Introducing linK by hjkuiw354

VIEWS: 144 PAGES: 32

									Businessbroker
The Authority on buying and selling businesses
volume 1 no.1
Aus $5.95 nZ $6.95 inc GsT




Introducing                           how do
                                  you vAlue A
linK                                business?



                                    buyinG A
                                business And
AusTrAliAn                        GrowinG iT
privATe                         And what to consider
compAnies                           before buying a
show                                      business?
resilience
ThrouGh The
sTorm




                                                       TM
Your One-Stop
Finance Shop
Commercial Loans

Business Loans

Residential Loans

Personal Loans

Leasing and
Equipment Finance


SCR Finance specialises in developing creative finance solutions for businesses and home
owners that are tailored to meet each client’s specific requirements. They actively source
the best deal available and submit an attractive financial package for approval.
Managing director, Tony Taylor, has more than twenty one years banking experience and
over six years managing his own finance broker business on the Gold Coast. With a passion
for creating winning financial strategies, Tony should be at the top of your list when you
need finance. No challenge is too great!

Call Tony now for a competitive,
no obligation quotation.

P.   1300 665 074
F.   07 5575 9514
E.   tony@scrfinance.com.au
W.   www.scrfinance.com.au
                                                                                                                           ediToriAl




The TeAm
editor/designer: Liann Rasera/
Shannon Fleming
                                                                     Thank God Your
writers: David Fitzgerald, Aaron
Toresen, Tim Craft, Peter Rowe, Guy
Cooper, Catherine O’Keeffe, Barry
Morwood, Peter Jackson, Shannon
                                                                     Here!
Fleming, Rebecca Brookes, David van
Herwaarde, Liann Rasera, Michael
Webb, William Shillingford, Tony
Taylor, Andre Vosloo, Mark Mansour            Like the hit television show of the same name these were the exact words used by a
                                              renowned business mentor Peter Rowe when I told him of our plans to take business
cover: www.skyepics.com.au
       1300 737 767                           broking to a whole new level never experienced before by buyers and sellers of
                                              businesses in Australia.
Business Broker magazine is published
by Business Sales Corporation Pty Ltd         Welcome to the first edition of “Business Broker”. Our magazine is designed to be
trading as linK                               informative, interesting and educational with up-to-date articles on issues of interest to
AdverTisinG
                                              business owners, people looking to own a business and the professionals that service
if you wish to advertise in                   and advise people in business. The articles we publish are not written by journalists as
our magazine please call:                     we source information from leading professionals and successful business people that
Liann Rasera (07) 5572 2122 or                we believe will benefit our readers.
email: liannr@linkbusiness.com.au
                                              We at Link are business brokers with more than 50 years combined experience in
conTAcT deTAils                               advising and selling businesses. As the magazine grows we expect to be showcasing
business sAles corporATion pTy                more quality businesses for sale while providing real life information and education for
lTd t/as linK
                                              people in business especially if they are looking to buy or sell a business. Too often I see
The Atrium,                                   people that have owned and managed good businesses for more than 20 years yet when
Level 2, 15 Lake Street
Varsity Lakes, Qld 4227
                                              the time comes to retire or sell their business they have no idea what to do, leaving it
Australia                                     to the last minute with little time to prepare their business for sale. They all say “If only I
                                              knew….”
P O Box 5141                                  In our first issue we have some very informative articles that cover a range of topics
GCMC Bundall
                                              including how to buy a business, preparing a business for sale, getting finance to buy a
Queensland 9726
Australia                                     business, changes in franchising as well as the accounting and legal issues that need to
                                              be addressed when buying or selling a business. We have some great interviews with
Ph: +61 (07) 5572 2122
                                              successful business people along with real life stories from business mentors and an
Fax: +61 (07) 5572 2322
                                              article on corporate office design today.
goldcoast@linkbusiness.com.au
www.linkbusiness.com.au                       As the seasons and economic climates change so will we at Link. We have sold over
                                              a thousand businesses and work with Accountants, Solicitors, Finance Brokers and
link@linkbusiness.co.nz                       business professionals on a daily basis. This exposure to an enormous variety of
www.linkbusiness.co.nz
                                              businesses and professionals in South East Queensland allows us to experience exactly
disclAimer                                    what is happening in the market place. While never undermining client confidentiality
The contents of Business Broker               we are more than willing to share our knowledge and experience with people either in
are copyright of Business Sales               person or through this magazine “Business Broker”.
Corporation Pty Ltd t/as LINK. Any
reproduction without prior permission         Over time I am sure that all people looking to buy or sell businesses will benefit from this
is strictly prohibited. Although              publication and our knowledge and experience as it is our goal to lead the industry in
information in Business Broker has
been derived from sources believed to
                                              education, information, quality service and results. I welcome your feedback and please
be reliable and accurate, no liability        by all means let me know davidf@linkbusiness.com.au if there are any topics that you
is accepted for any opinions expressed        would like us to cover in future issues.
or for any error or omissions.
This includes material which may
                                              Sincerely,
be inserted into the publication.




