Sectors / Category

Annual turnover

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  • Mandate: 34890
  • Added: 10 Nov 2021
  • AFS
  • 398

Highly profitable business specialising in IT resourcing and placement

Gauteng, Johannesburg
398
Mandate 34890
Added 10 Nov 2021
R 5,000,000* ZAR
for 51% of business
Stock: R 0
Assets: R 407,836
R 192,445 ZAR
Wynand Wolmarans
(PRINCIPAL)
Aldes Exceed
Gauteng, Sandton
Gauteng, Sandton
Summary

Calling all BBBEE investors. This business has grown from a start-up of a highly profitable business with a good reputation and blue-chip clients within a 4 year period. The existing shareholder is looking to sell a 51% shareholding in the business to the right female BBBEE partner for R2 500 000.00. An opportunity like this does not come along very often.

SELLING PRICE AFS
R 5,000,000* ZAR
for 51% of business
Stock: R0
Assets: R407,836
R 192,445 ZAR
Summary

Calling all BBBEE investors. This business has grown from a start-up of a highly profitable business with a good reputation and blue-chip clients within a 4 year period. The existing shareholder is looking to sell a 51% shareholding in the business to the right female BBBEE partner for R2 500 000.00. An opportunity like this does not come along very often.

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Fully describe the business's activities?
The business specialises in IT resourcing and placements. They hire IT consultants on a sub-contract basis and place them at blue-chip clients for a fixed-term duration, normally for one year or longer. The business is engaged to source IT talent in the market in order to fulfill their client's resourcing requirements.

How long has the business been established?
2017

How long has the owner had the business?
The current owner started the business in 2017

How does the business operate on a daily basis?
The business receives demand/resource requisitions from multiple clients on a daily/weekly basis. They then search for suitable candidates that meet the required IT skills on LinkedIn and other social media channels. Once they identify a suitable candidate, they perform background and reference checks before submitting their profiles to clients for selection and interview. Before placing a suitable candidate, they sign a work/purchase order with their clients. In South Africa, IT skills are in high demand and low in supply. Clients anticipate and expect the business to find the right candidate in a short space of time due to their extended network and pool of skilled IT resources. Their customer's find it hassle free and cost effective to source skilled resources effectively and efficiently through this business.

How are the clients attracted to the business?
The business has existing relationships with client that result in a lot of repeat business within its existing customer base. In addition to this they advertise on all the social media platforms. Lastly they do cold calling and respond to advertisements placed by by companies looking for SMEs and Micro Enterprises with BEE status to assist with their recruiting requirements.

What Advertising/Marketing is carried out?
The business advertise positions/job openings on various social media channels such as LinkedIn, Facebook- and, WhatsApp groups among other to maximise their reach to prospective candidates who are or might be looking for job opportunities.

Does the business have any contract work?
The business does not have contracts per say, however, they have active service agreements with blue-chip companies and a Managed Services Company. However, the business hires consultants for periods ranging between 6 months to 1 year as per client requirements/yearly budget. These contracts are often renewed yearly based on the performance of the consultant as well as project delivery roadmap. Most of the IT projects within their existing client base run for approximately 3 years resulting in annuity income. The business has just signed a joint-venture agreement with a Managed Services service provider where they will work together on all opportunities from a major Consultancy Company on a 50:50 split. The business expects this joint venture to result in substantial new business opportunities.

What competition exists?
There is strong competition competition in this industry, they compete against hundreds of IT consulting agencies and suppliers. The way the business differentiates itself against the competition is by keeping resources accessible and presenting the candidates to clients as promptly as the demand comes through. They also aim to submit the highest caliber of candidates at the best rates possible which increases their success rate in obtaining contracts.

What are the seasonal trends?
This business has opportunities throughout the year but the most of the new placements or extension of placements happen from January through to August as their clients' IT budgets get approved.

How did the Covid-19 pandemic impact the business turnover / daily operations?
The business turnover was not impacted by the Covid-19 pandemic. There was some impact on the daily operations as there were less opportunities/demand for new IT contractors from their clients.

What steps / actions have been taken to combat the effect of Covid-19 pandemic?
The business actively started looking for more clients to ensure that they increase their client base, their revenue and ultimately their profit.

Is the business VAT Registered?
Yes

What VAT documentation is on file?
All Vat documentation is on file with the Seller and will be made available to serious investors during the due-diligence phase.

