Business Overview

1. History Background

Fully describe the business's activities

The accounting practice provides monthly and annual accounting services, tax compliance services, and secretarial services. They handle tasks such as bookkeeping, financial statement preparation, tax return filing, and company secretarial duties. With a focus on accuracy, compliance, and client satisfaction, the practice supports businesses and individuals in their financial management and regulatory compliance needs.

How long has the business been established?

The business was established in 2015.

How long has the owner had the business?

The seller started it.

2. Present Market

How does the business operate daily?

The business operates remotely with the owner, who has emigrated, overseeing daily operations. The staff members work from both the office and their homes, utilizing cloud-based solutions for collaboration and accessing necessary accounting tools. This setup allows for flexibility, efficient communication, and seamless workflow management within the practice..

How are the clients attracted to the business?

The clients are primarily attracted to the business through referrals, both from satisfied clients who recommend the services to others and from licensees within the network who refer potential clients. This word-of-mouth marketing is a key driver for client acquisition..

What Advertising/Marketing is carried out?

The accounting practice conducts its advertising and marketing efforts through the network licensor. They utilize national marketing campaigns, leveraging the resources and strategies provided by the licensor to promote the practice's services and attract clients, ensuring consistent branding and messaging.

Does the business have any contract work?

No contract work but they have many long-standing loyal clients who value the good and efficient service they offer.

What competition exists?

The level of competition may vary, but it is a typical aspect of operating in the industry..

What are the seasonal trends?

The peak months for the accounting practice's business activity are from February to November each year

3. Financial

Is the business VAT Registered

Yes

Are there up-to-date management accounts?

Yes, management accounts are available upon request.  .

What annual financials are available, income statements and or balance sheets?

Yes, available upon request, as part of the Due Diligence.

What percentage of the business is cash/credit?

The business operates entirely on credit, with no percentage of cash transactions. Most of the monthly clients pay on the invoice date, following the credit terms agreed upon. 

What is the age analysis of the debtor’s book?

The average age of the debtor's book is approximately 45 days. The business has very few slow payers, suggesting a generally healthy payment behaviour among clients..

How could the profitability of the business be improved?

The profitability of the business could be improved by moving to smaller premises, which would reduce overhead costs. Additionally, implementing cost-effective measures, optimizing operational efficiencies, and exploring opportunities for expanding service offerings could contribute to increased profitability.

Is Seller finance available and for what amount?

Yes, a structured deal will be considered on the following basis:-

1. Finding an approved Buyer.
2. The seller will expect an upfront cash payment, of 50% of the purchase price, on the Effective Date.
3. The Seller will warrant turnover for 12 months, subject to acceptable terms and conditions being established for the owner’s continued involvement in the business.
4. The balance is payable in monthly payments over 24 months.
5. The terms and conditions regarding the warranty and ongoing involvement will be clearly defined, as well as how the price will be adjusted, either upwards or downwards at the end of the warranty period.
6.  The seller will continue to bring new clients to the business and will be rewarded accordingly.

4. Staffing

What is the total staff complement?

The normal team complement is 9, including the seller.

Staff Breakdown

A breakdown of the staff functions and length of service will be provided as part of the due diligence process. However, it is mentioned that the staff members are skilled and experienced, with most of them having been employed by the firm for several years. This indicates a stable and knowledgeable team supporting the operations of the accounting practice..

Do any receive special perks, bonuses or incentives?

Yes, the staff of the accounting practice receives discretionary bonuses in their birthday month. The bonuses vary from 75% to 100% of their gross salary and are based on their work performance over the preceding year. These bonuses serve as incentives and perks to recognize and reward the staff for their contributions and achievements.he staff members enjoy travel reimbursements for business expenses and receive an annual bonus.

Are they on contract?

Standard employment contracts apply,

Do any have management potential?

Yes, some staff members within the accounting practice have management potential. Further information regarding specific individuals and their management potential will be provided during the due diligence stage.

How involved  is the Owner in running the business

The owner of the accounting practice is actively involved in running the business on a day-to-day basis. Despite having emigrated, the owner continues to oversee the operations remotely, ensuring the smooth functioning of the practice. They provide guidance, make strategic decisions, and maintain involvement in key aspects of the business to ensure its continued success.

5. Premises

When does the current lease end?

The current lease for the accounting practice ends on July 31, 2023. Moving to smaller premises presents a great opportunity to enhance profitability by reducing overhead expenses and maximizing operational efficiency.

Is there an option for renewal & what period

No.

What is the annual escalation %?

N/A

What are the trading hours?

The trading hours for the accounting practice are from 08:00 AM to 04:30 PM, from Monday to Friday.

What is the square meterage of the business?

The current square meterage of the business is 164 square meters. However, this space is excessive as staff members work both from the office and from home. The maximum requirement for the business is approximately 50 square meters.

Is a copy of the lease available?

Yes

Do you require a licence?

Yes, the business owner holds specific licenses and registrations. They are registered with the South African Institute of Professional Accountants (SAIPA) and are also SARS Tax Practitioners.ppropriate accounting bodies. SAICA and IRBA registration is required, and a Tax practitioner registration is also required.

6. Assets

Is a full asset list on file?

Yes, Available on request, but a sale of clients.

Are any items not included in the sale?

All assets relating to servicing the clients are included.

What is their overall condition?

Good

Do any require repairing?

No

How have they been valued?

Replacement Value

Which assets are on lease/HP and with whom?

None

What are their settlement amounts?

N/A

Will the Seller settle or Buyer take over?

N/A

Are copies of agreements available?

N/A

Are they presently insured?

Yes Insured

7. S.W.O.T. Analysis

Strengths

The strengths of the business can be summarized as follows:

•  Mature practice with a solid foundation and established client base
• Varied client base providing recurring monthly fees
• Loyal and efficient staff who provide quality service
• Low overhead costs contribute to good profitability
• Effective use of cloud solutions and strong systems in place

Weaknesses

• The weaknesses of the business can be identified as the reliance on a single partner for decision-making and management

Opportunities

The opportunities for the business can be summarized as follows:

• Potential to add auditing services to the existing service offering
• Expansion into new geographical markets or target industries
• Embracing technology advancements for improved efficiency and client service
• Developing strategic partnerships or alliances with complementary service providers
• Leveraging the network of licensees for business growth opportunitiesbility to expand the firm

Threats

The challenge of managing and overseeing the business remotely is due to the owner's location in another country.one Perceived

8. Reason For Sale

What is the reason for the sale?

The reason for the sale of the accounting practice is that the owner has emigrated..

9. Conclusion

Why is this a good business to buy?

This accounting practice is a valuable acquisition due to its established presence, diverse client base, recurring revenue streams, loyal and efficient staff, low overhead costs, and the potential to expand services and improve profitability. It also benefits from the effective use of cloud solutions and strong systems..