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.
RECORDS IN CHECK
“There are a couple of things to be done before selling a business,” says Joshua Prager, business broker and founder of FloridaCoinLaundryBroker.com.
“The owner must gather all of the books and records, utility bills for the past two years, tax returns, profit and loss statements, and a copy of the lease,” says Prager. “Buyers will be requesting this information when inquiring about the business and will need to verify the information during due diligence.”
Brian Grell, executive vice president at Eastern Funding, stresses the importance of having records of your store’s cash flow among these documents.
“You must know what your net cash flow is—revenue minus expenses,” says Grell. “You must know what that is so that you could come up with an estimate of what you’re going to sell your store for.”
Collecting these documents ahead of time will not only speed up the selling process, but also show buyers that “you’re serious about selling,” says Prager.
‘A TURNKEY OPERATION’
In addition to these records, also of importance to consider is the quality of the laundry’s equipment, according to Dave Nolan, assistant vice president, commercial laundry, at Firestone Financial.
“The equipment has to be in good working order, so that it’s essentially a turnkey operation,” says Nolan. “[Sellers] want to make sure that any repairs have been made [and] any deferred maintenance has been taken care of.”
Prager agrees, saying, “Repairing broken equipment, a fresh coat of paint, new decals on washers and dryers, installing new soap dish lids, repairing broken tiles, and replacing blown light bulbs go a long way when selling a business. Laundromats with great cosmetic appeal will sell faster.”
THE SELLING PRICE
When assessing store value, the experts advise operators to consider factors such as the age of equipment, condition and size of the store, competition, net profit after expenses, and the length of the store’s lease, the latter of which Nolan stresses.
“The true value of the laundry is the lease,” says Nolan. “If you have a lease that only has two years left on it, and no options for renewals, you’re not going to get much value for your location.”
In addition to these considerations, the experts also turned to industry standards.
“A coin laundry should sell between three to five times the net profit after all expenses,” says Prager.
“Stores that are typically over 2,000-3,000 square feet [will] sell anywhere up to five, and maybe even six times, the annual cash flow,” says Grell.
Check back Tuesday for Part 2!
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].