How to prepare a Stellenbosch coffee roaster, hospitality business for a partial exit or equity partner?
A coffee roaster, hospitality 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 12 Oct5 answers
✓ Accepted by the asker
12 OctSpot on @nicola_claremont. 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.
12 Oct@nisha_maharaj 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.
12 OctGreat points from @nicola_claremont and @sanet_menlyn. 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@nicola_claremont and @nisha_maharaj we implemented this exact setup in Stellenbosch last quarter and it cut our monthly admin and reconciliation time in half.- 13 OctSuper helpful checklist @nicola_claremont and @sanet_menlyn. Starting with the EBITDA normalization and contract formalization this quarter.
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