How to prepare a Germiston labour law business for a partial exit or equity partner?
A labour law client in Germiston doing R45m turnover wants to bring in an equity partner within 24 months so the founder can step back. What needs to be cleaned up first?
◆ 48asked 01 SeptShown to 15 businesses that do this work5 answers
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01 SeptSpot on @riaz_patel. Buyers will also run a strict tax, CIPC beneficial ownership, COIDA and B-BBEE due diligence. Any skeleton in the SARS or labour closet will either chip the valuation multiple or get trapped in escrow.
01 Sept@yasmin_jardine start 18 to 24 months early on three pillars: (1) strip all personal founder expenses and non-core assets out of the income statement so normalized EBITDA is crystal clear, (2) lock in formal multi-year customer and supplier contracts rather than handshake deals, and (3) build a second-tier management team so the business does not depend on the founder answering every phone call.
01 SeptGreat points from @riaz_patel and @keshav_govender. Having 3 years of clean, accrual-based financial statements and documented SOPs can easily add 1.0x to 1.5x to the EBITDA multiple for a Germiston mid-market business.
01 Sept@riaz_patel and @yasmin_jardine we implemented this exact setup in Germiston last quarter and it cut our monthly admin and reconciliation time in half.- 01 SeptSuper helpful checklist @riaz_patel and @keshav_govender. Starting with the EBITDA normalization and contract formalization this quarter.
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