                                              dAvid FiTZGerAld
                                         TM
                                              MANAGING DIRECTOR


www.linkbusiness.com.au                                                                                                 business broker 03
     10                      Tips For Selling Your Business
                              By Peter Jackson, a highly successful Business Broker with over 15 years experience



           1.   Ensure all of your financials are up-to-date. Usual         6. Prepare a list of everything that you would have to
                requirement is the last 3 years Profit & Loss and              show or teach a new owner.
                Balance Sheet as prepared by your Accountants for
                taxation purposes.
                                                                            7. Contact an experienced Business Broker to get
                                                                               advice on what you should do and could do to
           2.   Tidy up like you are about to move house. Get rid              maximise the price that you get for your business.
                of any old stock, paperwork, bad debts and bad              8. See your Accountant and get their advice on
                payers, problem customers, unproductive staff and              taxation and capital gains issues so that you do not
                unutilized assets.                                             have to pay more than you need to.
           3.   Put measures in place so that your business does not        9. Plan what you are going to do once you sell your
                rely solely on you to run the day-to-day operations.           business as this will affect timing, Accountants
                Delegate and train others to do as much as possible.           advice and future requirements.
           4.   Check leases, contracts and any agreements that             10. Don’t get bogged down selling it, leave that up
                you have in place. Ensure that they are up-to-date             to a Business Broker. It is most important that you
                and can be assigned to a new owner.                            concentrate on ensuring the business performs to
           5.   Get your accounts up-to-date both debtors and                  its best ability prior to and during the sale process.
                creditors.




                                                    A Perfect Venue
                                                     For Your Next
                                                      BIG DEAL..

  Our Corporate VIP package includes but is not limited to:
 - Exclusive use for your guests only in the Executive VIP Lounge, caters for up to 350 Guests
 - A professional photographer to take photos of your guests and party with images supplied to you following the event
 - Decorations
 - Savings on beverages
 - Food Platters
 - Promotional artwork to advertise your event to colleagues via email or web                                  LOUNGE BAR & NIGHTCLUB
 - Transport to/from Shooters Lounge Bar & Nightclub
   www.linkbusiness.com.au                                                                                            business broker 23
For bookings & enquiries contact Shooters Lounge Bar & Nightclub 5592 1144 or info@shootersbar.com.au
                                                                                                                     volume 1 no.1




                                          13                                                                                22

    08                                                                16
Contents
06 Acquiring or Disposing of an Existing                              19 Due Diligence
   Business                                                              The essential part of any deal
    AVA Solicitors, Andre Vosloo discusses practical tips to ensure
    your business venture is a flawless transition.                   20 Juggling Family Life & A Career
                                                                         We ask mother of two, Nicole Nguyen how she manages family
08 Varsity Lakes is Fast Becoming the Most                               and a career in business broking.
   Dynamic Business Precinct
    See who has just joined this smart business community.            21 Getting Ready To Sell Your Business
                                                                         Advice To Sellers
10 When Times Are Good
    Peter Rowe of Profitune Business Systems explains that            22 Australian Private Companies Show Resilience
    businesses should now be capturing the bigger slice of the pie.      Through The Storm
                                                                         A brief outline of KPMG’s Private Companies Survey 2009
11 Business Broker
    A rewarding profession.                                           23 How To Buy A Business
                                                                         Business Broker, Guy Cooper talks about how fun, exciting,
12 The Secret To Success                                                 challenging & rewarding it can be to buy a business as long as it’s
    We asked one of the most successful Business Brokers how he          done properly.
    became so successful.
                                                                      24 Franchising & Where Are We Now?
13 Why Use a Finance Broker                                              Michael Webb looks at the importance of the Franchising Code.
    SCR Finance, Tony Taylor explains some of the advantages of
    using a finance broker.                                           25 Franchising Is Not For Everyone
                                                                         The benefits of a Franchise.
14 Corporate Office Design Evolves and
   Changes With Time                                                  26 How Do You Value A Business?
    The latest trends in office design.                                  What everyone wants to know.


