How to underwrite a car wash acquisition in 2026: an IC-grade framework

Our team has delivered 60+ sites and closed $300M+ across our careers. The underwriting framework I use is the same one I'd run for an institutional investment committee. Six numbers that tell you whether the deal works. Five red flags that tell you to walk. Anchored to the actual 2025-26 transaction market. Brokerage engagements run through Matthews; WLG handles development, operations consulting and equipment.

The 2025-2026 market context every buyer needs to know

Before you put pen to paper on a bid, you need to know where the market is pricing AND what the multiple is actually measuring. The single biggest framing error in car wash M&A is conflating multiples with and without real estate. They are not interchangeable.

With real estate vs without real estate

OpCo-only deals (no real estate, typically because the seller has already sale-leasebacked the property or the buyer is acquiring a leasehold operating business): EBITDA is measured after rent expense, so the EBITDA is lower and the multiple is correspondingly higher. This is the basis most platform-level transactions trade on.

OpCo+PropCo deals (operating business plus the owned real estate): earnings are measured before rent because the buyer owns the property. For the real estate component, historical NNN listing reports provide asking-rate benchmarks. B+E's August 2025 car wash inventory averaged a 6.33% asking cap rate, roughly 15.8x the rent line. Listed asking terms are not verified closing cap rates.

If you don't specify which basis a multiple is on, you don't have a comparable. Period.

Current pricing, basis-explicit

The bubble peak of 2021-22 (platform OpCo-only deals at mid-teens to 20x+ EBITDA) is over. Current comparables, by basis:

• Platform deals (multi-site portfolios with proven membership economics), OpCo basis: our current underwriting range is 9-11x EBITDA, with the best portfolios going higher. Whistle Express acquired Take 5 Car Wash from Driven Brands in April 2025 for $385M across 385 units, with roughly 8x headline pricing on reported EBITDA above $50M. Whistle also executed a sale-leaseback at closing, so the transaction structure needs to be reconciled before using it as a pure OpCo comparable. By our read of the market, premium portfolios with institutional-quality membership economics can clear 11-13x OpCo.
• Public-comparable benchmark: Mister Car Wash's take-private by Leonard Green & Partners valued the company at approximately $3.1B enterprise value, approximately 9x FY2025 adjusted EBITDA of $345.4M per public analysis of the SEC filings, with other analyses in the 7x to 9x range on 2026 estimates. The deal was announced February 18, 2026 at $7.00 per share and closed May 19, 2026. The historical and forecast denominators are different and should stay separate.
• In our deal experience, small portfolios (3-20 sites, membership-anchored) clear 6-8x EBITDA on an OpCo basis and 5-7x on an OpCo+PropCo basis. These are our underwriting bands.
• In our deal experience, single-site express tunnels on an OpCo+PropCo basis clear 5-7x EBITDA for a typical site and 7-8x for well-performing sites with strong membership and owned real estate in tier-one trade areas.
• NNN-listed car wash real estate averaged a 6.33% asking cap rate in B+E's August 2025 report and 6.32% in its July 2026 report. These describe listed inventory rather than completed sales.
• Small-deal marketplaces quote car washes on SDE, not EBITDA. BizBuySell-based data summarized by Selling My Car Wash shows a 5.18x median SDE on sold listings from 2021 through 2025 and about 6.3x on current listings. That source estimates roughly 3x-5x EBITDA on typical small-operator P&Ls; there is no fixed conversion without reconciling owner compensation and other adjustments. Treat any marketplace aggregate quoted as EBITDA as a different basis.

The compression-to-build-cost insight

At current single-site multiples on an OpCo+PropCo basis, there are markets where you can buy an operating express tunnel below replacement cost. The math:

• Replacement cost (all-in greenfield build, Southeast US, 2026): $4.0M-$7.5M depending on land, site work, and equipment package
• Acquisition price (single site, $800K-$1.0M EBITDA, 5-6x OpCo+PropCo): $4.0M-$6.0M

When a stabilized operating asset with proven trade-area performance is trading at or below the cost to build the same asset, that's compression, and it's a buy signal. You're acquiring de-risked cash flow with an established membership base and operating history, at a basis that doesn't require Year 1-2 ramp risk. The 2021-22 capital cycle pushed multiples so high that buy-vs-build math heavily favored build; the 2025-26 reset has flipped that for the right targets.

