1. History Background
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| Fully describe the business's activities |
The business is an accounting practice which specialises in Taxation, Annual Financial Statements for small businesses, Bookkeeping, Independent Reviews for Companies with under 100 PIS score, CIPC registration, Payroll, for Companies, Sole Proprietorships and Partnerships. The Company is an accredited Training Centre which trains graduates to become qualified as professional accountants. |
| How long has the business been established? |
Since 1987 |
| How long has the owner had the business? |
A 60% Partner started it and the other has been buying in since 2014. |
2. Present Market
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| How does the business operate daily? |
Owner-managed and run
The business uses various accounting packages to manage the business daily as follows:
1. Pastel Partner
2. Sage business online
3. Xero
4. Smart practice for their timekeeping
5. Dext for document management
6. Syft Analytics - Reporting |
| How are the clients attracted to the business? |
This is generally through word of mouth. The business has a long-standing excellent reputation. |
| What Advertising/Marketing is carried out? |
The advertising/marketing is not extensive and is generally via word of mouth.
They are a preferred accountant for FNB instant banking.
They have a website and Facebook page on which they post regularly. |
| Does the business have any contract work? |
About 25% of clients are on a fixed monthly retainer.
For some clients, this covers bookkeeping/payroll only, for some clients it covers all accounting functions. The balance of their clients is charged by the time it takes to complete their jobs. We have a fixed fee structure for those clients who require one-off jobs and CIPC registrations, VAT registrations, etc. |
| What competition exists |
Normal competition. |
| What are the seasonal trends |
The company has a fairly smooth distribution of turnover over the entire year and this is due to the fixed fees being charged. However, once the tax season opens, from August to November there is a peak in turnover and again in January when the Company taxes and provisional taxpayers' taxes are due. |
3. Financial
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| Is the business VAT Registered |
Yes |
| Are there up to date management accounts? |
Yes Available
It will be provided if needed |
| What annual financials are available, income statement and or balance sheets? |
Yes Available
For the Financial Year End 28 February 2022. |
| What percentage of the business is cash/credit? |
All credit |
| What is the age analysis of the debtor’s book? |
At 31/05/2022
• 120 days R325 510.95
• 90days R53 248.78
• 60days R38 861.48
• 30 days R99 219.89
• Current R293 631.53 |
| How could the profitability of the business be improved? |
Automating more functions, smoothing and standardising the workflow process.
Better use of technology, reducing manual bookkeeping and manual annual financial statements/reporting. |
| Is Seller finance available and for what amount? |
Yes, a structured deal will be considered on the following basis:-
- Finding an approved Buyer.
- The seller will expect an upfront cash payment, of 50% of the purchase price, on the Effective Date.
- The Seller will warrant turnover for 12 months, subject to acceptable terms and conditions being established for the owner’s continued involvement in the business.
- The balance is payable in monthly payments over 12 months.
- The terms and conditions regarding the warranty and ongoing involvement will be clearly defined, as well as how the price will be adjusted, either upwards or downwards at the end of the warranty period.
- The seller will continue to bring new clients to the business and will be rewarded accordingly.
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4. Staffing
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| What is the total staff complement? |
11 in total, 2 are owners selling. |
| Staff Breakdown |
Will be provided as part of the Due Diligence, but they are skilled and experienced staff, most with the business for a long time. They also have trainees. They are an ATC. |
| Do any receive special perks, bonuses or incentives? |
All staff get double pay in December.
The winning team each month gets 4 hours of leave off the following month as the top achieving team. Staff who are studying get the day of the exam off as study leave.
It is important to note the firm has a culture of family where staff are cherished and any suitor wanting to buy this business will be assessed to ensure this continues. |
| Are they on contract? |
5 staff are on learnership contracts. |
| Do any have management potential? |
Yes, will be discussed. |
| How involved is the Owner in running the business? |
The owners work full-time in the practice as part of the team. |
5. Premises
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| When Does the Current Lease ends? |
The current lease ends on 31 Dec 2022 |
| Is there an option for renewal & what period |
The building is owned by shareholders of the firm and will be available for purchase by the new owners. If not required then there will definitely be an option to renew the lease for a period to be determined. |
| What is the annual escalation %? |
6% |
| What are the Trading Hours? |
Monday to Thursday - 07:30 to 16:30
Friday - 07:30 to 13:30 – no lunch break |
| What is the square meterage of the business? |
155sqm |
| Is a copy of the lease available? |
Yes |
| Do You require a license? |
SAIPA Training Office and Registered Tax Practitioner |
6. Assets
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| Is a full asset list on file? |
Yes Insured
Available on request |
| Are any items not included in the sale? |
Yes, as per the list |
| What is their overall condition? |
Good |
| Do any require repairing? |
No |
| How have they been valued? |
Replacement |
| Which assets are on lease/HP and with whom |
The Switchboard and the Canon printer is on lease to own
The buyer will take this over |
| What are their settlement amounts? |
Will be discussed |
| Will the Seller settle or Buyer take over? |
The buyer will take this over |
| Are copies of agreements available? |
Yes |
| Are they presently insured? |
Yes |
7. S.W.O.T. Analysis
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| Strengths |
Loyal, regular, well-established, solid clients.
Established for 35 years.
Being a training centre they can employ good staff at very reasonable rates.
They also make claims for learners from Fasset and receive tax breaks in this regard.
The company was profitable even through the Covid pandemic.
The company has a very good track record.
The culture of the partners and staff is a family unit. |
| Weaknesses |
Due to time constraints, the advertising of the company has not been very thorough.
Staff turnover can present challenges but there is always a large contingent of graduates looking for training. Clients do not always like the change in bookkeepers but we explain that this is how we can keep their costs contained. |
| Opportunities |
Expand the firm.
Streamline the Practice management.
To grow the client base by keeping more up-to-date with Facebook advertising, |
| Threats |
Loadshedding – better infrastructure needs to be put into place to combat downtime caused by intermittent load-shedding.
Invertor and UPS on the server need to be improved |
8. Reason For Sale
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| What is the reason for the sale? |
One seller is retiring, one is emigrating |
9. Conclusion
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| Why is this a good business to buy? |
The business provides a good salary for 2 partners and also makes an annual profit resulting in dividends being declared regularly. The company has an excellent track record of many years both with clients, with SARS and with SAIPA. The environment is a happy and stable environment providing flexible hours. It is a progressive company which embraces the new accounting processes |