16 So What Is Different About LINK?
    Major change in the industry is on the horizon.


18 Buying A Business and Growing It
    Xplode Accounting, Catherine O’Keeffe gives her advice on
                                                                       business opportunities
    things to consider before buying a business.                       28 South East Queensland
www.linkbusiness.com.au                                                                                                 business broker 05
leGAl



Acquiring or Disposing of An Existing
Business
Andre Vosloo discusses practical tips to ensure a flawless transition
                                  The purchase of an existing business usually involves       of profit, sharing of losses and exit strategies.
                                  the investment of a significant sum of money, or the
     AVA Solicitors are a         realisation of an investment, which in both cases can       business Asset purchase vs. share
     boutique law firm and        be a complex exercise. Whilst there are specific issues     purchase
     provide specialist legal     to consider in each business transaction, there are
     advice in business sales     general legal and practical issues common to most           When buying a business, you can either buy the
      and acquisitions and        business transactions in which this guide aims to           business assets from the vendor or, if a company
      asset protection. Our       highlight.                                                  owns the business, you can buy the shares in the
    objective is to achieve a                                                                 company and thereby acquire the business with
    commercial, rather than       As the purchaser, know what you                             the company. If you decide to acquire the shares, it
    purely legal, resolution to   can spend                                                   is imperative to conduct a thorough due diligence
   our clients’ problems. We                                                                  and obtain extensive warranties, guarantees and
   make sure that when you        The starting point for any potential purchaser is to        indemnities from the vendor and the vendor’s related
    purchase your business,       determine a comfortable purchase price. Speaking to         entities as you will also acquire the liabilities of the
     your investment will be      an industry finance professional like a finance broker,     company.
            protected.            specialist accountant or banker can assist you in
                                  determining a realistic price point.                        commercial Terms of the contract
  ASSET PROTECTION                In addition to the purchase price of the business, you      When initially negotiating the deal with the vendor,
                                  should add an allowance for fees and expenses of            the greater the number of specific commercial points
  COMMERCIAL LAW                  roughly 5% of the purchase price. This will normally        and issues that can be discussed and agreed up
                                  cover stamp duty and accountant’s, bank’s and               front, the easier it will be to close the deal. Often,
  ESTATE PLANNING                 solicitor’s fees. These costs are significant and should    important issues which are not considered at the
                                  be considered as part of the overall investment             beginning later emerge as “deal breakers” after
                                  (particularly since they will be included in the cost       you have invested substantial time and money in
                                  base for Capital Gains Tax (“CGT”) purposes).               progressing the deal.

                                  business structures                                         The following issues should be discussed:
     If you have any queries
         please contact:          When entering into a new business venture it is               1.    conditions precedent outline the conditions
           Andre Vosloo           important to choose an appropriate entity and struc-                which need to be fulfilled prior to the agree-
                   or             ture to ensure tax minimisation and asset protection.               ment becoming unconditional, those condi-
      Tegan Hocken of our                                                                             tions and the time when they are to occur
    office on (07) 5630 6562.     The purchasing entity should be determined and                      should be agreed upon. Typical conditions
                                  established before a contract is entered into. If the               precedent include due diligence investiga-
                                  purchasing entity is changed after the contract has                 tions and finance approval.
   This article is a guide only   been entered into, there is the possibility of having
   and is not legal advice. We    to pay double stamp duty. Choosing the correct                2.    due diligence should be conducted prior to
   strongly recommend that        purchasing entity will require input from your                      the Contract becoming unconditional. It is
   you consult your accoun-       accountant and solicitor and for that reason it is                  imperative to conduct legal and financial due
   tant and solicitor to take     advisable to involve your professional advisors early               diligence processes to independently ascer-
   independent accounting         in the process.                                                     tain and verify the legal and financial posi-
   and legal advice regard-                                                                           tion of the business. The cost of having your
   ing the issues addressed in    If you intend to have business partners it is essential             accountant and solicitor inspect the business
   this article.                  to agree the type of commercial arrangement you will                is not wasted if they discover issues that are
                                  enter into (e.g. a joint venture or a partnership) and to           serious enough to cause you not to proceed
                                  document that arrangement including distributions                   with the deal.
06 business broker                                                                                                        www.linkbusiness.com.au
                                                                                                                                                                        linK




