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.
BROKER CONSIDERATIONS
When it comes to the selling process, should operators manage it themselves, or seek professional counsel?
“It really depends upon the educational level and the sophistication level of the seller,” says Dave Nolan, assistant vice president, commercial laundry, at Firestone Financial. “If the owner has the capacity to do what is necessary, they could probably sell a store on their own.”
However, the experts interviewed agreed on the benefits of consulting with a broker.
“A seller should look for a broker who has a lot of experience selling coin laundries, because they have a much better handle on the business,” says Joshua Prager, business broker and founder of FloridaCoinLaundryBroker.com.
“Brokers and [professionals] generally have a network of people, and they can sell [the business] faster for you,” says Brian Grell, executive vice president at Eastern Funding. “If you don’t have the time, then you could let the broker go through all the financial information and let [them] weed out the possible candidates.”
TIME TO SELL
To begin the sales process, Prager advises operators to first draft an “advertising information sheet.”
“The information sheet is a summary of your business, including your coin laundry income, expenses, lease information, equipment information, hours of operation, employee schedules, etc.,” says Prager.
When drafting the sales agreement, the most important items to include are the price and payback terms, he says.
For this document, both Prager and Nolan advise seeking professional counsel.
“I recommend hiring a professional, because the purchase agreement survives the closing,” says Prager.
“[A sales agreement is] something that either an attorney or a broker will be better suited for,” adds Nolan. “What we look for in those [include] a defined purchase price. … If there’s any holdback that’s going to be maintained, that should [also] be defined.”
VETTING A PROSPECTIVE BUYER
What should a seller look for in a buyer?
“You need to look for someone who’s financially viable,” says Nolan. “Whether you get a sizable down payment up front, or you have a short window on when they’re supposed to get their financing, or proof of their purchase price.”
In addition to the drafting of a confidentiality agreement, Prager also recommends providing a personal financial statement for the prospect to complete.
“There’s no sense in spending your time with prospects that can’t afford your laundry,” he says.
Grell agrees with this, stressing that operators should require this from a prospect when it’s time to go into contract.
“The only thing I would put in a contract for a seller [is] that if the buyer is going to require financial assistance, they must get approval within no more than two business weeks,” says Grell. “You don’t want to go into contract and find out that the buyer can’t obtain the financing.”
“The seller wants the right to cancel the contract if [the buyer] doesn’t get financing approval in [a certain] period of time,” he adds.
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Check back Thursday for the conclusion!
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].