THINGS YOU NEED TO DO DURING DUE DILIGENCE
In California the sale paperwork for a Laundromat sale are provided by the brokers and the escrow agents. In some States services are provided by attorneys. In either case, it is important that you read all the paperwork and understand the terms and the terms of the lease, if your don't understand some terms or issues talk to your attorney or advisor. The allocation of your purchase price of a Laundromat (allocation of equipment, fixtures, goodwell, personal property, leasehold value) are usually understood by most buyers, but if you have any concerns contact your CPA or advisor.
What I recommend to potential buyers are aspects of advanced due diligence:
1) Hire a professional property inspection service to verify code compliance, mold issues and
2) Hire a professional roof inspector. The roof and sealant around the venting should be inspected as to condition.
Inside the Laundromat the ceiling tiles, especially near the swamp coolers, should be inspected for water stainds. mold issues, and ADA compliance of the site.
3) Visit the City building department and obtain all permits, records and insure the Certificate of Occupancy is listed as a Laundromat. The building department might know of any new Laundromats are in the planning phase.
4) Visit all Laundromats within a one mile radius and note vending prices, equipment brand, equipment condition, number, Square Footage of premises and their cleanliness and upkeep condition.
5) Visit all the large apartment buildings within one mile and note all aspects of item four above.
6) Visit local police agency and ask for historical records of incidents and crimes in or about the premises.
7) Visit neighboring business and ask for information about the Laundromat, past traffic and problems.
8) Obtain a demographic study and review it for those items important to a successful Laundromat. If your don't understand the issues normally considerated to Laundromat success, ask your advisor or broker.
9) Speak to the repair person and staff of the business to gather information and indications of problems.
10) Check the neighborhood for any potential new stores being developed near your location. City building department, other owners and distributors are good sources of information.
11) Verify with building or planning department that no changes to road or property development are planned.
12) Review the last three years of income and expenses, noting trends and sudden increases prior to this sale.
13) Do a water and utility bill analysis.
14) Hire an equipment repair person to offer an opinion of the condition of the installed equipment.
15) Ask an attorney, CPA or advisor about any aspect of the purchase agreement or terms you don't understand.
16) An experienced Laundromat professional to assist in the evaluation process.
17) The floor should be inspected to ensure that the concrete is not lifting/sinking and the tile is not cracked, broken or excessively worn.
THINGS TO GATHER FOR A LAUNDROMAT REVIEW DURING YOUR DUE DILIGENCE
1) Lease (please ensure it is a signed copy).
2) Seller to provide drawings, building permits and warranty that all electrical and plumbing are up to code.
3) Seller to provide all manuals and programming instructions for equipment, safes and internet.
4) Seller to provide name and contact information or alarm company and details/codes for alarm company.
5) Seller to provide a list of all keys, number of keys and notification of who has copies of any keys.
6) Seller to provide contact information for any non-owned soda or vending machines.
7) Seller to warranty that all water service connected to the Laundromat water account is not provided to any other business or the common area.
8) Attachments and addendums, if any, to the lease (also signed).
9) Records of income and expenses for the past three years.
10)
Utility bills for the past three years.
11) Cost and copy of current business insurance.
12) Size of Laundromat in Square Feet. Verify the number provided on the lease with the actual premises.
13) Brand, number and the age of equipment. Serial numbers and a call to the manufacturers provide age.
14) Income tax, Schedule C forms of Laundromat for the past two or three years.
15) Reason provided by seller for selling his business.
16) All of the documents (or notes of conversations) provided to you by the seller or seller's broker as an inducement to enter into a purchase agreement.
17) Up to twenty (20) digital photographs (inside and out
ADVANCED DUE DILIGENCE ADVICE