                              3.   The deposit amount, when it will be paid and to whom it will         8.   stock included in the purchase price should be reflected in the
                                   be paid should all be determined prior to entering into the               Contract. If the purchase price does not include the stock then
                                   Contract.                                                                 you should agree a maximum value that the purchaser must pay
                                                                                                             for stock at settlement. A stocktake should be conducted on the
                              4.   The business name and intellectual property is an                         evening prior to or the morning of settlement. If the value of
                                   increasingly important asset for any business. When purchasing            the stock is greater than this limit then you should be entitled to
                                   a business it is necessary to take into consideration any patents,        reject items of the stock to reduce the value to the agreed stock
                                   designs, trade names, trade marks or logos registered by the              limit.
                                   business, as well as any web domain name, e-mail address or
                                   registered business name.                                            9.   employee entitlements need to be considered from a legal and
                                                                                                             practical perspective. The Contract will generally require the
                              5.   licenses, permits, certificate and consents may be required               vendor to terminate the employment of all staff from the date
                                   for some businesses. It is necessary to ensure that you are               of settlement. All accrued entitlements should be paid to the
                                   eligible to hold those consents. You may need to attend a                 employees by the vendor prior to settlement. Any long service
                                   registered course or hold some specific qualification to be able          leave entitlement should also be considered when negotiating
                                   to conduct the business.                                                  the contract and consideration given to whether long service
                                                                                                             leave should be adjusted at settlement.
                              6.   The business premises lease must be transferred to the
                                   purchaser if the vendor is not selling the freehold title to the     10. Training must be agreed upon at the time of negotiating the
                                   business premises with the business. The purchaser must                  Contract. The Purchaser may require the vendor to provide the
                                   consider the remaining period of the lease term, renewal                 purchaser with training prior to or after settlement.
                                   options and rental escalations, all of which could have an impact
                                   on the future profitability of the business.                         11. vendor’s restraint prohibits the vendor from competing
                                                                                                            with the business being purchased. If you have agreed that
PHOTO shuTTersTocK imAGes




                              7.   existing contracts may be required to conduct the business               the vendor will not compete with the business then you must
                                   and you should ensure that these agreements are transferable.            specify the period of time and area within which the vendor
                                   It may be necessary to obtain some form of consent to transfer           (you may specify individuals if appropriate) will not be allowed
                                   the contracts or enter into new contracts. These contracts may           to compete with the business.
                                   include service agreements, rental agreements, hire purchase
                                   agreements and license agreements.


                            www.linkbusiness.com.au                                                                                                       business broker 07
linK




              LINK’S Gold Coast office joins

                         V  arsity Lakes is considered the geographic heart
                            of the Gold Coast. It is fast becoming the region’s
                         most dynamic business community and the Coast’s
                         largest office precinct.

                         The area of Varsity Lakes is known as Varsity Central
                         Business Precinct and is home to a number of
                         communication and information technology firms
                         and has a growing base of law, finance, accounting,
                         education, professional services, general business
                         services, retail and entertainment. The area has already
                         attracted such companies as Minter Ellison Lawyers,
                         Delfin, McDonald Balanda & Associates, IBM, AAPT, Bank
                         of Queensland, Gold Coast City Council as well as Bond
                         University. And now LINK is enjoying this most desirable
                         address.




                         W     ho is LINK?

                                LINK is the authority on buying and selling
                                businesses.




                                                                    TM




08 business broker                                               www.linkbusiness.com.au
                                                                                                                                    linK




                            the Varsity Lakes Community

                            W     here can you find LINK?

