finders fee

[SmartCard]

Now that I'm an expert in the laundromat biz, people are coming to me for advice. (LOL) I have an aqauintance who will be building a new mat. He owns the shopping center in which he intends to build. He is a licensed commercial builder. I know of another person looking to sell his 2 year old equipment from a failing mat. My question is: what type of fee should I get for for putting this deal together? I'm thinking of 20% of equipment cost paid to me by the seller plus a flat fee from the buyer as consultant. How much is reasonable?

[Jim]

I would have to be really desperate to give someone a 20% finders fee and even then I probably would never do it...
Why do you need to get anything? All your doing is making a phone call or two.

What I would consider if I where you, is if the new mat is going to be your competition? If so I wouldn't put the two together at all....
Let the new guy suffer a little, and buy new equipment... This way he may not be your comp for very long.

[BWJR]

When I sold my mat I paid a 3% finders fee to someone for finding me the buyer. Remember Real Estate Brokers only charge about 6%. Where did you come up with 20%?

BWJR

[Andy]

20% seems high.

Remember don't try to get rich off one job, you'll never get another one.

[fluffy]

Here's a related question...what are the broker fees involved in seeling a mat? In my area it seems common to charge 10% of the sale price (which is higher than residential real estate for some reason).

[mike]

Smart card,

I know of two Hollywood starlets,
and I haven't decided which one I will spend the weekend with :-)

Oh, wait, they haven't actually given me that option.....

Hellooooooo.....

I suspect no one will be paying you much money.

You should ask for 100%, why settle for 20% ?

Do I sound sarcastic ? YES !

Seriously, Jim has the best answer.
(read his second half carefully, then act accordingly)

[pete f]

What separates the boys from men is money. If your friend wants your advice and know how, then he should be willing to pay for it, just like I pay my lawyer, accountant, landscape architect. You are talking about bumping a used equipment deal 20%. That does not sound that bad to me. There are many more expense to build out a mat. I would be up front about you know of some equipment, and what you are looking for to put a deal together. Don't think a distrib would buy that equipment and sell it for any less than you are talking about. I have offered a few times over the years consulting but find most want to go it alone, saving the money they could spend on advice and using it to make their own mistakes with.

I do agree with Jim, is this going to be close? I assume not, because you are willing to broker a deal and help him.

[SmartCard]

I know of several mats that the owners are up against the wall. They are bleeding thousands per month. The banks are breathing down their necks. I figure both will be repoed by the bank ( both have SBA guarantees). I got to believe that I can broker a better deal vs. an auction. Both stores are for sale but business sucks so badly that they are desperate to get out. This is a case of lying,snivleling, thieving distributors showing big returns based on fantasy.

[Kitty]

I knew Pete would respond as he did, and my assumption on his take on this was correct, mine was the same if you can believe it :).

If you can capitalize on their need for information/deal of that you can deliver, you do so at the highest margin you can get an agreement on. Of course I am sure you will not assist anyone who is in direct competition with you so I will not add the same statements as others. There are many people that have their hands in the cookie jar when it comes to assisting the business people in this industry, why should you be any different? I just hope you do so with the attitude of assisting the parties more so than taking advantage of the ignorant. Since I had the pleasure of meeting you in Vegas I believe my assumption that you would be most beneficial rather than not would be correct in this scenario.

[Fred50]

Smart C,

Would you consider picking up any of these struggling mats at a deep discount to original cost for yourself, especially if you think that you could make a go of it?

Remember, being the second or third or fourth one in on a struglling mat makes it much easier to make it.

I'm not suggesting that vulture investing is a noble thing, but someone is going to buy it so. why not?

[SmartCard]

Yo Mark!

