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GoMechanic Business acquired by a consortium led by Lifelong Group

According to sources, there is no clarity on what happens to the founders

GoMechanic

The Gurugram-based company also dealt with insolvency pleas, vendor mistrust, customer dissatisfaction over unserved requests, and employee grudges over unpaid salaries

Shivani Shinde Mumbai

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Sequoia- and Tiger Global-backed car servicing start-up GoMechanic has been acquired by a consortium, led by Lifelong Group as the majority shareholder under its Servizzy entity in a slump sale. This comes two months after GoMechanic founders admitted to financial irregularities and investors began an insolvency process.

The financial details of the acquisition are still fuzzy. But sources in the know said this deal will provide some respite to debt venture firm Stride Ventures which has over Rs 100 crore invested in the start-up.

The company was valued at $285 million at the time of its Series C fundraise in June 2021, which dramatically eroded down to just about $30 million in March 2023 after its founder admitted to financial misappropriation.

According to sources, there is no clarity on what happens to the founders.

“One thing is clear: the founders will not make any economic gain from the sale,” said a source in the know.

An email sent to the founders of GoMechanic, Lifelong Group did not elicit any response until the time of going to press. Attempts made to connect with investors were not successful either. 

The official spokesperson for Lifelong Group said, “The acquisition of the GoMechanic business aligns with our strategic vision of synergising Lifelong Group’s proven expertise in the automotive (auto) industry. We are focused on building upon GoMechanic’s business journey, and will continue revolutionising the Indian auto service and repair industry.”

Lifelong Group is a private company incorporated in 1985. The group diversified into auto component manufacturing in 1995, medical devices in 2005, and e-commerce in 2015. The business has grown from an annual revenue of $500,000 in 1995 to over $175 million today and caters to major customers in the auto industry like Hero Moto Corp, General Motors, ArvinMeritor, Stanley Black & Decker, etc, said the company in a statement.

“The Servizzy consortium, to be led by Lifelong Group, emerged as the strongest bid in this process for the acquisition of the GoMechanic business in accordance with the terms and conditions contained in the agreement,” said a statement from Lifelong Group. 

Due to recent financial difficulties at GoMechanic, the board and shareholders, with support from Stride Ventures, initiated a speedy and widely publicised sale process to ensure the continuity of business, said a statement from the company.

“This transaction will assist in preserving the ecosystem at large and also enable providing continued livelihood to the employees at GoMechanic.”

GoMechanic in a business update in February this year stated that over 800 workshops were still active in its network. It also added 3,000 members to its Miles programme, which currently has 60,000 members.
It was still not clear if the investors of GoMechanic were going to take any action against the founders of the company.

In January this year, co-founder Amit Bhasin in a LinkedIn post accepted the fraud.

“Our passion to survive the intrinsic challenges of this sector, and manage capital, took the better of us and we made errors in judgement as we followed growth at all costs, including financial reporting, which we deeply regret,” said Bhasin in his post.

After this, Sequoia Capital, along with other investors, ordered a forensic audit of the firm’s business by EY. However, so far the details of the audits have not been shared.

The Gurugram-based company also dealt with insolvency pleas, vendor mistrust, customer dissatisfaction over unserved requests, and employee grudges over unpaid salaries.

This is the second Sequoia Capital-backed company which has been acquired after a fraud. Singapore-based Zilingo, too, sold some of its assets to potential buyers.
THE MECHANICS OF IT
  • GoMechanic valuation came down to $30 million in March this year, from a high of $300 million
  • Stride Ventures will receive a chunk of its cleared debt
  • Debt is above Rs 100 crore
  • Close to 400-500 employees are part of the slump sale

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First Published: Mar 29 2023 | 12:47 PM IST

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