New York – New to the business, ready to learn

[Sean Walsh]

Happy to have found a great resource like this to learn the business from experienced professionals like Jordan and the owners/operators on this forum. I’m retired from my first career in an unrelated business, and am well into my second career in the finance sector. I have life experience, but never owning or operating my own business, so I’m ready to learn. First things first, I’ve been researching buying a laundromat for well over a month for several hours a day to ensure I’m making an informed choice.
I was surprised that all of the laundromats that I found on bizbuysell.com are impossible to look at in person without going through a broker and signing an NDA. Its a nonstarter if you’re not willing to sign an NDA, won’t even give you a town or address. Thats how they make money, I get it, but uneasy signing an NDA. Has anyone had these NDAs come back to haunt them? Meaning a broker used an NDA to prevent you from looking at other properties or something?
Next question, how do you value an existing laundomat? Its seems the valuations are very arbitrary. I’ve read 3X or 4X the cash flow is standard. Is that accurate?

[Oscar Uribe]

Hi, Sean. Like you I am just getting started. No experience, but have read through a good portion of this forum.

It seems like signing the NDA is just the price you gotta pay to play. Will let you know once I get there. But for now maybe some good legal advice is what you should pursue…?

[Sean Walsh]

Agreed Oscar, seems to be a standard ask when dealing with a business broker. I’m shifting away from the laundromats listed by business brokers because the info I’ve found online indicates that those listings the leftovers for lack of a better term.

[Emely Kaufman]

As long as you read the NDA carefully and understand what you agree to, it shouldn’t come back to haunt you.
Valuing an existing laundromat can be a complex process without a one-size-fits-all answer.

[Emely Kaufman]

However, 3X or 4X the cash flow is a good rule of thumb. Consider factors like location, equipment condition, and customer base.
BTW, I noticed that you’re in the finance sector. Have you considered working with a business plan company like OGScapital? They specialize in creating customized business plans for entrepreneurs like yourself. Here’s a link to their website if you’re interested: https://www.ogscapital.com/about-us/. Best of luck in your new venture!

[Tony]

Hello Emely,

3x 4x is exceptionally generous for laundromats you find on BuyBiz and Loopnet. 90% require an equipment refresh, and giving them 4x cash flow and the need to make a large equipment spend puts a lot of pressure on your margins. It’s just my opinion, and I am new to this, but I negotiate at my day job. As an owner ready to buy, you are negotiating from a position of power. There are more businesses for sale than buyers. 1x -2.5x seems fair when you are going to do a complete refresh and modernization. Now if you find a true turn-key laundromat that needs a new owner and nothing else, I see nothing wrong with giving a 3x 4x multiple. All of this is just my opinion, and I a new to this industry.

Tony

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