Most laundromat buyers are flying blind when they review financial statements. This guide teaches you to read financials like an operator, not just an investor.
SDE Calculation Example
| Net Income | $45,000 |
| + Owner salary | $35,000 |
| + Interest expense | $8,000 |
| + Depreciation | $12,000 |
| + Owner perks | $13,000 |
| SDE | $113,000 |
At the current market multiple of 4.17x, a reasonable valuation would be around $471,000.
Red Flags in Financial Statements
- Round numbers everywhere: Real businesses have messy numbers — $4,237, not $4,000
- Missing months: Why are the last three months missing?
- Cash discrepancies: Revenue vs. bank deposits don't match
- Unexplained fluctuations: 30% revenue drop in March needs explanation
- Declining trends: Year-over-year data tells the real story
Tax Returns vs Owner Financials
Tax returns tend to understate income. Owner financials tend to overstate it. The truth lies in between. Start with tax returns as baseline, then cross-check against bank statements.
Legitimate vs Questionable Add-Backs
Legitimate: Owner salary, interest on paid-off debt, depreciation, one-time expenses, personal expenses through business.
Questionable: "Underreported" cash income, "potential" revenue, "savings" from changes you might make.
Questions to Ask the Seller
- What percentage of revenue is cash versus card?
- Can you provide bank statements that support these revenue figures?
- What documentation do you have for each add-back?
- Can you explain the difference between tax returns and internal financials?
Your offer should be supported by your analysis. Reference the valuation methodology and verify with the revenue verification guide.