EBITDA
EBITDA is earnings before interest, taxes, depreciation, and amortization: operating profit after paying market-rate management, but before financing costs, tax, and non-cash charges. It measures what a business earns independent of who owns it.
Why EBITDA Matters in a Laundromat Sale
EBITDA fits multi-store laundromat operations that already carry a paid manager, because it shows what the business earns after someone is paid to run it. It does not fit a single owner-operated store, where the owner's unpaid labor is a real input. Applying an SDE multiple to an EBITDA figure, or the reverse, is the most common source of a valuation argument in which both sides are doing arithmetic correctly.
Example
A three-store group produces $410,000 of SDE across all locations, but $95,000 of that is the owner's own management work. EBITDA after hiring a market-rate operations manager is roughly $315,000. A buyer acquiring it as a passive investment underwrites the $315,000, not the $410,000.
What to Check
- Ask which earnings measure a quoted multiple was built on before comparing two deals.
- For a multi-store group, confirm the management salary in the numbers is a market rate, not a token.
- Never apply an SDE multiple to an EBITDA figure or the reverse.
Where This Comes Up
- SDE vs. EBITDA for Laundromats: Which Number Prices Your Store
- Buying Laundromats as a Portfolio Roll-Up: Structure and Sequencing
- Laundromat Roll-Ups and Institutional Capital: What Is Real
Related Terms
- SDE (Seller's Discretionary Earnings) — SDE, or seller's discretionary earnings
- Multiple (Valuation Multiple) — A valuation multiple is the factor applied to normalized earnings to produce a business value
- QoE (Quality of Earnings) — QoE, or quality of earnings
- Working Capital — Working capital is the cash a business needs to fund normal operations between paying costs and collecting revenue
See the full laundromat glossary for all 78 terms.
The Next Step
This page is general information about laundromat transactions, not legal, tax, or investment advice, and not a guarantee of sale price, timing, or financing approval. Verify current rules with your own CPA, attorney, lender, and the relevant state or municipal agency before acting.