The Lifelong Group-led group Servizzy has acquired the car-service startup GoMechanic. Amit Bhasin, the co-founder of GoMechanic, acknowledged errors in financial reporting months prior, leading to the company’s 70% workforce layoff and much uproar in the startup community.
“Due to the recent financial difficulties at GoMechanic, the board, and shareholders with support from Stride Ventures initiated a speedy and widely publicized sale process to ensure the continuity of business,” said a press release from the Lifelong Group.
“The Servizzy consortium, to be led by the Lifelong Group, emerged as the strongest bid in this process for the acquisition of the GoMechanic Business in accordance with terms and conditions contained in the agreement,” it added.
The 1985-formed Lifelong Group changed its focus to producing auto components in 1995. The business also operates in the e-commerce and medical device sectors. It asserts that from $0.5 million in 1995 to $175 million today, its annual revenue has increased. Hero Moto Corp., General Motors, and Arvin Meritor are a few of its top clients.
The Lifelong Group expressed confidence that the agreement will contribute to the preservation of the ecosystem as a whole and provide a fresh start for GoMechanic, which in January continued to run 800 workshops and service 30,000 vehicles despite difficulties.
In spite of this, GoMechanic has a new lease on life after making headlines in January for all the wrong reasons. As previously stated, Bhasin acknowledged errors in financial reporting that reportedly came to light during EY’s due diligence. To raise new funding, GoMechanic was in discussions with SoftBank. A third party will now audit the company’s operations, the co-founder had previously stated.
GoMechanic was founded in 2016 with funding from a number of well-known investors, including Sequoia Capital and Tiger Global. The business raised $42 million in a funding round led by Tiger Global in June 2021.
When compared to the prior fiscal year, GoMechanic’s revenue increased by 2.7x in FY22, coming close to Rs 100 crore. In the most recent fiscal year, its operating income more than doubled to Rs 91 crore from Rs 34 crore in FY21. GoMechanic’s losses jumped 4X and reached Rs 114 crore in FY22, outpacing its scale growth. Fintrackr reports that advertising and promotion expenses for the company increased 3.8X to Rs 65 crore.