Opportunities
Absentee Owned Laundromat w/ Large Shower Facility
Large facility - also offering drop off services!
Specifications
This spacious laundromat was established in 2012 and is strategically located in Watford City, ND which is a temporary home for over 100,000 laborers who migrate to the region for work and reside in temporary homes without the ability to do laundry. This 3,600 sq ft facility offers self-service laundry, shower facilities and drop-off services where employees will wash, dry and fold laundry for the customer. The pay-per-load machines utilize a card service as opposed to cash and coin which is much more secure and safe, especially for the out of state owner. Competition in the area is very low. A new owner could boost revenue by offering starching and dry-cleaning services or by offering pick up services in the area and nearby towns.
Priced at $765,000, a 10% down payment of $76,500 returns $50,230 in the first year after debt payments – a 65% return on investment! Plus, the owner is offering a 10% promissory note and 6 months of training, as a sign of good faith. North Dakota is ranked 2nd, after Texas, as the highest oil producing state. Due to this fact, many oil companies will send swathes of contractors to this area and this business is noted as a preferred laundromat for their employees. This activity has brought the business to a 39% profit margin.
Income Analysis
Business Highlights
- Year Established: 2012
- Location: Watford City, North Dakota
- Service Area: North Dakota
- Services: Self-Service Laundry, Drop-off Laundry, Tanning, Showers
- Building: 3600 Sq. Foot Facility
- Reason for Selling: Strategic Exit
- Personnel: 1 Full-Time Manager, 4-5 Laundry Techs
- Seller Training Period: Negotiable
- Growth Opportunities: Expand Starching/Dry Cleaning Services
- Current Owner’s Responsibilities: Minimal Oversight, lives in another state.
Financial Highlights
- List Price: $735,000
- Cash Flow:
- 2019: $409,079
- 2018: $298,742
- 2017: $243,077
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Accrual | Tax Return Accrual | Tax Return Accrual | Tax Return Accrual | Notes |
| 2019 | 2018 | 2017 | 2016 | ||
| GROSS SALES | $751,194 | $474,761 | $398,211 | $375,302 | |
| Net Income Shown on Financial Statement | $213,772 | $53,253 | $-5,609 | $-96,984 | |
| ADDBACKS | |||||
| Compensation to Owner | $111,000 | $120,002 | $108,910 | $88,330 | Per owner, not financials |
| 11% Tax on total W2 Salaries | $12,210 | $13,200 | $11,980 | $9,716 | |
| Depreciation | $0 | $40,181 | $65,674 | $92,483 | |
| Interest | $34,126 | $58,209 | $47,894 | $50,497 | |
| Discretionary Spending | $16,645 | $13,897 | $14,228 | $18,444 | Personal Expenses |
| TOTAL ADDBACKS | $173,981 | $245,489 | $248,686 | $259,470 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $387,753 | $298,742 | $243,077 | $162,486 | |
| Profit Margin | 51.62 % | 62.92 % | 61.04 % | 43.29 % |
Profit Margin: 52%
Clients
- Local Residents
- Out of Town Contract Workers
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Self-Service Laundry Machines
- Drop-Off Laundry Service
- Tanning Booth
- In-House Showers
Personnel
- 1 Absentee Owner
- 1 Full-Time Manager
- Manages the day-to-day-operations and facilities
- 4-5 Laundry Techs
- Responsible for the drop-off laundry services
Growth Opportunities
- Starch/Dry Cleaning
- The nearest facility for starching is about a 40-minute drive away, and a lot of contract workers require a starched shirt.
- Mailboxes
- Used to house mailboxes for USPS, still owns the boxes could bring that back in as an additional service
Valuation Details
The Firm Advisors used a cash flow valuation methodology to determine the purchase price of the business.
Cash flow is the sum of business net income plus any owner perks and any non-onward expenses. Then we prescribe a multiple based on 20 parameter which valuate the health of the business. For this valuation, we used the 3-year (2017-2019) cash flow average value making the business price much more favorable to the buyer.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
With this information, the computation is as follows:
$316,966 x 2.35 = $744,870
Funding Example
Purchase Price: $735,000
| 10%Buyer Down Payment | $73,500 | Must be unborrowed funds |
| 20%Seller Financing or Equity | $147,000 | 5-year term at a rate of 4.50% = a monthly loan payment of $2,741 |
| 70%Bank Loan | $514,500 | 10-year term at a rate of 6% = a monthly loan payment of $5,712 |
- 3-Yr. Avg. Cash Flow (2017-2019): $316,966
- Annual Payment:
- To Seller: $32,886
- To Bank: $68,544
- Net Profit (after expenses and loan payment): $215,536
Funding Details
Business:
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
Loan Payments
| Monthly Payment to Bank: | $ |
| Yearly Payment to Bank: | $ |
| Monthly Payment to Seller: | $ |
| Yearly Payment to Seller: | $ |
| Total Monthly Debt Service: | $ |
| Total Yearly Debt Service: | $ |
Conclusions
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
|
Cash Flow: 2022 cash flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2022 cash flow |
$ |
| Annual Debt Service: | -$ |
| NOI: |
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
| Down Payment: | $ |
| NOI: | |
| ROI: | % |
Attachments
| Document Title / Description |
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