Buyer-side diligence memo · Pre-LOI · Sample
Riverbend Laundry Co.
Self-service laundromat with wash-and-fold · Asking $650,000
1. Purpose of this memo
This is a preliminary, pre-LOI review. It uses only the documents the seller provided: P&Ls for 2023–2025, federal tax returns for 2023 and 2024, the broker listing, a lease summary, and an equipment list. Nothing here is verified against bank records yet. Section 8 lists what must be verified.
2. Business overview
Riverbend Laundry Co. is a self-service laundromat in a strip center in a mid-size Midwest town. It has 34 washers and 28 dryers, is open 6 a.m. to 10 p.m., and runs with two part-time attendants plus the owner. About 22% of revenue comes from wash-and-fold service; the rest is self-service.
3. Transaction context
The asking price is $650,000 for the business and all equipment. Real estate is not included; the store is leased. The seller is retiring and offers four weeks of transition support. The listing is broker-represented.
4. Financial summary
| Year | Revenue | Growth |
|---|---|---|
| 2023 | $402,000 | — |
| 2024 | $431,500 | 7.3% |
| 2025 (P&L) | $447,800 | 3.8% |
2025 expenses as reported by the seller:
| Line | 2025 |
|---|---|
| Rent | $72,000 |
| Utilities | $61,400 |
| Repairs and maintenance | $14,200 |
| Supplies | $9,800 |
| Insurance | $8,600 |
| Attendant payroll | $52,300 |
| Owner salary | $48,000 |
| Depreciation | $31,000 |
| Interest | $11,200 |
| Other operating | $7,900 |
| Vehicle | $6,400 |
| "One-time" machine repair | $12,500 |
| Net income | $112,500 |
SDE recast. The seller adds back owner salary, depreciation, interest, the vehicle, and a “one-time” repair, for an SDE of $221,600. The buyer-side recast removes two adjustments:
| Item | Amount |
|---|---|
| Seller’s SDE | $221,600 |
| Remove: "One-time" machine repair | -$12,500 |
| Remove: Vehicle (50% personal, no log) | -$3,200 |
| Buyer-side SDE | $205,900 |
Tax return tie-out. 2024 gross receipts on the tax return are $428,900; the 2024 P&L shows $431,500. The gap is $2,600 (0.6%). This is small, but ask what explains it. The 2025 tax return is not filed yet.
Balance sheet. Not provided. This is an asset sale, so working capital will be set at closing.
5. Key risks and red flags
- Recurring “one-time” repairs. Each year shows a repair labeled one-time: $9,800 (2023), $11,400 (2024), $12,500 (2025). A cost that happens every year is an operating cost. Removed from SDE.
- Lease shorter than the loan. The lease ends in 4 years with no renewal option. A typical SBA acquisition loan runs 10 years. Without a new lease, this deal may not be financeable, and the business has no right to stay.
- Old equipment. The equipment list shows an average machine age of 11 years. Replacement will come during your ownership. Budget for it in the price.
- Utilities at 13.7% of revenue. Water, gas, and power are the largest variable cost. Rate increases go straight to SDE.
- Vehicle add-back without support. No mileage log was provided. Half allowed.
6. Opportunities and value creation
- Wash-and-fold is 22% of revenue. Pickup and delivery, and commercial accounts (short-term rentals, gyms, salons) can grow it without new machines.
- Newer, efficient machines cut water and energy cost per load. Pair the replacement plan with a card or app payment system that allows pricing changes.
- Revenue grew 7.3% and 3.8% in the last two years. Ask what drove it.
7. Initial observations
This is the only section with judgment. The price is not out of line with the earnings. The real issues are the lease and the equipment, not the multiple. If the landlord gives a 10-year lease (or renewal options), this is a financeable, owner-operator-friendly deal. Without that, do not go further.
8. Open questions for diligence
- Will the landlord sign a new lease or add renewal options to cover at least 10 years?
- Invoices for the 2023–2025 repairs labeled one-time.
- Age, model, and service history of each machine.
- 12 months of bank and card-processor statements, to tie revenue to deposits.
- What explains the $2,600 gap between the 2024 P&L and tax return?
- Mileage log or business-use support for the vehicle.
- Largest wash-and-fold customers and their share of revenue.
- Utility bills for 24 months, to check rate trends.
9. Preliminary valuation and deal considerations
Reported laundromat transactions in 2025 show an SDE multiple of 4.12x across 169 sales (BizBuySell data, via Sundance Financial). This store deserves a discount from that because of the lease and equipment risk.
| Buyer-side SDE | $205,900 |
| Value range (2.9x–3.5x) | $597,110 – $720,650 |
| Asking price | $650,000 (3.16x buyer-side SDE; 2.93x seller SDE) |
| Financing (assumed) | 10% down ($65,000), $585,000 loan, 10 years, 10.25% |
| Annual debt service | $93,744 |
| Coverage with a $55,000 manager | 1.61x |
| Coverage as owner-operator | 2.20x |
| Largest loan at 1.50x coverage (with manager) | $627,782 |
Starting structure. Make any offer subject to a new lease of at least 10 years. Ask for part of the price as a seller note, so the seller shares the equipment risk. Use the recurring repairs and machine age to support an offer near the low end of the range.