                                    The Atrium
                                                                                          •	

                                                                                          •	
                                                                                               It is centrally located with easy access to
                                                                                               all major arterial routes;
                                                                                               Strong population growth with over
                                    Level 2, 15 Lake Street                                    7,000 people living in Varsity and over
                                    Varsity Lakes                                              4,500 business owners working daily in
                                                                                               the area;
                            The Atrium Building was developed by the most                 •	   Transportation with Bus lines, ample
                            prolific developer - Solmac Developments. With                     parking, and the Varsity Lakes Railway
                            their enviable reputation for producing properties                 Station due for completion in 2010;
                            of value, high quality and superior design.                   •	   Vibrant restaurant and retail precinct
                                                                                               that makes it a great place to do
                            LINK engaged 5 Star Developments to design the                     business over lunch or coffee.
                            LINK office. The end result is stunning and all due
                            to the creative vision and design of its architect,
                            William Shillingford.                                 Ideally, Varsity is developing into a very smart
                                                                                  community and offers a unique lifestyle location


                            W
                                                                                  with multiple benefits for us and our clients.
                                  hy have we moved to Varsity?
                                                                                  If you are considering selling your business then call
                                    Well there are many reasons why Varsity       one of our professional and experienced brokers
                                    Central works for us....                      on (07) 5572 2122 for a free appraisal and advice on
                                                                                  how to assist you in exiting your business.
PHOTOS solmAc & lendleAse




                                    •	   First and foremost Varsity/Robina is
                                         rapidly becoming the central business
                                         district for the Gold Coast;
                                    •	   The area has a strong communication
                                         and information technology sector;


                            www.linkbusiness.com.au                                                                      business broker 09
business speciAlisT



When Times are Good
The Farmer Who Liked A Good Drought                                                                                            peter rowe
                                                                                                                               managing director,
                                                                                                                               profitune business




  W
                                                                                                                               www.profitune.com
                    hen the season is good everything grows - including           Smart operators anticipate cycles. That doesn’t stop them making
                    the weeds. They shoot out shallow roots to suck up          hay while the sun shines, but it does stop them blowing the lot, and it
                    the surface moisture and nutrient and so stunt the          does cause them to lay in stores for the Winter.
                    deeper rooted cash crops. Weeds are opportunists.
They flourish in good times, but when times turn tough, they don’t have            Jim Collins, business researcher of renown in his latest book How the
the deep roots or the solid heartwood to survive. They die and become           Mighty Fall, says, “Our research shows that if you’ve been practicing
fertiliser for the hardier plants.                                              the principles of (business) greatness all the way along, you should get
                                                                                down on your knees and pray for extreme (market) turbulence, for that’s
   “I like a good drought. It tends to get rid of the deadwood”, my             when you can pull even further ahead of those who lack your relentless
farmer mate Curly used to say - and he wasn’t talking about trees!              intensity.”

   No, he was talking about his less resourceful neighbours; tax-break            here endeth the lesson
farmers who jumped into a rising market, bought new gear, ran a crop
in with little fertiliser, no weed control, paid at the top of the market for
the best breeding stock, and let their dams silt and their feral pests run         You’ll have to ask me another time what The Principles are, because
wild (into Curly’s immaculately-groomed property!). They used their             right now the point I wish to make is this: If your market is shrinking
primary producer tax breaks to compensate for their inefficiencies and          you need to be grabbing a bigger slice of it – at someone else’s expense.
turn a quick buck.                                                              You had best be improving your business right now because other
                                                                                operators less resourceful than you are struggling and will fail, and their
            “Smart operators anticipate cycles”                                 market share will be up for grabs now, or shortly.

   Curly, meanwhile, cleaned his dams, nurtured his pastures, controlled           Now is the right time to capture the
his weeds, selectively bred his stock and controlled pests. Because             demand that others are too weak or
he was continually investing, his input costs were higher than his              confused to be servicing, and you had
neighbours but his yields were higher too. In good seasons, he socked           better put some planning into how you
his profits away for hard times and continued to invest in his assets.          will handle the surge when the market
                                                                                once more breathes in and your bigger
   When the market turned, the get-rich-quick operators promptly                slice of the pie expands and your
failed, and their neglected lands, silted dams, shiny new equipment and         business comes out of this current
exquisitely-bred stock were snapped up at the next clearing sale by -           downturn like a champagne cork
you guessed it - Curly!                                                         out of the bottle!

