A Laundromat Valuation Worked Example, Line by Line

By Jason Taken, business broker · HedgeStone Business Advisors · Updated 2026-09-04 · 11 min read

The Store

Illustrative throughout. Every figure is an assumption.

Step 1: Normalize the Earnings

Starting from the filed federal return.

Note what is not added back: the $17,000 of repairs, because a mechanical business incurs them every year, and the $22,000 of cleaner payroll, because a buyer will pay someone to do that work.

Utilities at $64,000 are 20.5% of revenue — essentially at the surveyed median of 20% (Source: CLA 2024 Laundry Industry Survey). Rent and CAM at $58,000 are 18.6%, against a surveyed median of 18%. Both are unremarkable, which is itself useful information.

Step 2: Place the Multiple

Four factors at the top, three in the middle, none at the bottom. Against a 3.50x median and a 4.50x upper quartile, 4.0x is defensible — above median, below the top quartile, with a reason for each.

$132,000 × 4.0 = $528,000 indicated value before capex.

Step 3: Subtract the Capital Program

The equipment schedule and technician inspection identify a partial replacement due in year four: 12 of the 20 lb and 40 lb washers, which are approaching the end of their service life on bearing condition and drain performance.

Installed distributor quote for that program: $74,000, covering equipment, freight, rigging, demolition and disposal, pads, plumbing and drains, electrical, permits, payment hardware, and two days of partial downtime.

Discounted at 8% to year four: $74,000 ÷ 1.08⁴ = $54,392.

For scale, the CLA's valuation discussion frames retools on a 15-20 year horizon and notes they can exceed $200,000. This is a partial program on a fleet that is not yet due for a full retool, which explains why it is $74,000, not a six-figure number.

Step 4: Cross-Check Four Ways

The third test needs care and illustrates why it matters. A ceiling of $215,000 against claimed vend revenue of $268,000 is a contradiction — the store cannot have produced $268,000 at 3.1 turns and a $5.60 average vend price.

Resolution: the observed turns figure was taken on two weekday visits. Re-observation across a Saturday and a first-of-month period puts turns nearer 3.9, giving a ceiling of about $271,000. Claimed vend revenue of $268,000 sits just under it, at 99% utilization of the recalculated ceiling — which is high, and worth one more round of observation before relying on it.

That is the cross-check doing its job: not producing a number, but producing a question that had to be answered before the valuation could be trusted.

Step 5: Change One Clause

Now suppose the five-year option belongs to the landlord, not the tenant.

$132,000 of value, from one clause. Same machines, same customers, same cash flow, same utility bills.

That is the single most important thing on this page, and it is why the lease gets read in week one of any engagement on either side of a transaction.

Step 6: How a Lender Would See It

Just under the 1.25 threshold many lenders apply. The buyer's realistic responses: a larger equity injection reducing the loan, a longer term if any portion qualifies, or a lower purchase price.

Note that this is computed with every add-back documented. Strike one unsupported $8,000 add-back and coverage falls to 1.11, which most lenders decline. That is the practical reason the documentation discipline on add-backs matters more than the multiple argument.

What Would Change If This Store Were Different?

The method is fixed; the inputs are not. Running the same case with one variable altered shows where value actually comes from, and the answers are not evenly distributed.

If the revenue could not be verified. The earnings figure would be an assertion and not a finding. A lender declines, which removes most of the buyer pool, and the remaining buyers discount for the risk that the number is wrong. This is the largest single swing available in either direction, and it is the one most within a seller's control.

If the fleet were three years old, not at end of life. The capital deduction largely disappears. Note what this does not do: it does not raise the earnings, because the machines were producing the same revenue either way. Younger equipment removes a deduction rather than adding value, which is precisely why retooling shortly before a sale rarely returns its cost.

If the store were attended and the owner worked full-time. The recast would carry a larger deduction for the market value of that labour, and the resulting earnings would be smaller. The store might well be more profitable in absolute terms and still price lower per dollar of reported cash flow, because more of that cash flow is wages.

If utilities ran at 30% of revenue rather than near the surveyed median of 20% (Source: CLA, 2024). Ten points of revenue would come out of earnings, and the price would fall by that amount times the multiple. It would also raise a question a buyer will pursue: whether the cause is the plant, a leak, or the utility's rate structure. The first two are fixable and therefore an opportunity; the third is permanent and is a discount.

If a competitor had opened nearby in the last year. Trailing earnings would overstate forward earnings, and a buyer would want to see stabilised months instead of the twelve-month figure. Sellers in this position are frequently better off waiting for the trend to flatten, because selling into a visible decline invites a discount larger than the decline itself.

The pattern across all five: the variables that move value most are the ones affecting confidence in the earnings and the risk attached to them, not the ones affecting the store's physical condition.

How Should You Use a Worked Case at All?

As a demonstration of method, not as a comparable. This distinction matters because worked examples get misused in both directions.

A seller who reads a case reaching a $310,000 indication and concludes their store is worth $310,000 has substituted somebody else's inputs for their own. The multiple in any example was placed using facts specific to that store — its lease, its documentation, its equipment, its trade area — and none of those transfer.

A buyer who uses an example to argue a price down has made the same error in reverse. The example's deductions were derived from that store's inspection findings, not from a rule about what deductions should be.

What does transfer is the sequence, and it transfers completely: normalise the earnings from filed returns, place the multiple using the closed-sale distribution and the store's own risk characteristics, deduct the present cost of near-term capital spending, then cross-check the result against revenue multiple, physical capacity and what a lender would fund.

The cross-checks deserve particular attention because they are the step most often skipped. A single method producing a single number invites false confidence. Four methods converging on a range is genuinely informative, and four methods disagreeing sharply is the most useful signal of all — it means one of the inputs is wrong, and finding out which is worth more than any of the individual answers.

Run the sequence on your own store with your own documents. Where you cannot fill in an input, that gap is itself the finding: it is precisely what a buyer or a lender will ask about, and you have found it before they did.

What Each Side Does With This

The seller. Arrives at market with the normalization already documented, the equipment program already quoted, and the lease option already confirmed as tenant-controlled. That store attracts offers near the top of its justified range, because a buyer has nothing left to discover and therefore nothing to discount for uncertainty.

The buyer. Runs the same analysis independently, from original documents, not a seller's summary, and treats every disagreement as a question instead of an accusation. On this store the productive questions are: can the observed turns figure be confirmed across a full week; is the year-four equipment program complete or does the technician see more; and has the tenant-controlled option's notice deadline been diarized.

Both. Reach the same number, or find the specific fact they disagree about. That is what a defensible valuation produces — not agreement, but a small and nameable set of open items.

Where Could This Store Go?

The last two rows are the ones sellers most often reach for and the two that do least. The first three cost almost nothing and take between a week and two quarters.

Summary

Normalize from the return with a document behind every add-back. Place the multiple on seven factors inside the 2.72x-4.50x range. Subtract the discounted installed cost of the real replacement program. Cross-check four ways and take the contradictions seriously. Then read the lease, because one clause in this example was worth $132,000 — more than any other single item in the entire analysis.

A shorter walkthrough of the same method is in how do you value a laundromat.

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.