Laundromat Resource › Forums › Laundromats › Due Diligence › Reply To: Due Diligence

July 25, 2020 at 2:59 pm #1954
Mitch Brunette
Participant

    Hi Bryan,

    I’m new and also in DD. As someone who has been on the hunt for businesses for sale for over a year (focused on laundry for the last 90 days), if they aren’t giving you what you asked for, they have something to hide, or they are pretty foolish if they had something to prove their case and wouldn’t turn it over.

    I’d 100% expect to see the 2020 utilities, especially if they are claiming similar revenue or no revenue drop. It is apparent that the industry took a hit in revenue by all marks, but it sounds like there are some individual laundromats that didn’t. If this seller didn’t take a revenue hit, that should be a huge part of his sales pitch and he should give utilities to support it. This would be the equivalent of a Walmart on March 23rd 2020 hanging up a sign that says “nope, we don’t have any TP for sale in here” yet they have 50 cases ready to buy (covid joke….).

    I’m currently in DD on a location right now and I found the seller through several phone calls networking with people in the industry. Maybe he’s just Minnesota Nice, but he brought me coin count record from pre covid, during covid, and post covid to demonstrate the hit he took. His price point (which we’ve agreed to, pending DD) is based on 2016-2018 numbers because 2019 was inflated as he had a bigger year because flooding in the area caused home owners to not have laundry in their basements and thus came to use the location.

    I don’t expect most sellers to be this forthcoming but sometimes it can be helpful to recognize both extremes to recognize where the middle can and should be.

    You aren’t crazy for asking and expecting those items. If they won’t give them to you, I’d be really leery and the only way I’d make an offer is if there is enough seller financing in place, that you can do revenue claw backs to change the purchase price if/when those numbers are NOT hit.

    Good luck, I want to buy one too but it has to be the RIGHT one and the RIGHT price that works. Otherwise my capital is better sitting on the sidelines.

    Check out Jordan’s due diligence list if you haven’t already. Good luck!