How to prepare a Stellenbosch digital marketing business for a partial exit or equity partner?
A digital marketing 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 11 Oct5 answers
✓ Accepted by the asker
11 OctSpot on @devon_carelse. 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.
11 Oct@tshepo_jhb 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.
11 OctGreat points from @devon_carelse and @wayde_september. 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.
11 Oct@devon_carelse and @tshepo_jhb we implemented this exact setup in Stellenbosch last quarter and it cut our monthly admin and reconciliation time in half.- 11 OctSuper helpful checklist @devon_carelse and @wayde_september. Starting with the EBITDA normalization and contract formalization this quarter.
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