MANDATE REPORT
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1. History Background
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Fully describe the business's activities
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This is a client base receiving Accounting and Tax Services. The practice covers a broad spectrum of industries. The nature of its clients is as follows: Agriculture, Investments, Manufacturing, Medical Small business etc. Because of the monthly nature of PAYE, VAT, Payroll the practice has strong cash flows from very good paying customers. They are mostly located in and around Pretoria but some visits to larger clients are required out of town.
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How long has the business been established?
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9 years
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How long has the owner had the business?
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5 years.
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What steps are in place to solve "load shedding" problems
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N/A
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2. Present Market
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How does the business operate on a daily basis
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Owner operated with 1 staff member specifically focused on the clients is sufficient. Currently the owner has to perform some tasks and assignment of tasks from the coast which is why the business is aggressively priced for a sale.
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How are the clients attracted to the business
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Word of mouth, established clients that has been with the practice for a significant time, some predating the current owner and has been handled over time by various different staff members. The existing clients also refer others
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What Advertising/Marketing is carried out
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Nothing.
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Does the business have any contract work
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Yes and they have longstanding regular clients supporting them
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What competition exists
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Normal competition from other tax practitioners and accountants in the area.
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What are the seasonal trends
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Tax Season starts in July and end in November, making this the right time to buy this practice.
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3. Financial
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Is the business VAT Registered
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No
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What VAT documentation is on file?
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No, not registered
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Are there up to date management accounts?
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Yes
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What audited financials are available, income statement and or balance sheets?
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2009-2013 Income Statements.
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What percentage of the business is cash/credit?
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30 day settlement
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What is the age analysis of the debtor’s book?
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30 days.
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How could the profitability of the business be improved?
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Increasing the existing client base
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Is Seller finance available and for what amount?
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No.
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4. Staffing
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What is the total staff complement?
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1 Staff member. Note that the staff member is due for maternity leave shortly
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Staff Breakdown and length of service
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Employed since 2010 with Corporate background, qualifications and experience in various software module like Pastel Payroll, Caseware, Pastel Payroll, SAP etc
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Do any receive special perks, bonuses or incentives?
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N/A
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Are they on contract?
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Yes
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Do any have management potential?
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Yes
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How involved is the Owner in running the business
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Owner operated currently from a remote coastal location
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5. Premises
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When does the current lease end?
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N/A.
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Is there an option of renewal & what period
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N/A
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What is the annual escalation %?
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N/A
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What are the trading hours?
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Mon-Thursday 08:00-17:00
Friday 08:00-13:00
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What is the square meterage of the business?
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N/A
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Is a copy of the lease available?
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N/A
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Do you require a licence?
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Tax Practitioner, SAIPA or SAICA
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6. Assets
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Is a full asset list on file?
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N/A
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Are any items not included in the sale?
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N/A.
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What is their overall condition?
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N/A
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Do any require repairing?
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N/A
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How have they been valued?
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N/A
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Which assets are on lease/HP and with whom?
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N/A
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What are their settlement amounts?
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N/A
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Will Seller settle or Buyer to take over?
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N/A
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Are copies of agreements available?
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N/A
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Are they presently insured?
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N/A
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7. S.W.O.T. Analysis
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Strengths
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Established practice for many years with a great name, great clients, great service. Good paying clients
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Weaknesses
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Currently the owner is located at the coast
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Opportunities
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SARS pushing harder for compliance will grow the demand for this service and for existing clients to remain with the practice. Compensation Fund, UIF etc grow demand
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Threats
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SARS pushing harder for compliance will require more and more expert tax knowledge from the practitioner.
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8. Reason For Sale
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What is the reason for the sale?
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The seller has relocated to the coast and the distance is making this unsustainable going forward.
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9. Conclusion
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Why is this a good business to buy?
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A solid loyal client base, with 70% requiring monthly or two monthly work to be done. This ensures very good cashflow. Accounting Practices of this calibre, pricing and loyal client base on the open market is a rare opportunity.
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