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Leading suppliers of branded sports fitness equipment and other sports goods, with 70% of its business being sold through online channels.
This is an incredible opportunity to buy a well established ( 20+ year old ), leading supplier of branded sports Equipment and other sports goods business, with 70% of its business being online. It is extremely profitable, operating in a niche market. It owns a number of very valuable Brands, which for purposes of the valuation, have simply been included at no value.
Sales and Profits have increased steadily over the last number of years, and the foundation has been laid, for this trend to continue onwards, as is evident from the figures to 31 August 2020 as compared to the prior comparative period, as well as per the projections for the next two years. Hence the Selling price had to be calculated on the average of the previous two years’ net profits, plus the next two years projected profits, (with the first year projection being almost guaranteed). Turnovers are in the vicinity of R60 million per annum, and historical Net Profit before tax averaging R5 to R6 million a year. Stock is estimated at R18-22 million, but will be counted and valued on the effective date.
From a cash flow perspective, the purchaser needs to be aware, that in round figures, he will require to pay R14,6 million, being the down payment for the business, plus stock estimated at R18-22 million. The Purchaser will also have to cater for the ongoing cash flow requirements of the business, because the Seller will be collecting the debtors for his account, and paying the creditors, net amount estimated at R 15 million. One year down the line there will be a further payment for the business, of say R2 million, and a further one year later, say another R2 million, but obviously these two payments will be funded from the profits of the business.
It is the wish of the present owners to sell their loan accounts, and for the deal to be structured in that manner. This is an obvious advantage to the Purchaser, and the net value has not been taken into account in valuing the business. Continuity of operations is essential for the projections to be met and more, and for the business to thrive, and the driving force, being the present manager of the business, would be delighted to stay on and carry on running it.
Price: R18.6 million, payable R14.6 million upfront, and a further R4 million on an earn out basis over two years. Plus Stock of approximately R18-22 million. Debtors less Creditors (Estimated Net R15 million) will be collected by the Sellers for their account.
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