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MANDATE REPORT
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1. History Background
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Fully describe the business's activities
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Computer store supplying the normal IT services selling software, hardware from all the major brands. The business offers LAN and WAN support and does call outs as requested by clients. They are also an accredited iBurst dealer (3% of business). In addition the business also offers Internet Café services (5% of business) and various functions such as Copying, Faxing and Colour printing.
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How long has the business been established?
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8 Years.
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How long has the owner had the business?
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The current owner started the business.
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What steps are in place to solve "load shedding" problems
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None
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2. Present Market
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How does the business operate on a daily basis
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The business is manager run and with the owner in another part of the country he can only get to it irregularly.
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How are the clients attracted to the business
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Mainly word of mouth.
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What Advertising/Marketing is carried out
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Social media – Word of mouth marketing as part of the centre marketing. Pamphlet distribution.
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Does the business have any contract work
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No, the owner is too far away to effectively manage this, to compensate they do offer businesses preferred rates to make use of their services in lieu of contracts.
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What competition exists
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None in the shopping centre, closet competition is 5km away.
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What are the seasonal trends
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December is the quietest month as this is an upmarket area and the schools and university are closed and the people are away on holiday.
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3. Financial
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Is the business VAT Registered
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Yes, however this is part of the larger legal entity and the buyer will have to arrange their own Vat no, please be aware if the buyer is not Vat registered or does not intend to register for Vat, that there will then be Vat payable on the purchase price.
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What VAT documentation is on file?
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The business is in a CC with other businesses and the books are done for the CC as a whole, HOWEVER, the shop itself has full purchase control and sales records which will be excellent for a due diligence.
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Are there up to date management accounts?
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Yes
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What audited financials are available, income statement and or balance sheets?
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Part of a bigger company, Financials for the shop, howver management accounts are available.
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What percentage of the business is cash/credit?
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40% on Credit Card, 55% is Cash and the remaining 5% is EFT
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What is the age analysis of the debtor’s book?
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Only a couple of small clients around 5% of the business and these normally pay on 14 days.
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How could the profitability of the business be improved?
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Increased sales with a owner in full attendance and involvement driving the process.
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Is Seller finance available and for what amount?
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No
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4. Staffing
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What is the total staff complement?
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2 staff members.
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Staff Breakdown and length of service
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1 x Sales and Marketing (2 Years)
1 x Technical support (11 Months)
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Do any receive special perks, bonuses or incentives?
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Commission on turnover over set amounts
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Are they on contract?
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Yes the staff members have proper employment contracts
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Do any have management potential?
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Supervising skills mainly
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How involved is the Owner in running the business
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The owner is not involved in the business and due to the distance can only look in once a month, this is also the reason why he is selling
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5. Premises
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When does the current lease end?
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August 2014
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Is there an option of renewal & what period
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Yes, 3 years
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What is the annual escalation %?
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10%
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What are the trading hours?
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Mon-Fri 9am-6pm, Sat 9am-5pm, Sun 9am-1pm
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What is the square meterage of the business?
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±60m²
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Is a copy of the lease available?
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Only heads of agreement, seller never received his copy of the lease, but can always be checked with the landlord.
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Do you require a licence?
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Entertainment license due to the Internet Café as the clients can view videos and movies off the internet
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6. Assets
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Is a full asset list on file?
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Yes
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Are any items not included in the sale?
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No
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What is their overall condition?
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Good condition, the internet stations have been recently upgraded and a new inkjet colour printer added.
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Do any require repairing?
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There is a colour laser that requires servicing but the seller is not doing anything with it.
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How have they been valued?
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Fair value/ Book
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Which assets are on lease/HP and with whom?
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N / A
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What are their settlement amounts?
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N / A
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Will Seller settle or Buyer to take over?
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N / A
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Are copies of agreements available?
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N / A
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Are they presently insured?
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Yes
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7. S.W.O.T. Analysis
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Strengths
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The store is in an upmarket popular shopping centre located close to the anchor tenant of choice for the centre. There is good technical support in the business. The staff are friendly and outgoing. The business always has proper stock on hand as clients otherwise shop elsewhere.
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Weaknesses
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Lack of owner involvement.
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Opportunities
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The business has huge potential to increase its turnover and profitability through proper marketing driven by owner involvement, canvassing of the area around the business for contract work doing maintenance and support and call outs.
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Threats
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Online stores, however most people still want to deal with a individual.
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8. Reason For Sale
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What is the reason for the sale?
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The seller is in another part of the country and can’t give the business the attention it requires.
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9. Conclusion
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Why is this a good business to buy?
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This is a very well established business in a busy shopping centre, next to the anchor tenant of choice, in a upmarket area with loads of potential to increase the turnover and profitability of the store.
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