Regional Commercial Laundry and Linen Service Company
This case study focuses on the acquisition potential of a commercial laundry and linen service business that services hotels, short-term rentals, medical clinics, and fine dining establishments. With industrial-grade equipment, route-based logistics, and long-standing service agreements, the company offers a turnkey solution for clients needing consistent pickup, cleaning, folding, and delivery of linens, towels, uniforms, tablecloths, and specialty garments.
The business currently generates $5.8 million in annual revenue with $1.04 million in adjusted EBITDA. Operating for over 18 years, it serves a four-county metro area, processing over 14,000 pounds of laundry daily. Approximately 70% of revenue comes from recurring weekly contracts with the hospitality industry, including branded hotel chains and boutique lodging operators. The remainder comes from medical outpatient facilities, country clubs, banquet halls, and spas.
Due to its stable recurring revenue, low customer concentration, route infrastructure, and documented SOPs, this business is an ideal candidate for SBA 7(a) acquisition financing. Post-acquisition opportunities include expanding to same-day express service for STR operators, cross-selling branded linen rental, and acquiring smaller operators or hotel in-house laundry divisions.
Proposed SBA 7(a) Deal Structure
This cash-flowing, asset-backed operation supports a traditional SBA structure with moderate seller participation:
Purchase Price: $4.15 million (4.0x EBITDA)
SBA Loan: $3.112 million (75%)
Buyer Equity Injection: $415,000 (10%)
Seller Financing (Subordinated): $622,500 (15%) with 5-year amortization, 12-month interest-only
Incentives and protections:
25% clawback on seller note if more than 15% of recurring clients cancel in 6 months
Seller earns a bonus if buyer expands into STR same-day territory within 12 months
Seller to stay on board as strategic consultant and key relationship liaison for 9 months
Client Breakdown and Revenue Composition
Customer verticals:
Hospitality and lodging (hotels, inns, STR property managers): 50%
Restaurants and banquet facilities: 18%
Outpatient medical clinics and dental offices: 12%
Spas, salons, and wellness centers: 10%
Country clubs, golf courses, and uniforms: 10%
Revenue split:
Weekly linen service: $3.5M
Towel and bath mat service: $1.2M
Uniform and apron laundering: $630K
Specialty medical-grade services: $290K
Express/same-day add-ons and emergency service: $180K
Contract types:
1–3 year service agreements, most with auto-renew clauses
Pricing by pound, by piece, or by scheduled service frequency
Pass-through charges on specialty detergents and damaged linen replacement
AR remains below 30 days. No customer exceeds 5.7% of revenue; top 50 clients account for 68% collectively. Most clients have remained active for 5+ years, with quarterly satisfaction audits.
Facilities, Equipment, and Operations
Main plant:
11,000 sq ft industrial laundry facility with:
5 commercial washers (400–600 lbs)
3 tunnel washers
4 industrial dryers
3 flatwork ironers and folders
Conveyor belt sorting and automated bagging system
Located within 2 miles of major highway corridor
Fleet:
6 delivery vans (box trucks and sprinter vans)
2 backup vehicles
FMV: ~$420K (fully owned and maintained)
Shift structure:
Two shifts: Morning (6am–2pm) and Afternoon (2pm–10pm)
Night maintenance technician handles equipment service and safety logs
Tech and compliance:
RFID-tagging and inventory control for high-value clients
OSHA and EPA compliance logs maintained
Fire suppression, ventilation, and chemical safety compliant
CapEx forecast:
Washer/dryer replacements: $150K over 36 months (can be financed)
Route management software integration: $12K
GPS upgrade for trucks and digital proof-of-delivery: $8K
Staffing Model
Personnel:
22 production workers (washers, folders, baggers)
6 drivers with designated routes
1 logistics coordinator (scheduling, route dispatch)
1 plant manager (compliance, workflow, vendor management)
2 customer service reps
1 general manager
Drivers and production workers are W-2. The company offers weekly bonuses for zero-error routes, speed, and early deliveries. Plant techs are cross-trained, and absenteeism is low due to incentive programs.
Post-close plan:
Launch bilingual training program for production crew to increase speed
Pilot per-pound bonus for driver efficiency
Implement electronic timecard system for route and plant time control
Sales and Marketing Infrastructure
Current client acquisition:
Referrals from hotel GMs and STR cleaning teams
Google Ads ($2,000/month spend)
Partnership with STR property management companies
Yelp, Google Business, and industry vendor directories
No active outbound sales team.
Post-acquisition growth playbook:
Hire B2B account executive to target 100+ STR property managers
Launch branded linen rental program with custom monograms/logos
Offer “24-hour express” delivery tier at premium pricing
Market to dentist and outpatient chains needing OSHA-compliant service
Host open-house tours for hotel procurement teams
Financial Overview
Revenue: $5.8M
COGS (labor, utilities, chemical, fuel): $3.25M
Gross Profit: $2.55M
SG&A: $1.51M
Adjusted EBITDA: $1.04M (17.9%)
Margins:
Hospitality linen: 38–42%
Medical-grade linen: 50%+
Uniforms: 33%
Express/emergency service: 60–65%
Utility and water costs fluctuate seasonally but remain manageable due to on-site filtration and smart boiler systems. Electricity demand peaks during summer laundry volume spikes.
Legal, Licensing, and Risk
Fully insured: $2M GL, $1M auto, $1M umbrella, $1M workers comp
OSHA logs and EPA detergent storage compliance on file
No outstanding litigation, labor complaints, or city code violations
Contracts all assignable or assumed upon change of control
Buyers should confirm environmental permits are updated post-close and verify ADA compliance in plant layout.
Working Capital and Transition Budget
Payroll float: $100K–$120K
Plant upgrades and software: $20K
Sales rep compensation for territory expansion: $60K
Seller consulting and retention bonus: $30K
Express delivery pilot: $15K
Ideal Buyer Profiles
Route-based logistics operators (HVAC, food delivery, medical transport)
Franchise operators expanding into recurring B2B service
Former hospitality or property management execs looking to vertically integrate
PE-backed platforms with operating teams seeking low-capex cash flow
Post-Close Execution Plan
Conduct kickoff meetings with top 20 clients and STR partners
Launch branded linen rental service for mid-tier hotels
Identify zip codes for same-day STR delivery routes
Integrate route tracking with customer satisfaction follow-up calls
Begin tuck-in acquisition search of small dry-cleaning and linen providers
Conclusion
This commercial laundry and linen business offers a defensible, asset-based operation with consistent recurring B2B revenue, optimized routes, and a strong equipment base. Its hospitality and medical segments provide stable income, while STR and emergency services offer high-margin growth opportunities. With SBA 7(a) financing and strategic seller transition support, a buyer can unlock territory expansion, boost route profitability, and implement new service tiers, creating a platform for durable cash flow and operational scalability.