The corollary: if you're modeling a greenfield build in a market where comparable stabilized sites are trading at or below replacement cost, your underwriting needs to demonstrate why the new site will outperform the comparable, not just match it. Otherwise, buying is the better risk-adjusted move.

Direction of travel

By our read of the market, multiples compressed through 2022-2024 as rates rose, then firmed in 2025-2026. We see a widening gap between premium membership-rich, clustered portfolios and average sites. Our underwriting bands are 11-13x OpCo for the strongest platforms and 5-7x OpCo+PropCo for average single sites. These are different asset and EBITDA bases, not directly comparable multiples.

Two market signals that should anchor your underwriting:

• ZIPS Car Wash filed Chapter 11 in February 2025 with $654M of debt and 260 locations. The CEO publicly cited oversaturation from "900 new car washes annually." That's the downside scenario for a platform carrying that much debt.
• Driven Brands exited the US car wash sector entirely by selling Take 5 to Whistle Express. That's a sophisticated sponsor concluding the risk-adjusted returns don't fit their portfolio strategy. Their analysis isn't necessarily yours, but read the reasoning.

The six numbers that matter

1. Revenue quality, not revenue total

Two washes can do $2.4M in top-line revenue and have radically different value. The split is what matters.

• Membership revenue as a % of total wash revenue: We target above 70% (Mister Car Wash reported 76% in Q1 2026). Below 50%, the business depends more heavily on retail visits.
• Average ticket on retail: We treat tickets below $12 as a price-competition signal and above $18 as a possible sign of pricing power, subject to menu mix.
• Cars per day (CPD) consistency: A wash doing 250 CPD with 5% weekly variance is worth more than one doing 280 CPD with 35% variance.
• Member ARPM: Historical reference points are $29.56 (Mister Q3 2025 disclosure) and approximately $30 (Rinsed Q4 2024 report). We investigate pricing below $26 and verify tier mix above $35.

Pull 24 months of POS reports. If the seller can't produce them, the deal isn't ready for diligence.

2. EBITDA quality, and the seller's add-backs

Every seller has add-backs. Half of them won't survive scrutiny.

Legitimate add-backs I'll accept:

• One-time legal/professional fees
• Owner compensation above market for replacement GM
• One-time equipment repairs that won't recur
• Marketing experiments the new owner won't continue

Add-backs I won't accept:

• "Personal vehicles" running through the P&L
• Family member wages with no documented role
• "Future cost savings" the buyer hasn't actually committed to
• Maintenance that the buyer will absolutely have to spend

My rule: add-backs above 12% of stated EBITDA get a 50% haircut before I'll model them.

3. Membership penetration and churn

Penetration measured two ways: members ÷ unique monthly customers (operator view), or member revenue ÷ total wash revenue (public-company view). Use both. The bands below are our underwriting screens, not Rinsed retail-to-member conversion rates.

• Member-revenue % above 70% of wash revenue: Institutional-quality, matches Mister Car Wash's disclosed level.
• 8-12% members-to-customers penetration: New site or underperforming. Upside opportunity.
• 12-15%: Healthy mature site.
• 16-18%: Strong operator.
• 20%+ penetration: Top of the industry. Confirm with raw data, not seller claims.

Churn is the more important number nobody asks about. Rinsed's Q2 2026 industry aggregate is 7.9% total monthly churn (4.9% voluntary plus 3.0% credit card churn), the highest print in the series; Q1 2026 came in at 7.3%. Mister Car Wash reported roughly 5% monthly churn on its Q3 2025 call. I underwrite to the industry aggregate even when the seller claims top-tier retention, then build the upside case to 5% as proof-of-improvement potential.

4. Trailing 18-month capex (not 12)

We underwrite trailing 18-month capex to check for spending deferred in the run-up to a sale. A 12-month window can miss that pattern.

