"Selling your business is our business"
"Selling your business is our business"
Fully describe the business's activities?
Precision machining, presswork, jig manufacture, tool and die making, engineering and fabrication of parts and equipment for clients.
How long has the business been established?
Established in 2001
How long has the owner had the business?
24 years - since establishment.
What steps are in place to solve 'load shedding' problems?
Due to location near a strategic manufacturer loadshedding is limited. A generator is on site for rare occasions of power interruption
How does the business operate on a daily basis?
Drawings are received, quoted and orders placed prior to execution.
How are the clients attracted to the business?
Mostly repeat business based on known capability, quality and price. Installed asset base across CNCs, Presses, lathe a guillotine offers one-stop solutions to clients. The reputation of the business generates new clients.
What Advertising/Marketing is carried out?
Limited - mostly word of mouth - high % of repeat business.
Does the business have any contract work?
No contract work but a large client has allocated them preferred supply status. Current open order book is valued at R4 million.
What competition exists?
Two engineering shops are located in the area - providing in-house design and manufacture remains a key competitive advantage. In addition the installed asset base offers a 1-stop solution to most engineering requests.
What are the seasonal trends?
The industry enters into an annual shutdown in December and January which leads to reduced turnover for these months.
Is the business VAT Registered?
Yes
What VAT documentation is on file?
Per SARS requirements.
Are there up-to-date Management Accounts available?
Yes - these are prepared by the accounting practice we engage.
What Balance Sheet and Income Statements are available?
For the year ending 2024 AFS are signed off. AFS 2025 are expected to be signed of by end June 2025.
What percentage of the business is cash/credit?
Nil - we offer all clients 30 day payment terms.
What is the age analysis of the debtors book?
30 days.
How could the profitability of the business be improved?
The owner is the manager and is on the floor daily, prepares quotes, drawings and engages with the clients. A second manager with an engineering background would free up time to secure additional work. Previous managers have been headhunted.
Is Seller finance available and for what amount?
No - value of sale is too low to warrant terms.
What is the total staff complement?
13 including the owner and bookkeeper.
Give a breakdown of staff/ functions/ length of service?
Bookkeeper - 9 years
Foreman - 13 years
4 skilled artisans - 17, 13, 12 and 10 years respectively.
Do any receive special perks or incentives?
A year-end bonus is paid based upon performance of the business.
Are they on contract?
No employees are on contract - they are permanent.
Do any have management potential?
The Foreman can manage day to day aspects of the business in the absence of the Owner but not complex issues nor drawings and quotes.
How involved is the Owner in running the business?
He is very involved in the business - works on the floor, in the office and meets with clients.
When does the current lease end?
The premises are owned by the business owner. Negotiations are in progress to sell the 4 units currently occupied by the business. If sold the new owners will offer an 18 month lease.
Is there an option of renewal & what period?
18 months.
What is the annual escalation %?
This needs to be negotiated with the new landlord.
What are the trading hours?
Monday to Friday 06.45 - 16.15 plus Saturdays if urgent work needs to be done.
What is the square meters of the business?
990m sq. This is based on consolidation of the business into 2 factories which the owner will undertake upon sale.
Is a copy of the lease available?
NA
Do you require a licence?
No
What lease deposit and/or other surety is required?
1 month
What are the main assets of the business?
3 x CNC milling machines
1 x CNC lathe
1 x Guillotine
1 x Bendbreak
1 x 250 t press
1 x 160 t press
1 x 55 t press
1 x 35 t press
Are any items not included in the sale?
No
What is their overall condition?
All CNC - good
Presses - old and in fair condition due to age but fully operational.
Do any require repairing?
No
How have they been valued ?
After the floods of 2022 all machines were valued by machine experts.
Which assets are on lease/HP and with whom?
NA
What are their settlement amounts?
NA
Will Seller settle or Buyer to take over?
NA
Are copies of agreements available?
NA
Are they presently insured?
Yes - fire and flood NOT breakdown.
Strengths?
Have been accorded preferred supplier status by large strategic manufacturer - current order book + R 4.0M
Provide a manufactured product to a euro based client - 19 years and ongoing.
Strong asset base to offer engineering solutions
Commercially cost competitive
Weaknesses?
The business is run and managed by the owner. There is no 2 IC.
Opportunities?
If an engineering manager can be brought in the workload can be shared and revenue increased.
Threats?
The loss of the major client - need to continue to offer various engineering solutions at agreed quality and price standards.
What is the reason for the sale?
The owner is set for retirement but will offer a handover period to ensure continuity.
Why is this a good business?
A 24-year track-record of successful trading has provided the seller a generous salary.
The business has paid off 2 factories and owes 700K on the remaining two.
A euro based client of 19 years
An open order book with a significant manufacturer of R4 million currently.
