Laundromat Resource › Forums › Laundromats › Acquisitions and identifying true value › Reply To: Acquisitions and identifying true value
No pay stubs = no trust in his financials. That’s the way it works (unless you have inside info or other docs to source)
For estimating machine value – a few ways. You can look at what used equipment is selling at currently (there are resale cos via google) and apply broadly to the setup to give you an idea….obviously you want to discount this amount quite about due to markup from re-sale, etc. Alternatively, if you have the data, specifically the make/model/serials you can figure out approx when they were made and use some of the IRS depreciation schedules to find what depreciated value is per machine. These can give you an estimate of what liquidation value would look like.
Final thought….he wants $35k – this doesn’t mean he’s going to get $35k – spell your case out as to why you believe its not worth that. At $15k “claimed profit” that a 2.3x multiple which is on the lower end of ranges but could still be high depending on a variety of factors.
Final final thought – this could be a great deal if things were just mismanged and the financials are verifiable. He’s saying he’s running at a 12% margin, which at face value seems a bit lower than what a well run mat should earn (20%-30% ballpark). Need to look at why – competition, high rent, old machines, etc. These are critical to actually being able to implement a potential turnaround.