   Right now, this same cycle is playing out in the broader business
market. The new-comer opportunistic operators who jumped into
rising markets for a quick buck (and the incumbent average operators
who, despite their inefficiencies couldn’t help but thrive in a rising
market with its fat margins) are failing. The business weeds are
withering! And the Curly’s of the business world? Well, they are making          brace
a killing!                                                                      yourself!

when The Going Gets Tough . . .
                                                                                                                                                              PHOTO IsTocKphoTos imAGes




   We humans are funny creatures for we choose to ignore Nature’s
lessons and expect our markets (which, incidentally, rely on Nature) to
expand, and expand. Economies never grow straight-line, but always
cycle. Ours breathes in and breathes out; expands then contracts.
Without any change in the fundamentals why would we not expect,
after a long period of inhalation, there would not be an exhalation –
and possibly a forcible one?
10 business broker                                                                                                           www.linkbusiness.com.au
                                                                                                                                                                              linK



                                                                                         Business Broking
                                                                                          how hard can it be?
                                                                                         Managing Director of LINK,
                                                                                         David Fitzgerald explains what attributes
                                                                                         make a good business broker




                              T
                                         his is a question that I am often          This is also why people don’t succeed as         clients. People with good businesses that
                                         asked especially as many people          they can work extremely hard and put in many       work smart and provide a quality product or
                                         think that selling a business is easy.   hours only to receive nothing for their time       service usually always make a lot of money.
                                         Unfortunately the attrition rate in      and effort as they did not produce results.        Business broking is like any other business in
                            our industry is over 80% which makes it one           People soon get sick of working for nothing        that if you look after your customers they will
                            of the hardest professions to succeed in. With        however I believe that this can be avoided if      always come back.
                            over 4 out of 5 people in the industry failing        the main 4 reasons mentioned are addressed
                            this is not a record to be proud of which makes       prior to a new broker starting.                       We have just moved into a new state-
                            me ask, why?                                                                                             of-the-art office in Varsity Lakes and have
                                                                                     First of all a business broker must             a limited number of business broking
                               In the many years that I have been a               understand what it is like to be in business       positions available. If you believe you have
                            business broker I have seen many gung ho              for themselves. They also must know how            got what it takes to succeed in business
                            starters that never complete their first year.        to read financials especially a Profit and Loss    sales then we have the rest including the
                            While there are many reasons as to why people         Statement and a Balance Sheet. They must           most comprehensive training package in the
                            don’t make it, it invariably comes down to one        also be self motivated with a strong desire        industry.
                            and or all of these:                                  to succeed and be able to listen and focus.
                                                                                  Honesty and integrity are other key attributes        We provide an excellent working
                              1.    Poor choice by the employers in not           they require, as without these you will soon       environment with highly skilled support
                                    picking the person with the necessary         get found out and be doomed to failure.            staff, one-on-one training with some of
                                    attributes and skill base in the first                                                           the most knowledgeable and successful
                                    place;                                           To be successful a business broker must         business brokers in Australia and a detailed
                              2.    New candidates not prepared to listen,        learn and gain a thorough understanding            step-by-step training manual. We also have
                                    learn, focus and put in the hard yards;       of how and why many various businesses             a dedicated trainer and broker development
                              3.    Employers not being able to offer the         work. What makes them profitable, how they         manager in Tim Craft, who is also a Director
                                    right training program;                       make the money, what their purpose is and          of Link, very successful with over 15 years
                              4.    Broking firms having inadequate               what they are truly worth amongst a host           experience and actively selling businesses.
                                    systems and support staff.                    of other things like understanding leases,
                                                                                  risk assessment and contract negotiation?             If this is something you feel you can do,
                              For the top 20% that succeed they enjoy a           Never have I mentioned the word “sell” as the      then call our office on (07) 5572 2122 for more
PHOTO shuTTersTocK imAGes




                            great and rewarding lifestyle. When you sell          selling of a business is all in the preparation,   information or send an email to:
                            businesses, for the most part, you get to meet        presentation and communication which if            goldcoast@linkbusiness.com.au to make an
                            and deal with a lot of nice, happy, interesting       done correctly will sell the business for you.     appointment.
                            and successful people. However these same
                            people want results and business brokers                Financially business broking can be very
                            only get paid when they successfully sell the         rewarding as being a business broker means
                            business and complete the deal.                       being in business for yourself just like your
                            www.linkbusiness.com.au                                                                                                             business broker 11
business broKer Q & A



