Deal Snapshot: ISS

ISS is a global organization that provides comprehensive facility services, from catering to security. The company recently spun off its North American single-service janitorial division, a commercial cleaning and hygiene services provider with national scale and long-standing relationships. Harris Williams advised ISS in this division’s purchase by Argenbright Holdings.

Here, members of our Business Services Group discuss what makes janitorial services a compelling investment and what made the ISS division particularly attractive. They also explore what other buyers should know about this space.

What is appealing to buyers about the janitorial services industry?

Lewis: Before COVID-19, janitorial services were seen as essential but not necessarily as high value. Fast-forward to the pandemic era, and deep, careful cleaning is now considered by many to be as mission critical as HVAC, safety, or elevator services.

Morgan: Building owners have realized that their buildings won’t function without professional, reliable cleaning—whether or not there is a pandemic. We project solid growth for at least the next several years as companies and building owners continue to increase their spending on cleaning and sanitation to ensure the health and safety of their employees and tenants.

Morris: In particular, we’re seeing the investor appeal of large, national cleaning companies. They can take advantage of economies of scale, and they’re able to navigate labor supply issues more effectively than smaller, local businesses. As the janitorial services industry grows, more professionalized companies are better prepared to hire and retain the employees they need. That means they can consistently deliver professional-level cleaning while maintaining healthier margins.

What makes the single-service janitorial division of ISS a particularly attractive asset?

Morris: The division has a nationwide footprint that enables it to provide high-level support to single-site, regional, and national accounts. In recent years, ISS had made strategic changes to the division, such as focusing on the most attractive end markets, including industrial/warehouse, healthcare, and commercial offices. But its focus on single-service janitorial services, rather than complete facilities management, meant the division no longer fit the ISS corporate focus. So, ISS wanted to spin it off to a company that would build on its solid foundation with more strategic marketing and business development.

Lewis: Argenbright Holdings is a privately held group of operating companies that provides workforce solutions, such as security and facility services. But it did not have a janitorial offering. So the division was a natural fit: a national platform with solid clients and improving margins—and the opportunity for extensive growth with the right business development.

What should other prospective buyers know about this sector?

Morris: In this industry, scale matters. National companies can respond to the big RFPs—and they can hire and retain the best employees. The larger the janitorial services group, the better it can serve sophisticated customers that understand how cleanliness impacts the brand and employee experience. Businesses now have higher expectations for cleanliness, and professionalized janitorial services companies with national footprints are simply better positioned to meet those expectations.

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The Harris Williams Business Services Group is dedicated to serving the needs of companies within the rapidly evolving service-based economy. We have completed business services transactions across all areas of the economy and are actively working with companies in a wide variety of sectors.

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