Planet Laundry Nov 2020

LAUNDRY 101

Bob Nieman

Working with a Broker to Buy or Sell Your Next Laundromat Go for ‘Broker’

With some 30,000 laundromats in the United States – give or take – there are stores perpetually being bought and sold in nearly every market throughout the country. This is where a reputable laundry broker comes in. “The role of a broker can be very important, especially to someone new to the industry,” said Carol Dang of Elite Business Investments Corp. in Los Angeles. “A good laundromat broker should be able to walk the buyer or seller through the entire transaction – frommaking an offer to closing the deal.” “In my experience, the importance of the broker is tremendous and often undervalued,”noted Connor Frankian of D&MEquipment Co., based in Chicago.“Understandably, sellers have an emotional attachment to their businesses, which can cause them to overvalue what they think their store is worth. On the other hand, buyers have an emotional vision of what will be required to make their investment a success. This is where the importance of a broker – being a neutral party whose utmost interest is a successful deal – comes into play. Many good deals fall apart without themediation of a broker.” What to Expect No doubt, buyers and sellers of laundromats should expect a broker to be honest and transparent with them, as well as displaying a strong knowledge of the self- and full-service laundry businesses. In addition, George Morgan of Best Laundry Brokers in Grass Valley, Calif., added some specifics that potential investors and owners looking to sell should expect. For buyers, the broker should: • Be knowledge of the particular market area, as well as the typical price range within which stores in the area sell. • Be knowledgeable about the laundry equipment in the laundromat, including the approximate age and condition. • Know how to obtain and verify the seller’s income and expense records. This includes knowledge of all expenses typical to a

laundromat, and the ability to use the store’s utility bills to verify the seller’s stated income and expenses. • Be knowledgeable on commercial leases. This includes making sure there are no“land mines” in the lease that could cripple the buyer. The broker also should check the length of the lease and, if there are options, determine whether those options are assignable to the buyer. • Be able to guide the buyer toward competent service technicians and building inspection companies – to determine the condition of the equipment, including the boiler and other ancillary equipment; the condition of the water and sewer lines, the electrical system, and the heating and cooling systems; and verifying ample makeup air for the dryers and water heating system. • Be aware of competition in the marketplace, along with the prospect of any new laundromats being planned for the immediate area, which could impact the store’s income. For sellers, the broker should: • Provide ideas to make the laundromat more visually appealing. • Be able to present the laundromat and its financial information in the best light possible without deceiving anyone. There should always be full disclosure. • Take the necessary steps to protect the seller’s privacy, safeguarding financial and other critical information until a non-disclosure agreement has been signed. • Market the laundromat in the most effective way possible. Typically, this entails extensive website advertising with strong SEO. Also, specialty laundromat brokers usually have a short list of serious, qualified potential buyers to contact. Due Diligence When seeking a broker, your first stop should be local laundry distributors. If a distributorship doesn’t do brokerage work,

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PlanetLaundry Magazine

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Magazine of the Coin Laundry Association