A dry cleaning business with 4 locations – one plant (where the machinery is located but also for drop off/pick up) and 3 other drop off only locations. One site has an on-site tailor. All locations are within one mile of each other. Two are in strip malls, which are anchored by major grocery stores.
Asking price - 900k
Cash Flow - 290k
The stores are fairly new (the plant just over a year old and the drop offs are less). The existing owner built this operation up from scratch and (apparently) his business model is that he picks a location, builds a small monopoly and then packages the whole thing for sale, while he moves on to do the same in another location. He is currently working on his next location, which we have visited as well.
We have been to all 4 sites several times. We have dropped off product and spoken, casually, to the staff we encountered. They do a lot of things right but there is definitely room for improvement.
Currently, the plant location does not run 24 hours (more like 14) so there is room to handle additional volume (should you choose to add more drop offs). The area is high growth and caters to an income bracket which would use dry cleaning services.
Real estate is not included. Long term leases are in place.
We have asked for detailed financials (what we have received so far is very high level) and were told that in order to move forward, they would need to have an offer (obviously with lots of contingencies). Makes no sense to me but many brokers are trying to tell us that this is ‘how it works’.
We are not fixated on buying this business; however, think it is a solid place to start practicing the analysis process. Figured I would enlist you all to help me to come up with pros/cons, questions, suggestions.
Any thoughts?
Asking price - 900k
Cash Flow - 290k
The stores are fairly new (the plant just over a year old and the drop offs are less). The existing owner built this operation up from scratch and (apparently) his business model is that he picks a location, builds a small monopoly and then packages the whole thing for sale, while he moves on to do the same in another location. He is currently working on his next location, which we have visited as well.
We have been to all 4 sites several times. We have dropped off product and spoken, casually, to the staff we encountered. They do a lot of things right but there is definitely room for improvement.
Currently, the plant location does not run 24 hours (more like 14) so there is room to handle additional volume (should you choose to add more drop offs). The area is high growth and caters to an income bracket which would use dry cleaning services.
Real estate is not included. Long term leases are in place.
We have asked for detailed financials (what we have received so far is very high level) and were told that in order to move forward, they would need to have an offer (obviously with lots of contingencies). Makes no sense to me but many brokers are trying to tell us that this is ‘how it works’.
We are not fixated on buying this business; however, think it is a solid place to start practicing the analysis process. Figured I would enlist you all to help me to come up with pros/cons, questions, suggestions.
Any thoughts?
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