Share This Info:  

What Factors Contribute To Coin And Card Laundry Business Valuations?

Comments & Replies: 1     Views: 6357     Posted By: Chuck Post  Chuck Post: Laundry Specialist, Consultant, Due-Diligence

We are finding that many laundry buyers and investors are not being given true light to selected elements of value or there are inconsistencies in the interpretation of these elements of value. This common error needs to be addressed. In this BizBen Discussion we address many of those factors.

Topics: Business Valuation, Buying A Business     Tags: business valuation, buying a business, selling a business



We are finding that many laundry buyers and investors are not being given true light to selected elements of value or there are inconsistencies in the interpretation of these elements of value. This common error needs to be addressed. It is important to realize that it is not so much the history of the business that establishes its value; but rather the confidence in the ability of the business to continue to perform over time; sufficiently for the anticipated return of investment.

These can be costly errors to all parties. First is the cost to the New Investor, who may understand these things and then not find a good laundry or may overpay for the laundry, causing problems in keeping up the business profitably going forward. This is also bad for the Broker, because of failed escrows resulting in loss of income, wasted time and efforts. It is certainly bad for the equipment companies and the lenders. When the investor purchases with these misunderstandings, the consequences result in a bad investment leading to a resistance to re-invest into the laundry. This means lower income, poorly run laundries and in the end possibly a loss of a part or all of the original investment. This is very costly and is also counterproductive as to the forward advancements of the industry.

Please consider:

The true value of a laundry is not based on its history but rather its ability to continue performing into the future. The laundry is a time-lined business. The Equipment and the Lease both age, deteriorate and/or expire. The elements just have to be there to make the whole thing work. In general, the Laundry is an Investment Business. In stating that, I qualify the term "Investment Business" as a business that relies largely on your Capitol Infusion rather than on your time invested into the business. It is true that if a proper model is put into place that a laundry can be well operated with as little as/or less than 6 hours of the investors physical time weekly.

The variable issues that are important for the Broker, Buyer, Seller, Landlord and Lender to understand in evaluation of the laundry or taking a listing are:

1. The Lease. Consider this, if one is unable to return the original investment plus a reasonable return throughout the investment within the agreed lease period, the investment risk is greatly increased and the selling price should reflect it.

2. The Ancillary Business, such as, Fluff & Fold, Agency, Mini Markets, games and especially those games that are closely related to gambling, do not carry the same weight as the Wash & Dry income. These should be evaluated on their individual merits.

As a norm, For Vending and Games (any), it is reasonable to assume a level of about 4% of Wash & Dry as normal income in this category. Higher levels need to be looked at differently. Again, the anticipated long-term capabilities of the ancillary are essential.

3. Payroll and Janitorial is an area that needs to be made sense of. In some cases a janitor and security person may be paid as an independent contractor at very low rate. Assuming that person is legal and the hours and expense are properly accounted for, that should be acceptable in the valuation. However, if there are questions or pay systems that are contrary to the norm they need to be closely looked at. The question is, if a Buyer can operate the laundry as it is now operated with the same results long term with the stated costs then the valuation would reflect that. Remember, if the owner and family are working in the laundry (excepting up to 6-8 hours), it is a payroll item and needs to be accounted for.

These issues are in addition to the more traditional elements of value such as: the equipment age & condition, the areas of competition, the demographics and the condition and perceived longevity of the building, and so on.

The high multipliers used in the valuation of the laundry are justified by the cost of its infrastructure, length of lease, and the anticipated long-term use of the equipment. At a minimum, a Business Buyer should have confidence that the income number, leasehold terms and equipment would hold for at least as many months as it would take to recover the anticipated investment.

Comments are appreciated ...


  Helpful Resources To Assist In Selling And Buying California Businesses
Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Steve Erlinger: Laundry Broker, Consultant

I specialize in the laundry industry broker and consultant in Southern California. I assist buyers navigate the many facets of finding, evaluating, and operating a laundry business. I also help current laundry owners find additional stores, sell, evaluate an existing laundromat. Call 949-500-5893.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Peter Siegel, MBA, BizBen Founder, ProBuy, ProSell Programs

Founder & President Of BizBen.com (since 1994) & BizBenNetwork.com. I am the Lead Facilitator for the ProSell & ProBuy Programs on both websites. I consult daily with buyers, sellers, and intermediaries daily about buying and selling businesses. Call 925-785-3118.

Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence

I have 32 years experience in the laundry industry, specializing in assisting laundry buyers with buying or starting up, building, re-tooling, laundries throughout CA. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations. Contact me at 619-227-5711 Cell.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Mike Hurrell, Broker: Coin & Card Laundry Specialist Brokerage

Providencia Properties Inc in association with Golden State Laundry Systems is a full service Coin Laundry Real Estate Broker. At GSLS you will receive personalized attention from our professional staff of coin laundry experts. To sell or buy a Southern CA laundromat call Mike at 310-223-2240 X209.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
4 Essential Facts For Coin, Card Laundry Buyers Seeking To Buy A Laundromat

Many Californians want to buy a coin laundry because it's a business that doesn't require full time owner attention and because, as an all cash business, the owner is always paid before the service is provided. Peter Siegel at BizBen explores these issues in his latest artcle/blog post on BizBen.

Why Isn't My Business Selling? 6 Great Questions To Ask Yourself For Answers

It can take months, sometimes longer to sell a small business. Here are 6 questions from Peter Siegel, MBA (Business Purchase Financing Expert, ProSell Program Advisor with BizBen) at 925-785-3118 to ask yourself to help you determine why your small to mid-sized California business isn't selling.

Why Deals Fall Out: Unrealistic High Asking Prices Are Usually The Reason

The unfortunate truth is that approximately 50% of all small business sales transactions fall out. While failed transactions can happen for a many reasons, Peter Siegel, MBA (BizBen Director & Business Purchase Financing Expert) discusses the main reason deals fall through; steep asking prices.

Find Out Why 80% Of California Business Buyers Never Find And Buy A Business

First the dreaded statistic: 80% of all California business buyers looking to buy a small to mid-sized business in California never end up doing so! Peter Siegel, MBA BizBen Founder And Director at 925-785-3118 covers successful tactics all business buyers of small businesses should utilize.

If You Plan To Offer Seller Financing: 3 Things Owner Sellers Need to Know

When selling your business, offering seller financing is a great way to help your business standout from others on the market and it is also a good strategy to consider that can help you close a sale. Peter Siegel, MBA (BizBen ProSel Program & Financing Expert) explains. Reach him at 925-785-3118.

Selling A Business Without Getting Sued: 5 Tips For Business Sellers/Brokers

How do I sell my business without getting sued, isn't a subject just for discussions with lawyers. A seller can take some precautions to reduce potential legal problems. Peter Siegel, MBA Founder Of BizBen and BizBen's ProSell Program discusses this topic for business owners/sellers and brokers.

What Factors Are Considered In Valuing A Small Business? Advisors Weigh In

Valuing a small business is not guess work. It's not what some other businesses of the same type may have or may not have been sold for, it's not even what a business owner "feels" they want or deserve. It is a formula based on many factors. Peter Siegel, MBA from BizBen & others discuss this topic.

Tips For Faster SBA Loan Approvals For California Small Business Purchases

In this article on BizBen, business purchase financing advisor and SBA loan broker, consultant Peter Siegel (Business Purchase Financing Expert/Advisor & the ProBuy Program Director at BizBen) at 925-785-3118 shares his views of getting SBA loan financing faster for business purchase financing.


Chuck Post Laundromat Industry Expert
Escrow Services Diane Boudreau-Tschetter
BizBen Index Sales Stats
Jim Saxton SF Liquor Licenses
Facebook
Twitter
Linkedin
Vlogs and Podcasts
Instant Email Alerts On BizBen
Business For Sale California Stats
BizBen ProSell Program
California Educational Events Buying And Selling Businesses
Advertise On BizBen
BizBen ProBuy Program


BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
4 Essential Facts For Coin, Card Laundry Buyers Seeking To Buy A Laundro...
Read More News
How Many Months Should I List My Business With A Business Broker?
Read More News