What I look for:

• Tunnel equipment replacement cycle: Belts, brushes, dryers, chemistry pumps. Based on our portfolios, we budget $0.08-$0.12 per car for routine recurring capex on a well-maintained site and $0.25+ per car if equipment is aging or has been deferred.
• Vacuum motors: We budget $400-$600 per unit installed and use a 7-10 year replacement cycle as a planning assumption, subject to inspection and quotes.
• Pay station refresh: We carry $25K-$45K per lane on an 8-10 year cycle as a planning assumption, subject to scope and vendor quotes.
• Reclaim system service: Annual deep service plus 5-year filter/pump replacement.

In our experience, properly maintained tunnel structural equipment can run 15-20+ years with periodic rebuilds. Parts availability and component rebuild intervals still drive replacement risk. Request maintenance logs and recent rebuild history during diligence rather than relying on generic published intervals.

We treat recurring capex below $0.05 per car as a diligence flag for possible deferral, not proof that equipment has been neglected. Reconcile the spending history to a physical inspection.

5. Working capital and deferred maintenance

This is where deals die quietly in diligence.

Pull the membership unearned revenue liability. If a wash has 4,800 monthly members at $25/month and no unearned revenue on the books, the seller is running the business on a cash basis and you'll inherit obligations you can't see.

Walk the back of house twice. Once with the seller, once without. The second walk is where you find the corroded chemistry containment, the cracked underground utility vault, the tunnel bay that floods in heavy rain.

6. Real estate, own, lease, or assignable?

Ground lease deals can be excellent, but the lease terms drive valuation more than the operating performance.

Our lease walk-away lines:

• Term under 15 years remaining (including option extensions)
• Rent above 8% of gross revenue
• Assignment language that requires landlord consent without reasonableness standard
• Recapture clauses on operating data

Sale-leaseback strategy note: Mister Car Wash executed $134.9M of sale-leasebacks in 2024 specifically to free real estate capital while maintaining operating control. The structure is now standard for sophisticated multi-site operators.

The five red flags that make me walk

1. POS data the seller won't release pre-LOI. A serious seller produces 24 months of raw POS exports within 5 business days. Anything else means the numbers don't hold up.
2. Membership pricing change in the last 12 months. Recent price increases artificially inflate trailing revenue and mask churn (Mister's January 2025 price increase normalized in 4-6 weeks, but most operators don't have that brand strength). I model the deal at the prior pricing to see what the run rate really is.
3. Equipment past its second rebuild cycle without documentation. In our experience, tunnel structures can run 15-20+ years, but component-level rebuild history matters. We plan ICS controller refreshes on an 8-10 year cycle and pay station hardware on a 7-10 year cycle, subject to inspection. Past the second rebuild without records, you're buying replacement risk priced as operating equipment.
4. Trade area saturation accelerating. Pull permit data for the last 24 months in a 3-mile ring. Apply our own trade-area saturation screen (population per operating tunnel, per our site selection framework). DRB's published saturation work weighs vehicle density per wash against market visit frequency and expected ramp speed; it does not publish a single numeric cutoff. If two or more new tunnels are under construction or recently opened, stress-test the revenue assumptions before closing.
5. Seller financing required to make the deal work. If the bank won't fund the LBO without a meaningful seller note, the deal is overpriced. (Take 5 is an exception: the $385M Driven-Brands-to-Whistle transaction was structured as $255M cash plus $130M seller note, but that's a strategic divestiture between sophisticated sponsors, not an operator-to-operator sale.)

How we structure the IC memo

The underwriting memos I prepare follow this structure. Listing and buyer representation engagements run through Matthews:

1. Deal summary, 1 page, the numbers a partner needs to decide whether to read further
2. Property and operations overview, 2-3 pages with site photos, equipment list, P&L summary
3. Trade area analysis, demographics, traffic, competition (our saturation screen), growth indicators
4. Financial analysis, historical P&L normalized, pro forma, sensitivity tables
5. Valuation, comparable transactions (anchored to 2025-26 platform comps), DCF, multiple analysis, recommended bid range
6. Risk factors, honest list, no marketing language
7. Diligence checklist, what we'd verify in confirmatory phase
8. Recommendation, pursue at X price, walk above Y price

How I apply this framework

Over our team's careers, we've run this framework on 60+ acquisition targets across the Southeast. We turn down more deals than we recommend. In our experience, the ones we recommend close at our bid range about 70% of the time. The 2025-26 market is unforgiving to overpaid deals; sticking to the framework matters more than it did in 2021.