Commercial Laundry and Linen Service Company

This article outlines the acquisition strategy for a regional commercial laundry and linen service company that provides washing, drying, folding, and delivery of linens, uniforms, and towels for hotels, medical offices, gyms, and restaurants. The company operates from a centralized 12,000 sq ft facility and services a 75-mile radius with scheduled pick-up and delivery routes. With an average of 3–5 day service cycles, the business offers high-margin, route-based recurring revenue and a strong reputation among local hospitality and healthcare providers.

The business generates $5.2 million in annual revenue and $1.03 million in adjusted EBITDA. Roughly 81% of revenue is derived from recurring B2B contracts, with clients under multi-year agreements requiring weekly or bi-weekly service. The remaining 19% comes from on-demand service, overflow processing for other laundries, and seasonal events.

This business is well-suited for SBA 7(a) financing, with stable cash flow, significant physical assets (machinery, trucks), and consistent service cadence. Growth potential lies in expanding into healthcare linens, partnering with uniform rental companies, optimizing the plant layout, and acquiring smaller independent laundries that lack route scale.

Proposed SBA 7(a) Deal Structure

Due to the capital equipment, consistent EBITDA, and long-term contracts, the deal supports traditional SBA financing with seller participation:

• Purchase Price: $4.12 million (4.0x EBITDA)

• SBA Loan: $3.09 million (75%)

• Buyer Equity Injection: $412,000 (10%)

• Seller Financing (Subordinated): $618,000 (15%), 6-year amortization, 12-month interest-only

Terms and protections:

1. 20% seller note clawback if more than 15% of linen contracts are canceled in the first 6 months

2. Seller bonus of $50K if buyer secures $500K in new hospitality contracts within 12 months

3. Seller remains on board for 9 months to assist in route optimization and client retention

Client Segmentation and Revenue Composition

Customer breakdown:

• Hotels and resorts (mid-scale to luxury): 42%

• Restaurants and catering operations: 18%

• Medical and dental offices: 17%

• Gyms, spas, and wellness centers: 11%

• Event planners and seasonal venues: 8%

• Other commercial laundries (overflow): 4%

Revenue streams:

• Linen and towel cleaning and delivery: $3.6M

• Uniform and workwear laundering: $780K

• Medical scrubs, sheets, and gowns: $530K

• Tablecloth and napkin service: $210K

• Emergency and rush service: $80K

All primary customers are on 1–3 year renewable service agreements with automatic renewal clauses and CPI-based pricing escalators. No single customer exceeds 6.3% of total revenue. The top 50 customers account for 68%.

Facility, Equipment, and Route-Based Operations

Facility operations:

• 12,000 sq ft facility with 3 high-efficiency tunnel washers, 12 dryers, 2 ironing machines, and 4 folding stations

• Daily processing capacity: ~14,000 lbs of linen

• Route dispatch dock with 5 bays for outbound/inbound loads

• On-site maintenance team for machine upkeep and calibration

Route logistics:

• 6 trucks with pre-scheduled weekly pickups and drop-offs

• 4 core routes with 2 rotating relief drivers

• Average delivery window: 24–72 hours depending on customer volume

• GPS and route planning via Routific integrated with CRM

Labor structure:

• 12 plant staff (washers, folders, pressers)

• 6 drivers (CDL and non-CDL mix)

• 2 route managers and dispatchers

• 2 customer service reps (contract renewals, upsells)

• 1 general manager

Turnover is low, with 80% of plant employees having 4+ years of tenure. Wages are competitive, and the company offers performance bonuses during peak season (April–October).

CapEx and Equipment Assets

Fleet:

• 6 box trucks (4 owned, 2 leased)

• FMV: ~$340K

Equipment:

• 3 tunnel washers

• 12 high-capacity dryers

• 2 ironing machines

• 4 folding stations

• 3 commercial water heaters and chemical dosing systems

Total equipment FMV: ~$850,000 (owned and fully depreciated)

CapEx plan:

• Upgrade one tunnel washer: $95K (with financing)

• Add HVAC zoning to reduce energy costs: $25K

• Install software-integrated linen tracking system: $18K

Sales and Marketing Infrastructure

Client acquisition:

• Regional hotel association sponsorships

• Referrals from hospitality procurement officers

• SEO for “hotel laundry service” and “commercial linen cleaning”

• Google Ads and LinkedIn campaigns targeting facilities managers

Marketing budget: ~$4,300/month

Growth opportunities:

1. Launch uniform rental partnership with regional apparel companies

2. Offer linen leasing program for new hotels and medical clinics

3. Acquire one or two small laundries to consolidate routes

4. Add pickup/drop-off lockers for small businesses in dense areas

5. Create a specialized medical linen sanitization division with UV and ozone treatment

Financial Summary

• Revenue: $5.2M

• COGS (labor, utilities, detergents, transport): $2.9M

• Gross Profit: $2.3M

• SG&A: $1.27M

• Adjusted EBITDA: $1.03M (19.8%)

Margins:

• Linen service: 45–55%

• Medical laundry: 40–48%

• Uniforms: 42–50%

• Tablecloths/napkins: 55–60%

Billing is typically net-30 via ACH or check. Emergency jobs are prepaid or billed separately. Credit risk is low due to stable hospitality cash flow and recurring cycles.

Legal, Compliance, and Risk Management

• Fully insured: $2M general liability, $1M auto, $1M umbrella, $1M workers comp

• OSHA-compliant operations with chemical safety and training logs

• Wastewater compliant with municipal disposal regulations

• No ongoing litigation or employment violations

Clients require service documentation, MSDS logs, and in some cases, laundering certification. The plant is subject to periodic sanitation audits by larger medical clients.

Working Capital and Transition Budget

• Payroll float: $110K–$125K

• Equipment upgrade: $100K (tunnel washer, HVAC)

• CRM and linen tracking software: $20K

• Seller consulting and transition: $35K

• Marketing blitz for uniform rental and hotel clients: $25K

Ideal Buyer Profiles

• Commercial service operators (janitorial, pest, HVAC)

• Hospitality entrepreneurs or hotel operators seeking vertical integration

• Logistics/route-based service businesses

• PE-backed firms seeking high-asset, recurring service platforms

Post-Close Execution Plan

1. Meet top 20 clients and ensure transition plan, retention bonuses, and no disruption

2. Consolidate delivery routes to reduce mileage and increase density

3. Launch uniform rental partnerships in parallel with core linen service

4. Bid for regional healthcare linen contracts (clinic networks, surgical centers)

5. Begin M&A outreach for small laundries within 100-mile radius

Conclusion

This commercial laundry and linen company offers steady recurring revenue, route-based efficiency, and physical assets with defensible contracts. SBA 7(a) financing enables the buyer to acquire a recession-resilient service provider with a built-in logistics network, stable workforce, and cross-sell potential across hospitality, medical, and uniform verticals. With well-maintained infrastructure and room to optimize plant operations, this business serves as a scalable platform for buyers seeking predictable, contractual B2B income with meaningful growth levers.