Fully describe the business's activities?
The business manufactures plastic bags, both printed and plain for the refuse, industrial and boutique markets.
How long has the business been established?
The business was established in 2007.
How long has the owner had the business?
What steps are in place to solve 'load shedding' problems?
How does the business operate on a daily basis?
Company reps visit clients, discuss their requirements and return with orders placed on the company. These are then scheduled into the production plan for manufacture.
How are the clients attracted to the business?
The company gets a large amount of repeat business as well as referrals from existing clients based on their quality and service delivered on past orders. Their major competitive advantage is however their turnaround time and new clients are attracted to use this business because they are the only ones who can produce within the clients short timeframe.
What Advertising/Marketing is carried out?
The major source of business is the sales team who visit existing as well as prospective new customers. The company also receives leads from their website and from adverts placed in newspapers from time to time.
Does the business have any contract work?
Approximately 10% of their turnover comes from contracts that are in place but the majority of the turnover comes from regular customers.
What competition exists?
There are a number of manufacturers in the greater Durban area, each with their own client base and sections of the market that they appeal to.
What are the seasonal trends?
While business is constant throughout the year, the period from September to December is particularly busy.
Is the business VAT Registered?
The business is VAT registered.
What VAT documentation is on file?
All submissions are on file and are available for scrutiny during the due diligence process.
Are there up-to-date Management Accounts available?
Up to date management accounts are available.
What Balance Sheet and Income Statements are available?
Audited Financial Statements to end of February 2018 are available.
What percentage of the business is cash/credit?
Approximately 90% of the business is done on credit with the remaining 10% being cash business.
What is the age analysis of the debtors book?
The average age of the debtors book lies between 30 and 60 days.
How could the profitability of the business be improved?
The business is constrained by their ability to manufacture. The owners feel that by producing 7 days a week would enhance the company's profitability.
Is Seller finance available and for what amount?
Seller Finance is not available.
What is the total staff complement?
The current staff compliment is 32 persons.
Give a breakdown of staff/ functions/ length of service?
Staff can be divided into 3 categories. Shift Supervisors who have an estimated 8-11 years of service. Machine Operators who have been with the company since inception (11 years). Assistants who have approximately 5-7 years with the company.
Do any receive special perks or incentives?
All staff receive normal benefits together with a provident fund and funeral plan.
Are they on contract?
All staff have normal employment contracts.
Do any have management potential?
There are staff who have management potential but not perhaps to the General Manager level.
How involved is the Owner in running the business?
The owners are 100% involved in the company at present.
When does the current lease end?
The owners are currently operating on a month to month lease but the landlord wants to sign a long lease with the company. This will be negotiated between the prospective buyer of the business and the landlord prior to purchase of the business.
Is there an option of renewal & what period?
To be negotiated.
What is the annual escalation %?
To be negotiated.
What are the trading hours?
Currently the business operates between 8am and 4.30pm.
What is the square meters of the business?
The business occupies 1500 square meters.
Who is the Owner/Landlord?
Is a copy of the lease available?
To be negotiated.
Do you require a licence?
No special license is required to operate the business.
What lease deposit and/or other surety is required?
To be negotiated.
What are the main assets of the business?
The main assets of the business are the various machines that take the raw materials and manufacture bags in an automated process.
Are any items not included in the sale?
The owners personal vehicles and effects are not included in the sale.
What is their overall condition?
All machinery is well serviced and maintained and most of the machinery is still relatively new.
Do any require repairing?
No special repairs are required other than normal maintenance which is carried out in house.
How have they been valued ?
The assets have been valued at fair market value.
Which assets are on lease/HP and with whom?
There are 2 machines that are financed through Westbank.
What are their settlement amounts?
R 1.7 mill.
Will Seller settle or Buyer to take over?
The Seller will settle the outstanding amounts.
Are copies of agreements available?
Copies of the agreements are available.
Are they presently insured?
All assets are currently insured.
The good quality machinery that the company owns provide a substantial barrier to entry and make the company a very competitive manufacturer. The large and regular client base provides ongoing work for the foreseeable future.
The owners feel that they are not putting enough effort into expanding their client base. They are not realising the potential growth that the company could be experiencing.
New opportunities in the market are continuously arising and an enthusiastic owner could embrace these opportunities and grow the business substantially. The market itself is expanding on a continual basis.
There are few meaningful threats perceived.
What is the reason for the sale?
The owners have run this business for 11 years and built a substantial and profitable business. They now believe that a new buyer could continue this growth into the future but they wish to sell the business and possibly move overseas.
Why is this a good business?
The historical growth of the business proves what a good market this business is in with substantial barriers to entry. There low manufacturing cost and committed sales force will continue to give this business an advantage into the future.
What is the price plus stock and the net profit?
The price of the business is R 24,000,000 plus R 800,000 stock and the Feb 2018 nett profit is R 7.8 million excluding the owner's' drawings and personal expenses.
Annual Turnover Amount between R 500 thousand and R 6 million