In both cases I looked at renegoitiating the bank notes. These mats were so off target from hitting there numbers it would impossibe to get to a low enough number on the note and rent to break even. I believe both notes are secured with primary residences. I spoke with a banker who said the SBA will liquidate assets to satisfy as much of the note as possible. Yeah these guys are screwed, and I heard of another mat that may be in as much trouble. I believe that I may in the best position to help myself, a new mat owner, the current mat owner and the bank.
I'm sure the current mat owner will have to make some type of settlement with his bank. Payup or move into a box on the sidewalk.

The advantage of financing through a manaufacturer vs. the bank..you may not have to take a lein on your house.

Be careful out there, it's your money. This a hard way to learn a lesson.

Kitty,
It was a pleasure meeting you and all the COINWASH.COM boarders. I love the mat business and I would never intentionally harm the reputation of professional mat owners. Unscupulous, greedy FACTORY AUTHORIZED con men (distributors, not all but some) really piss me off!

[Jim]

Another thing I just thought of, and I believe it was brought up on another thread is...Their is so much used and repossed equipment out there why would anyone have a problem finding it. As mentioned by Smartcard in this thread their are alot of mats going under or about to go under.

If you look in the back of the last Journal, there are several pages of people trying to sell used equipment. In my area I know of 3 mats for sale...none are making any money.

[detlaundry]

Parts of this thread should also appear in the newbie *section and reposted daily. I don't think there can ever be too many posts about some of the distributors and emphasizing the games they play.

Fortunately for me, i found one of the "good guys". (though i didn't initially purchase equipment from him.) Further, i have talked to at least 5 other owners who deal with him and have yet to hear a negative comment.

For all the newbies attending those weekend seminars, remember Pete F's motto. Write it down and keep it in your back pocket when looking for a mat to buy.



*Done Coinwash.com --thanks

[pete f]

if Kitty is going to start agreeing with me I will quit this board. Takes all the fun out of it he-he

[Kitty]

I did agree with your assumption, but after speaking to her yesterday her revenue was back in check. Therefore, it is more likely that the lack of key control could have been the culprit?

[ajay]

The price of your product/service is not determined by you but by the purchaser of your goods. You should ask the purchaser first, what their needs are. They may be be simply looking for a lead on the equipment. If that's the case, just give it to them - it didn't involve much work. If they want you to evaluate the equipment, open few screws, etc.. well then, ask them how they will be willing to pay for your consulting time. They can either pay per machine or a lump sum. 10% seems legit.

ajay

[bmattei]

Here's a related question...what are the broker fees involved in seeling a mat? In my area it seems common to charge 10% of the sale price (which is higher than residential real estate for some reason).

Though I don't have MAT experience I am a business broker. 10% is a common fee for business brokers and yes it is more then residential brokers charge. Let's list just a few of the reasons: (some of these may apply less to Mats then other businesses)

1) When pricing residential real-estate very close comparables are common so pricing is relatively easy to do and easy to justify. This is almost never the case with a business. And while home owners often think a home is worth 20-30% more then it's true value I've seen business owner who think their business is worth 200% - 300% more then its true value.

2) When selling a house you can present what is there fairly easily. Business owners almost never document their true revenue and cash flow - "TRUST ME I LIE TO THE IRS". Business brokers have to find a way to prove the real numbers and overcome the buyers natural and justified distrust.

3) Almost 60% of the businesses take over 6 months to sell. I've seen homes sell in days and sometimes hours - this never happens with a businesses.

4) Most homes in my area sell for much more then most small businesses.
(5% or 6% of 400,000 is a hefty fee for a lot less work then the 10% of $150,000 for selling a small business)

5) You can't put a for sale sign on a business. The owner wants you to sell it for top price but not tell anyone the business is for sale.



One thing you learn as a business broker; no business is easy. Most business owners work very hard for their money and once you understand the economics of the business you under why they price the way they do. Business brokerage is no different.

PS- I'm not complaining I like being a business broker. I find small business owners to be some of the most interesting people around. But I do think that like most businesses people look at what is being charged and assume it's easy money. As a great thinker once said ... "If it was that easy everyone would be doing it."