About two months after co-founders of Sequoia-backed GoMechanic acknowledged to investors that they had fabricated financial data, a consortium led by auto component manufacturer Lifetime Group said on Wednesday that it had acquired the troubled auto spare parts and automobile workshop platform.
The deal’s financial specifics weren’t made public.
According to a statement by Lifetime Group, this will usher in a new era for the GoMechanic company by making it the main shareholder under Gurugram-based car care startup Servizzy.
According to Lifelong, which serves key players such as Hero Moto Corp., General Motors, Arvin Meritor, and Stanley Black & Decker, the purchase of GoMechanic Business is in line with the group’s strategic aim of leveraging its established knowledge in the automotive industry.
In response to recent financial issues at the Gurgaon-based business, the transaction was started by the GoMechanic board and shareholders with assistance from venture debt investor Stride Ventures. Using the fundamental value proposition put forth by GoMechanic as a benchmark, the Servizzy consortium, managed by the Lifetime Group, emerged as the sales top bidder.
In a news release, LifeLong said that the acquisition will make it possible to preserve the ecosystem as a whole and to ensure the livelihood of GoMechanic’s staff.
Sequoia-backed GoMechanic, a company that was founded in 2016, connects automobile owners with nearby repair shops to offer a variety of services, such as routine maintenance, repairs, and car washing. Before cutting close to 70% of its workforce, it had 1,100–1,200 workers.
After reviewing the financial records of the five-year-old company in preparation for a potential investment, Japanese marquee investor SoftBank discovered anomalies in its growth and revenue data. SoftBank and Khazanah Nasional were interested in investing further money in the firm, which was valued at over $800 million.
In January, the creators of Sequoia-backed GoMechanic acknowledged fabricating numbers. After this, GoMechanic’s investors asked EY to conduct a forensic audit of its financial records in order to look into allegations of fraud and financial misreporting. “We are gravely troubled by the founders’ deliberate misstatements of the truth, including but not limited to the inflating of revenue, which the founders have admitted to. The majority of the company’s investors stated in a joint statement that all of this was concealed from investors.
Estimates by VCCedge, the data intelligence platform of VCCircle, show that GoMechanic’s most recent valuation was $285 million after it raised $42 million. Sequoia Capital, Tiger Global Management, Orios Venture Partners, Brand Capital, Chiratae Ventures, and Elina Investments are among the investors in the company.
At 26.89%, Sequoia Capital held the largest interest. Orios Venture Partners came in second with 17.1%, Tiger Global was third with 10.03%, and other investors held a combined 11.2%. The startup’s investment by Orios has already been written off.
GoMechanic maintained over 800 workshops and repaired 30,000 automobiles in January while acknowledging the financial problems.
