Cleaning, security and facility management companies have what most buyers want: predictable, recurring revenue from long-term contracts. Spain's auxiliary services sector is consolidating fast. If you own one of these companies, this article explains why the timing is favourable and what a sale process looks like.
If you own an auxiliary services company in Spain — building cleaning, private security, access control, facilities management, pest control, corporate landscaping or integrated maintenance — you know the two sides of this business well.
On one side, you have something most business owners envy: recurring revenue. Annual contracts, multi-year contracts, with clients who renew because switching providers is costly and disruptive. A revenue visibility that operators in other sectors simply do not have.
On the other side, you know that managing a labour-intensive services company in Spain is one of the most operationally demanding tasks in business. Constant margin pressure. The energy consumed by personnel management — recruitment, training, turnover, absenteeism, collective agreements. Brutal price competition in tenders.
That combination — the attraction of the recurring revenue model and the operational difficulty of delivery — is precisely what makes this sector so interesting to financial buyers. And what makes this a good moment for owners of these companies to understand their options.
Spain’s large facility services groups — Clece, ISS, Ferrovial Services, Sacyr Facilities, Acciona Facilities — have been growing through acquisitions of mid-sized companies for years. Private equity funds have increasing interest in building auxiliary services platforms that can scale regionally and nationally.
The logic is clear: companies with recurring service contracts are assets that behave predictably. A buyer can model cash flows with relative reliability because they know how many contracts the company holds, when they expire and what the renewal history looks like. That predictability has enormous value in an uncertain economic environment.
The sector is also highly fragmented. There are thousands of small and mid-sized companies in Spain competing regionally. Scale matters: a company generating €20 million in revenue can bid for contracts that a €3 million company cannot. It can negotiate better terms with suppliers. It can justify investment in management systems and technology that improve productivity.
That consolidation dynamic — large platforms growing by acquiring mid-sized companies — represents a genuine opportunity for well-positioned owners.
The typical range for cleaning, security and facility management companies in Spain is 5 to 7 times normalised EBITDA. Positioning within that range depends on contract portfolio quality.
Contract duration and diversification. Multi-year contracts — two, three or more years — with multiple clients are the most valuable asset. A company with twenty three-year contracts in healthcare, education and public administration has revenue visibility that justifies a high multiple. A company with several annual contracts with private companies subject to intense price pressure at each renewal will be valued at the lower end.
Renewal history. What proportion of clients does the company retain year on year? What is the contract churn rate? A high renewal rate — above 85-90% — is a strong signal of service quality and depth of client relationships.
Margins and operational efficiency. EBITDA margins in auxiliary services vary considerably: from 4-5% in cleaning companies with very compressed margins to 12-15% in security management or facility management companies with higher value-added. Buyers look for companies with sustainable margins and improvement potential through process professionalisation.
Sector diversification of clients. Companies providing services exclusively to one sector — for example, only construction or only hospitality — carry elevated concentration risk. Those with a client base diversified across sectors are more resilient to economic cycles and accordingly better valued.
In an auxiliary services company, personnel can represent 60-70% of total costs. Labour management is not a secondary function: it is the business.
Buyers will examine the company’s labour structure in detail. The split between permanent and temporary staff, compliance with applicable collective agreements, litigation history, relations with works councils and the quality of recruitment and training processes.
Labour irregularities — identified during due diligence — such as contracts incorrectly classified, workers with relationships that should be employment treated as commercial, collective agreement non-compliance — generate contingencies that are reflected in the price or in retentions. It is better to identify and resolve these before initiating a sale process.
What buyers value most in labour management is not the absence of complexity — the sector is complex by nature — but evidence of solid processes. A company with a professional HR director, a digitalised personnel management system and documented recruitment and training protocols generates confidence.
One of the concerns that most affects buyers in this sector is the risk that clients will not renew after a change in ownership. “The client is used to dealing with the owner. If the owner changes, will they stay?”
It is a real concern, particularly in smaller companies where the owner has deep personal relationships with the procurement managers of key clients. The transaction structure can address this risk in several ways.
A common approach is a transition period during which the selling owner remains associated with the company in a client relationship role, facilitating the transfer of those relationships to the new management. Another option is to structure part of the price as an earn-out conditioned on renewal of the main contracts during the first year.
In any case, the best mitigation of this risk is operational rather than contractual: building in the months before the sale a management structure that has its own relationships with clients, not solely through the owner.
A growing trend in the sector is the construction of auxiliary services platforms through successive acquisitions of mid-sized companies. In this model, a well-managed company becomes the “platform” onto which further acquisitions are integrated, generating economies of scale and expanding the service offering.
At Blue Mountain, this is one of our preferred models for the services sector. When we find a well-managed company with solid contracts and a capable management team, we make it the foundation for building something larger. The original owner can choose to remain as a director with a stake in the new project, or to exit with the knowledge that their company will be the core of something more significant.
If you own an auxiliary services company with a solid contract portfolio and are considering your options, contact us. The conversation is confidential and without obligation. Through our investment platform, we can provide an indicative valuation and a clear view of what your options are in the current market.
There is a window of opportunity in this sector. The best moments to sell are the ones you approach from a position of strength. Let us talk.
Dirk Manuel Martens Jiménez Founder, Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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