November 10, 2020 at 11:50 am #2487Robert SuessParticipant
Hi All – I’m new to the group by way of the Podcast (Big shout-out to Jordan for blazing the trail here). I’ve been passively interested in owning a laundry business for a number of years now. Recent job stresses from COVID have pushed my wife and I to begin exploring this option more seriously, and laundromats seem to check our boxes.
My question is – what amount of information should I expect to get from a broker after signing the NDA but before making an offer? I’ve only made a few inquiries so far, but by in large the amount of detail that I receive is pretty consistently just the address to view the site, and something comparable to a P&L that a 10 year old could have written (a couple didn’t even specify if it was current YTD, last 12 months, or prior year).
Additional Note – All businesses considered thus far included a note that seller financing is N/A. So making an offer to me seems a bit more formal when I start making SB loan inquiries with the bank right off the bat.
Thanks in advance for any insight!
November 10, 2020 at 4:50 pm #2490Bryan WilsonParticipant
The Pro Forma is always going to give you the best picture of the store from the income side.
Remember these are sales people so they are going to sell you.
Most wont open the books until an offer is put in.
Be specific as possible in everything you ask for to evaluate the store.
Good Faith offer to be returned in full if seller can not verify income via tax or bank statements
Tax Returns from every other year of owning the store, Counts from All months
Ask for 4 weeks of coin collections in person to get a full picture of whats happening
the owner will also get comfortable and spill the beans on the store by week 3.
November 10, 2020 at 7:02 pm #2491Robert SuessParticipant
Thanks Bryan – the in person collection for a month is a great idea.
The laundry I was most interested in is only about 2 miles from my house, would have been perfect, but showed up to find that a new Laundromat was just built(opened early this year) maybe 100 yards away, basically shares the same parking-lot in this big shopping center.
I don’t doubt the numbers from last two years, but for this year it doesn’t seem possible to not have a huge loss. I can’t tell if it’s pure ignorance by the broker to go along with the asking price the seller requested, or if they truly believe they could sneak it by someone.
If I go in with a low offer, and they accept. What would happen if the financial prove to be even lower than my offer? Is it typical for buyer to include a clause that financials must meet certain criteria over the course of x months?
November 18, 2020 at 10:35 pm #2543Bryan WilsonParticipant
Robert most Brokers know what the store is worth and they jack it up to get the higher comm on the sale. I do not deal with Brokers that have not owned a store
I automatically take %20 off the asking price and from there I deduct based on Rev. Equipment (Mix Age Upkeep) Store Upkeep inside and out. Parking Lot Signage Lease etc.
I also account for the owners Loan Payments.
Ex I found a store asking price was 375k got them down to 250K owner accepted the offer ran counts I ran my own numbers based of my comps and some of Jordan Templates the store was worth 100k Owner put in close to 80k told them 196 he agreed.
Ran more numbers and based on the the store current rev. the owner is losing close to 2k a month us getting the store at 196k we would have lost 60k First year So I know the owner is in the hole and needs to sell. Ill just wait him out another year.
November 29, 2020 at 11:46 am #2578Jason DodgeParticipant
If a new laundromat was built in the same parking lot the sales will be affected big time. I’m assuming the one your looking at is a zombie mat. That’s the only reason a person would have the balls to build right next door. It is possible for new and older laundromats to coexist but you really need to proceed cautiously in this situation. Honestly only time will tell what the sales will be. It can take a year or so for all to balance out.
You must be logged in to reply to this topic.