how the purchase price will be funded, including the buyer equity injection, SBA loan amount if applicable, seller note amount and terms, and any earnout component. Housekeeping business acquisitions in the $500K–$3M revenue range are frequently financed with SBA 7(a) loans, which require a minimum 10% buyer equity injection and lender approval of the business's cash flow. Seller notes of 5–10% of the purchase price are common and signal seller confidence in the business's ability to perform post-close.

💡 Sellers should treat a seller note not as a concession but as a deal-enabling tool — SBA lenders often require it as evidence of seller confidence. Buyers should negotiate the seller note standby period carefully; SBA guidelines typically require seller notes to be on full standby during the SBA loan term unless the lender permits partial payments. If an earnout is included, tie it to measurable metrics such as recurring client retention rate at 6 and 12 months post-close, not to gross revenue which can be manipulated by discounting or service add-ons.

4. Assets Included and Excluded

Define exactly which assets are being transferred. For housekeeping businesses, this includes the client list, service contracts and agreements, trade name, phone numbers and email addresses, scheduling software accounts, cleaning equipment (vacuums, caddies, mops, supplies inventory), employee records for transitioning staff, website and social media handles, and Google Business Profile access. Explicitly exclude any personal assets of the seller and any accounts receivable older than 60 days unless separately negotiated.

💡 Access to the Google Business Profile and scheduling software accounts is often overlooked but critically important in housekeeping acquisitions. These platforms hold the client communication history, recurring schedule details, and online reputation that new buyers depend on immediately after close. Buyers should demand a full audit of all software subscriptions and digital accounts during due diligence and include a technology transition checklist as an exhibit to the final purchase agreement.

5. Due Diligence Period and Access

Specify the length of the due diligence period, what information the seller must provide, and any confidentiality obligations during this period. For housekeeping businesses, due diligence must cover customer concentration analysis, employee classification review, insurance and bonding verification, revenue quality assessment (recurring vs. one-time), and owner dependency evaluation. A 30–60 day due diligence window is standard.

💡 Buyers should prioritize the customer concentration analysis above all else in a housekeeping due diligence. If any single residential client or commercial account represents more than 15% of total revenue, the buyer faces meaningful revenue risk at close. Request a 12-month trailing revenue report by client, sorted by revenue, and map out what the business looks like if the top 3 clients cancel within 90 days of close. This scenario analysis should directly inform the purchase price and any earnout structure. Sellers should prepare this report proactively — it demonstrates transparency and typically accelerates lender approval.

6. Exclusivity and No-Shop Provision

Establish a period during which the seller agrees not to solicit, negotiate, or enter into discussions with any other prospective buyers. This protects the buyer's investment of time and legal fees during due diligence and is a standard provision in any serious LOI. For housekeeping businesses, a 45–60 day exclusivity window is typical given SBA financing timelines.

💡 Sellers should limit the exclusivity period to no more than 60 days total and insist on a clear termination right if the buyer fails to provide written confirmation of SBA lender engagement within the first 15 days. Buyers who are not SBA pre-qualified or who have not identified a lender before signing the LOI frequently cause deal timelines to slip, leaving the seller off the market unnecessarily. Buyers should enter the LOI with a preferred SBA lender already identified and ideally a pre-qualification letter in hand.

7. Employee Retention and Transition Commitments

Address how existing cleaning staff will be handled post-close, including whether the buyer intends to offer employment to all current employees, the terms of that offer, and the seller's obligation to support the transition without poaching staff. For housekeeping businesses, employee retention is a primary value driver — tenured cleaners with established client relationships are a significant portion of the goodwill being acquired.

💡 Buyers acquiring housekeeping businesses should conduct informal conversations with key employees — particularly lead cleaners and anyone functioning as an on-site supervisor — during the due diligence period if the seller permits it. High turnover risk is the number one operational threat post-close in this industry. If the business relies on one or two exceptional employees who have direct client relationships, consider tying a portion of the earnout to their retention at 6 and 12 months post-close. Sellers should proactively disclose any pending employee departures or labor disputes before close.

8. Seller Transition and Non-Compete

Define the seller's post-close obligations including a transition support period and geographic non-compete and non-solicitation covenants. In housekeeping businesses, the seller often holds key client relationships built on personal trust, referrals, and years of service history. A meaningful transition period of 30–90 days and a robust non-compete are essential to protect the buyer's investment.

💡 SBA lenders typically require a non-compete of at least 2 years and commonly push for 3 years with geographic coverage matching the business's service area. Sellers should negotiate the scope carefully — overly broad non-competes that cover adjacent services like carpet cleaning or window washing can unnecessarily limit their future options. Buyers should insist that the non-compete cover not just the seller personally but any entity the seller controls. In a housekeeping business, a seller who starts a competing service and calls their former clients represents an existential threat to the acquired customer base.

9. Conditions to Closing

List the material conditions that must be satisfied before the transaction closes. These are the buyer's off-ramps if critical issues are discovered during due diligence or if financing falls through. For housekeeping businesses, key conditions include satisfactory completion of due diligence, SBA lender approval, landlord consent if a commercial lease is involved, and confirmation that no material client accounts have been lost between the LOI date and closing.

💡 Sellers should push back on overly vague material adverse change clauses. Define 'material' explicitly — for example, a loss of more than 10% of recurring monthly revenue, or departure of more than 3 key employees, between LOI signing and close. This protects the seller from a buyer using minor client turnover — which is normal in the housekeeping industry — as an excuse to renegotiate price or walk away entirely. Buyers should include a right to a final client list audit no more than 5 business days before closing to confirm active account count has not declined materially.

10. Confidentiality and Earnest Money Deposit

Confirm the confidentiality obligations of both parties during the LOI and due diligence period, and address whether the buyer will provide a good-faith deposit. While earnest money is not always required in small business acquisitions, a deposit of $10,000–$25,000 signals serious buyer intent and protects the seller from time-wasters during the exclusivity period.

💡 Housekeeping business sellers are particularly vulnerable to confidentiality breaches because their workforce is mobile and competitors actively recruit cleaning staff. Even a rumor that the business is for sale can trigger employee anxiety and client uncertainty. Sellers should require that buyers sign a standalone NDA before any financial information is shared, well before an LOI is executed. Buyers should insist the deposit is fully refundable if due diligence reveals material undisclosed issues — misclassified 1099 contractors, undisclosed insurance claims, or a client list that is materially smaller than represented.