Car repair startup GoMechanic has been acquired by Servizzy, a consortium led by the Lifelong Group, following financial troubles caused by reporting errors. This comes two months after founder Amit Bhasin admitted the mistakes and announced that the cash-strapped company will lay off roughly 70% of its workforce while also having its accounts audited by a third party.
"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," the Lifelong Group said in a statement.
"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 the terms and conditions contained in the agreement," the company added.
Lifelong Group is an Indian manufacturer of automotive components, medical devices and a player in the e-commerce space, and was established in 1985.
When Bhasin confessed to his mistakes in a LinkedIn post in January, one of Moneycontrol's sources in the know had informed, “GoMechanic had reported over-inflated numbers and fictitious garages. Some of its favoured partner garages were found to be making disproportionately more money during due diligence."
These details came out in a due diligence report by EY prior to Series D funding deal of about $75-80 million, which was to be led by SoftBank’s Vision Fund and Malaysian sovereign fund Khazanah Nasional.
After the startup's wrong-doings came into light, GoMechanic was eagerly hunting for a potential buyer. It had tapped several peers including car-selling marketplaces Cars24 and Spinny among others for a distress sale.