Are there up-to-date Management Accounts available?
Yes, up-to-date management accounts are available on Sage One on-line portal. The Seller has outsourced the day to day accounting and reporting to an independent accountant.

What Balance Sheet and Income Statements are available?
Signed Annual Financial Statements for the years ended 28 February 2019 - 2021 are available on file.

What percentage of the business is cash/credit?
The business operates on 30 days credit from date of invoice. They usually receive payment from their clients within 1 month of raising the invoice. The company has never had any bad debts.

What is the age analysis of the debtors book?
The debtors aging as at 31 August 2021 was as follows: - Current 60.7% - 30 days 39.3%

How could the profitability of the business be improved?
The following sectors/industries have huge demand for skilled IT sub-contractors: Telecom, Healthcare, Banking and Financial Services The business is looking for a BEE partner to assist them to expand into these industries as they spend a major share of their capex budgets on IT projects/software implementations.

Is Seller finance available and for what amount?
No.

What is the total staff complement?
Currently the company has 11 sub-contractor consultants on on fixed term contracts on their payroll, and another 3 sub-contractors in a joint venture with another agency where they split the profit on a 50/50 basis for the duration of the contract with the end-customer.

Give a breakdown of staff/ functions/ length of service?
The 11 sub-contractor consultants on the payroll: - 2 consultants over 2 years; - 4 consultants over 1 year; - 3 consultants over 6 months; and - 2 consultants that has only been with the company for 1 month. The 3 sub-contractor consultants in joint venture with another agency has been with them for almost 1 year as at 31 October 2021.

Are they on contract?
Yes, all of there sub-contractor consultants are on contracts.

How involved is the Owner in running the business?
The owner is fully involved in the day today management and operations of the business including client engagements, recruiting, administration and finance. On average he spends about 4 - 5 hours per day on running the business.

Any special arrangements for the staff related to the Covid-19 pandemic?
There were no special arrangements as they are all sub-contractors.

When does the current lease end?
There is no lease in place as the owner runs the business from home.

What are the trading hours?
The trading hours are from Monday - Friday 08H00 - 16H30.

What are the main assets of the business?
The main assets of the business is its employees/sub-contractors.

Strengths?
- Small but loyal customer base. - Good IT resource placement contracts with their existing customers. - Strong IT resource pool. - The company's ability to source and place high caliber IT resources at competitive rates. . Sustainability and retention of their sub-contractors who are currently serving their customers. - Low overheads

Weaknesses?
Not being able to partner with new clients due to their restricted BBBEE recognition level.

Opportunities?
The lack of BBBEE partner is impacting on the business' growth. The right BBBEE partner will ensure more business from their clients specially in the financial services industry. A level 2 BBBEE status will secure 5 year service agreement with one of the major banks. The recent joint-venture agreement entered into with a Managed Services service provider should result in substantial new business going forward.

Threats?
If the company does not improve their BBBEE recognition level from level 4 to level 2 by a certain target date they stand the risk of loosing one of their biggest blue-chip customers.

What is the reason for the sale?
The business expects to achieve substantial growth from within its existing blue-chip customer base with the appropriate BBBEE ownership structure and recognition level and therefore the Seller wants to sell 51% shareholding in the company to a BBBEE investor that can add value and assist to grow the company and its customer base.

Why is this a good business?
This business has grown from a start-up of a highly profitable business with a good reputation and blue-chip clients within a 4 year period. The key features making this a good business and contributing to its success are as follows: 1) The business is a IT resource service provider in an economy that has huge demand for IT contractors in the banking, financial services, telecom, healthcare and insurance sectors. All these sectors/industries are highly dependent on IT contractors for the delivery of their IT projects. 2) The company has a pre-tax margin of 23.77% 3) Sub-contractors are placed once-off, resulting in revenue and profits for medium to long-term periods. 4) The management and administration of the consultants does not require a lot of time and effort. In conclusion: An opportunity like this does not come along very often.

What is the price plus stock and the profit?
The existing shareholder is looking to sell a 51% shareholding in the business to the right BBBEE investor for R2 500 000.00

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AGENCY DETAILS

Aldes Exceed

1 members
8 mandates
Gauteng , Sandton
53 Park Drive, Mulbarton Ext.3, Johannesburg, 2059
Sandton

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