CarTrade in talks to buy GoMechanic: Report
GoMechanic has been looking for a potential buyer since reports on financial fraud at the company became public in January, according to the report by The Morning Context.
Months after car servicing startup admitted to misleading investors and failing financial compliance, the company seems to have found a buyer in , according to a report.
The Morning Context has reported that CarTrade has valued GoMechanic at $30 million, a steep haircut from its previous valuation of $283 million that the company had reported as part of its funding round in June, 2021. Tiger Global is an investor in both GoMechanic and CarTrade.
The report said that GoMechanic had been shopping for buyers over the past few weeks and has been in talks with multiple companies, including Cars24 and Spinny, for a potential buyout.
With the acquisition of GoMechanic, pre-owned car sales platform CarTrade will be able to strengthen its after-sales service offering and offer warranty on parts.
The fraud at Gurugram-headquartered GoMechanic came to light in January this year after vendors to the startup complained about non-payment of dues. SoftBank’s Vision Fund, which was in talks to invest in GoMechanic, found inconsistencies in the numbers reported by the startup as part of its due diligence, which it reported to the company’s existing investors.
Following this, Sequoia, which is a part of GoMechanic’s cap table, launched a forensic audit. An EY report on GoMechanic found that nearly 60 of 1000+ GoMechanic service centres violated accounting norms and overstated revenues.
Following the chain of events, GoMechanic let go of nearly 70% of its staff and was taken to court for bankruptcy by one of the vendors.
Edited by Swetha Kannan