Commercial Laundry Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating commercial laundry businesses relative to industry standards.

See also: Laundromat Business Valuation Metrics and Financial Benchmarks

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Highlights of Commercial Laundry Businesses Sold on BizBuySell

Commercial laundry businesses listed and sold on BizBuySell provide laundry services to a wide range of commercial and industrial customers, including hospitality, healthcare, food service, and manufacturing. Operating with industrial-grade machines, these businesses are equipped to handle large volumes of linens, uniforms, and other textiles. They may also offer wash and fold or pressing services, pick-up and delivery, dry cleaning, and specialized cleaning services.

Commercial Laundry Business Transaction Trends

Sales prices of commercial laundry businesses started increasing during the pandemic as demand for these businesses picked up and earnings grew. Valuations remained high until increasing interest rates tempered sales prices in 2022, though prices have rebounded through 2024.

Commercial Laundry Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of sales and income. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth. Valuation multiples for commercial laundry businesses fell during the Covid-19 pandemic even though demand for their services increased. Multiples quickly came back and held until 2024 when valuation multiples fell back towards the lower end.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - business valuations tend to hinge on the earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall annual sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its top line sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of commercial laundry businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are usually higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses. When current listing multiples are lower, that signifies decreasing values or previously inflated values of sold businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Smaller businesses with thinner profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of commercial laundry businesses are valued between 1.92 and 3.21 times their annual seller discretionary earnings, with 25% of higher-volume, fast-growing businesses trading above this range, and 25% of smaller, less desirable businesses trading below.

Commercial Laundry Business Financial Benchmarks

To determine how a business compares in terms of revenue and earnings performance relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated commercial laundry business financials useful for comparing an individual business to the broader industry.

Commercial Laundry Business Revenue and Earnings Trends

Revenues of commercial laundry businesses listed and sold on BizBuySell peaked during the Covid-19 pandemic as demand for their services increased. Since then, average revenue has been largely flat, though owners profit margins have been trending upwards.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to similar businesses traded on the market. Below you will find discretionary earnings ranges of commercial laundry businesses sold over the past five years, as well as recent business for sale listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of commercial laundry businesses sold over the past five years and recent businesses listed for sale.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Popular commercial laundry businesses that generate higher sales (and maintain industry profit margins) tend to sell for earnings multiples on the higher end. So, a commercial laundry business with sales over $350k may sell for an earnings multiple over 3, where a lower volume commercial laundry business with sales below $150k may trade below 2 times its annual seller's discretionary earnings.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable return on the acquisition cost.

Service Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader service sector when benchmarking commercial laundry businesses. The chart and table below include key metrics from sales of select service businesses on BizBuySell between 2020 and 2024.

Compared to other types of businesses in the service sector, commercial laundry businesses get a premium valuation relative to their average revenue and earnings. These businesses are relatively inexpensive to run once the equipment is purchased, and they have much higher profit margins than most other service businesses. Only laundromat businesses average higher valuation multiples, thanks to their self-service models.

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