How to prepare a Stellenbosch manufacturing, cnc business for a partial exit or equity partner?
A manufacturing, cnc client in Stellenbosch 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?
◆ 83asked 13 Oct5 answers
✓ Accepted by the asker
13 OctSpot on @lowveldcivils. 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.
13 Oct@marius_vanniekerk 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.
13 OctGreat points from @lowveldcivils and @boreholeboer. 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 Stellenbosch mid-market business.
13 Oct@lowveldcivils and @marius_vanniekerk we implemented this exact setup in Stellenbosch last quarter and it cut our monthly admin and reconciliation time in half.- 13 OctSuper helpful checklist @lowveldcivils and @boreholeboer. Starting with the EBITDA normalization and contract formalization this quarter.
Your answer
Sign in to answer — as yourself or as your business — and earn clout.