QoE (Quality of Earnings)
QoE, or quality of earnings, is an independent analysis testing whether reported earnings are real, recurring, and transferable. It reconciles revenue to source documents and scrutinizes each adjustment rather than accepting the seller's schedule.
Why QoE Matters in a Laundromat Sale
A formal QoE engagement is uncommon at laundromat deal sizes, but the discipline is exactly what a serious buyer applies anyway. For a coin-and-card business it means reconciling returns, deposits, processor settlements, machine exports, and collection logs against each other, then testing whether earnings survive replacing the owner's labor at market rate and funding a replacement reserve.
Example
A seller presents $148,000 of SDE. Diligence removes $9,000 of unsupported add-backs, reclassifies $6,000 of recurring repairs the seller had added back, and notes that a family member works 15 unpaid hours a week. Adjusted earnings are $118,000, and the price moves by that difference times the multiple.
What to Check
- Reconcile returns, deposits, settlements, machine exports, and collection logs against each other.
- Test whether earnings survive replacing the owner at market rate.
- Separate recurring from non-recurring with documents, not with adjectives.
Where This Comes Up
- Laundromat Add-Backs Explained: What Survives Buyer Scrutiny
- How to Verify Laundromat Income: The Six-Source Reconciliation
- Reading Laundromat Financial Statements Without Getting Fooled
Related Terms
- SDE (Seller's Discretionary Earnings) — SDE, or seller's discretionary earnings
- Add-Back — An add-back is an expense removed from reported earnings during valuation because a new owner will not incur it: owner compensation
- Collection Audit — A collection audit is a buyer attending multiple coin collections in person
- Water-Bill Analysis — Water-bill analysis is a revenue cross-check that compares a laundromat's metered water consumption against the manufacturer's per-cycle water usage for its...
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.