This business has been in operation since 1993 and is one of the longest-established wholesalers of specialized auto electrical parts. They operate from rented premises in Johannesburg with branches in four other major cities. Properties in Durban and Pretoria are owned and can be purchased in a separate transaction or rented from the owners.
They have over 3500 active clients, supplying a wide range of auto electricians, spare shops, general workshops, and transporters. In addition, they supply some of the country's biggest franchised auto spare retailers. They carry a trademarked product that is exclusively distributed through another franchised battery, exhaust, and tire retailer. They also have several trade-registered brand names, which gives them sole distributorship on these products for Sub-Saharan Africa.
The business carries an extensive stock-holding, valued in the region of R40M, to ensure they are always in a position to supply all client requirements.
They have a strong management team that is heavily incentivized to produce sales. Excellent management and control IT systems, developed internally and owned by the business, ensure tight stock control, rotation, and virtually zero stock losses.
The business has massive growth potential. The budgeted growth for 2024 is more than 30% and growth in 2023 over 2022 was 30%. The main reason for growth is threefold:
1. They relocated from previously cramped premises which hindered the locating and movement of stock to a modern warehouse with improved IT support.
2. They upgraded their internally developed IT system which assisted in being able to easily distinguish between slow and fast-moving stock thus improving their planning and parts availability for clients.
3. Their client base has evolved from auto-electricians to general workshops thus substantially increasing their potential customer base, something they are still growing.
In addition, they plan to diversify their product offering to include general spares which will be sold to their existing client base. The business projects a doubling of turnover and a tripling of profits over the next 5 years.
The owner of the business is active in the business and they have a succession plan for him in place. His brother owns the supplier relationships and does purchasing, and will have to be replaced. The owner is only interested in a complete buyout but willing to remain on for an agreed handover period with his brother not exceeding two years.
The business asking price is 4.5 multiple of net verifiable average EBIDTA in 2023/2024 of R24.5m. Full financial information will only be provided once an interested party has been fully qualified for suitability and funding availability. The transaction can be zero-rated for tax purposes provided the purchaser is registered for VAT. The stock of approximately R 40m is excluded from the purchase price and the final value will be determined during a stock take.
