You are here

Selling a Coin Laundry (Conclusion)

Setting clear expectations, preparing financial records ensures smooth sale

CHICAGO — No two coin laundries are alike. While some owners may find the coin laundry business a lucrative venture, others may not be as successful.

Some may have been in the industry for decades and believe that it’s time to retire from their business.

No matter what an operator’s reason for putting his/her coin laundry up for sale, all have one goal in mind when drafting their exit strategy—getting the best price/offer for their business.

But where should one start? American Coin-Op reached out to experts in the financing and commercial real estate industries to find out what operators should consider when they make the decision to sell their coin laundry.

LEASE, LANDLORD CONSIDERATIONS

As the buyer and seller approach a deal, Brian Grell, executive vice president at Eastern Funding, advises operators to withhold any financial information until after the deal has reached the contract stage.

“You don’t want to release any private information; you don’t want to hand over water, gas and electric bills until you’re ready to go, and that’s when you sign the contract,” says Grell. “Once that contract’s signed, you’re obligating the buyer … to a due diligence period.”

But before even approaching the contract stage with a buyer, both Grell and Dave Nolan, assistant vice president, commercial laundry, Firestone Financial, stress the importance of knowing the terms of your lease and involving the landlord in the sales process.

“You should have an understanding of how long your lease is and what your lease allows you to do,” says Nolan. “Before you even put your unit up for sale, you should have somebody … review that lease and make sure that the terms and conditions are favorable to you selling the property.”

“You need to bring the landlord in right away, because you have to read the lease to make sure that the lease is assignable to somebody and that the landlord is not going to reasonably withhold,” says Grell.

Lenders require an assignment of lease document, Grell adds, which “gives permission to the finance company to take over the lease and sell it if it defaults.”

“If the landlord does not cooperate, then the business is no longer financially viable,” says Grell. “So, you limit the number of people who can actually purchase this store if you do not have a landlord that cooperates.”

ROUNDS OF NEGOTIATION

Realistically, how many rounds of negotiations should a seller and buyer go through before passing on the offer?

“I recommend negotiating until you come to desired terms,” says Joshua Prager, business broker and founder of FloridaCoinLaundryBroker.com. “Negotiations may take one day [or] can take up to three months. A lot depends on the personalities involved.”

“Negotiation can take anywhere from three to four weeks before it actually gets into contract,” says Grell. “Once you get into contract … the negotiation stops, unless something new materializes during the due diligence period.”

“If you’re a seller and if you’re offering your store for sale at a fair, reasonable price, then that negotiating process shouldn’t be that significant,” says Nolan. “If you’re trying to get far more than it’s worth, and the buyer’s coming in and telling you all these different things that are wrong with it, that process is going to take longer.”

A SMOOTH CLOSING

Setting clear expectations ensures the selling process goes smoothly, says Nolan.

“The seller needs to be honest and diligent about the sale price of his/her store. They need to understand the market, and whether or not they could get an asking price that is reasonable,” he says.

“To ensure the closing process runs smoothly, have all of the books and records in order,” says Prager. “The buyer will need this in order to verify the accuracy of the information presented.”

Grell agrees, adding, “It’s so much more credible when you’re buying from someone who has good records.”

Prager also stresses one final point: “Polish the apple; nobody wants to buy a headache.” 

“If prospects are visiting your store and there is broken equipment, light bulbs out, peeling decals, chipped paint, and broken tiles, then they will not purchase your business … at any price.”

Missed earlier parts of this story? You can read them now: Part 1, Part 2.

03a39644 keys for contract web

(Image licensed by Ingram Publishing)

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].