Fully describe the business's activities?
The business sells a range of food products to major retail chain stores. The range includes pre-prepared meals and bakery products.
How long has the business been established?
The business was established in 1996.
How long has the owner had the business?
The current owner has been with the business since 2004.
How does the business operate on a daily basis?
Orders are received via the chain stores purchasing system. These orders are scheduled, produced and transported to the chain store distribution centers.
How are the clients attracted to the business?
The existing clients who have dealt with the company for many years provide ample opportunity for future growth of the company.
What Advertising/Marketing is carried out?
No advertising is carried out.
Does the business have any contract work?
The business does not have contract work as such but receives orders on an ongoing basis.
What competition exists?
There is competition who are able to produce the products however they are not able to satisfy the customers demands of quality, quantity and price.
What are the seasonal trends?
Sales are steady throughout the year with a slight increase over the December holidays.
Is the business VAT Registered?
What VAT documentation is on file?
All documentation is available on file to a prospective purchaser during due diligence stage.
Are there up-to-date Management Accounts available?
Up to date Management accounts are available are available.
What Balance Sheet and Income Statements are available?
Annual Financial Statements for Feb 2017 are available.
What percentage of the business is cash/credit?
All business is conducted on credit.
What is the age analysis of the debtors book?
The debtors book sits at less than 30 days with the major customer paying every 14 days.
How could the profitability of the business be improved?
The major customer has indicated that order levels could be significantly increased if the customer could increase his refrigeration capacity. This project is currently underway.
Is Seller finance available and for what amount?
Seller Finance is not available.
What is the total staff complement?
The staff compliment fluctuates but currently sits at 90 persons.
Give a breakdown of staff/ functions/ length of service?
The management team comprises of an admin manager (2yr), an accounts manager (5yr) and 3 operational managers (12,3,2yr).
Do any receive special perks or incentives?
No staff receive additional perks.
Are they on contract?
All staff have permanent employment contracts.
Do any have management potential?
While the current staff are very competent within their own positions, none of them show the potential to fulfill the General Management role.
How involved is the Owner in running the business?
The owner has implemented management systems that ensure that the daily running of operations continues without his presence. He is more involved in the long term projects. He currently spends 4-6 hours a day in the business, 5 days a week.
When does the current lease end?
The owner of the business currently owns the building and a new lease would have to be negotiated with the current owner.
Is there an option of renewal & what period?
To be negotiated.
What is the annual escalation %?
To be negotiated.
What are the trading hours?
The business hours are dependent on production requirements and currently the business is operating between 6 am and 5pm Mon to Sat.
What is the square meters of the business?
Is a copy of the lease available?
To be negotiated.
Do you require a licence?
A license from the department of health is required.
What lease deposit and/or other surety is required?
To be negotiated.
What are the main assets of the business?
The business owns refrigeration and cooking equipment for the production of the food products. In addition a fleet of transport vehicles delivers the products to distribution centres in Durban and Johannesburg.
Are any items not included in the sale?
Only the owners personal vehicle and effects are not included in the sale.
What is their overall condition?
All assets are maintained in good working order.
Do any require repairing?
No assets currently require repairs.
How have they been valued ?
Assets have been valued according to their book value.
Which assets are on lease/HP and with whom?
No production machinery is on HP agreements but 2 delivery vehicles are on HP agreements.
What are their settlement amounts?
The 3 ton truck has approximately R 550,000 outstanding and the 1.5 ton truck has approximately R80,000 outstanding.
Will Seller settle or Buyer to take over?
The buyer will take over the HP agreements.
Are copies of agreements available?
Copies of agreements are available.
Are they presently insured?
All assets are insured.
The business operates in a market that is showing significant growth. The close relationship that has been maintained with the major customer places the company on a strong growth curve that is limited only by the companies ability to produce.
The business is reliant on a few customers and is therefore vulnerable should customers refuse to place orders. The new owner would need to maintain this relationship with good quality standards and meeting delivery requirements.
A current project is underway to increase the refrigeration capacity of the company. This will allow the company to meet the increasing demands of their major client into the future. Once this production constraint is removed, the company could approach other retail chains for business.
The only threat to the business is the loss of one of their major customers. Given the strong relationship together with the lack of large production facilities around the country, this seems highly unlikely. Should this happen however there are other retail chains to approach.
What is the reason for the sale?
The owner has operated and built this business for 13 years and now wishes to retire and enjoy the benefits that this business has brought him.
Why is this a good business?
The business provides pre-prepared meals which is a growing market in South Africa. There is limited opposition who can meet the market requirements which will result in this business growing despite minimal marketing efforts.
What is the price plus stock and the net profit?
The business is priced at R 12,000,000 plus stock. This includes the cost of the current expansion project, the results of which should add substantial profits to those shown in the financials provided.
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