Looking for Laundromat due diligence / acquisition wisdom
January 15, 2024
by a searcher from Northwestern University - Kellogg School of Management in Seattle, WA, USA
Hi everyone, looking for insight on this community as I'm about to enter into a LOI agreement for a laundromat.
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The laundromat is brand new (~3 years), all new machines, pricing at 5x EBITDA. This is on my first acquisition, and feels like seller is pushing us to move quickly and giving a few red flags (trying to skip LOI to PSA right away, wants due diligence to be less than 60 days, skip SBA / conventional financing because he believes laundromat financing will take too long and instead asking us to do an alternative home equity financing),
Would appreciate opportunity to connect with anyone familiar with laundromat (or similar business) acquisitions, I'm excited about this opportunity but don't want to make a mistake I'll regret down the line.
from University of South Carolina in Charleston, SC, USA
60 days seems like plenty of time for due diligence on a business like this. The main thing to know about is the age/condition of the machines. Also, you'll need to somehow validate the cash revenue is legit, since most customers pay with coins. Looking at the water usage of the facility can be a decent proxy for how much business is being done.
I looked at these quite a bit 6-8 months ago, and it's true that SBA lenders are not too favorable to laundromats for some reason. This was the main factor in my decision to not pursue them any longer. I found one organization in New York that specializes in Landromat loans, but it wasn't SBA and I recall the terms being prohibitive. If you DM me, I can try to look it up again if interested.
in Rindge, NH 03461, USA