The Secret To Success
We ask, Tim Craft, why he is such a successful
business broker
Q: how long have you been selling                  planet, the banking system has become more        Q: how difficult is the sale process?
businesses?                                        laborious and difficult especially when trying    A: It is not difficult it is just involved and must
A: About 15 Years now.                             to obtain finance.                                be managed properly. There are Solicitors,
                                                                                                     Accountants, Landlords and Banks as well as
Q: can you remember your first sale?               Q: do you have a system or magic formula          the Buyers and Sellers. The broker needs to
A: My first sale was Midas at Nerang.              that works?                                       keep everyone informed so that there are no
                                                   A: I never assume that people understand, I       surprises.
Q: what was your most memorable sale?              make sure that they receive comprehensive
A: A large Manufacturing Plant in Brisbane         information to make an informed decision. I       Q: how important is advertising & prepar-
where I matched an English Accountant and a        communicate clearly and am always honest          ing a business for sale?
Dutch Production Engineer who both wanted          and truthful.                                     A: Very important, when someone has
to come to Australia and both had half of the                                                        decided to sell they are in most cases wanting
money needed to buy the business. This was         Q: is it difficult to negotiate the sale?         to get on with it. Advertising can include
all done via the internet and became a perfect     A: Sometimes if things are not clear,             newspapers, mail drops, websites, word-of-
match.                                             information provided is incorrect or parties to   mouth, buyers’ lists, etc. Without advertising
                                                   the contract are not working toward the same      it can take a very long time and once the
Q: what has been your most difficult sale?         goal. This is the business brokers’ job to keep   momentum starts to wane the enthusiasm
A: A very large multimillion dollar                things simple, remain focused and remember        drops. You can’t sell a secret however
manufacturing business based in Brisbane. It       that it is a business transaction, nothing        confidentiality is imperative. Producing a
was an extremely specialised production with       personal. Again if you are honest and truthful    detailed profile incorporating all or most of the
many long term contracts and agreements            and are trusted by both parties then invariably   information on the business serves as a strong
in place. Not only did I have to find the right    you will complete the deal.                       reminder and sales tool for all potential buyers.
buyer but I also had to ensure all relevant
agreements were assigned to the new owner.         Q: once both parties have signed the con-         Q: you are already a great success, so why
The paperwork was enormous however                 tract is your job done?                           join link?
everyone had a happy ending.                       A: Absolutely not! This is the most important     A: The industry is changing and we have
                                                   time. You must constantly make sure both          always wanted to be at the forefront. We
Q: what knowledge and skills do you need           parties are kept fully informed and keep the      could have spent considerable amount of
to have to sell businesses?                        process moving forward. Contracts have many       money over a number of years developing
A: You have to have a thorough                     conditions that must be met by both the buyer     systems and new technology ourselves or we
understanding of how each business works,          and the seller within a strict time frame and     could join a progressive international group
what makes it profitable and its unique points     this needs to be managed as it often involves     like LINK and leap ahead. The LINK system
of difference. Then you must be able to convey     many parties not obligated to the contract.       and advanced technology will raise the bar in
this information correctly and accurately to                                                         our industry for quality service and customer
potential buyers. You must be able to read         Q: have you had any businesses that you           match up and communication far beyond
and understand profit and loss statements          could not sell? if so why?                        anything available in Australia at present. By
and balance sheets. Also it is very important      A: Not many but in the odd case where we          taking over LINK we have probably saved 5
to uphold the highest integrity, honesty and       cannot sell a business then there is usually      years and I am looking forward to becoming
confidentiality.                                   something wrong like location, industry, staff,   even more successful and having even more
                                                   presentation, lease or price. There can be        satisfied buyers and sellers.
Q: what has changed in business broking            many reasons most of which can be solved if
over the years?                                    everyone communicates.                            ______________________
A: We now have computers, the internet and                                                           Tim Craft is a Director with Link and is highly
the ability to communicate information all         Q: what does a seller of a business need to       respected by his peers and all of the profes-
over the planet instantly. This is of great ben-   do in order to help you with the sale?            sionals that provide service to the Business
efit to selling businesses as it gives us access   A: Provide everything that fully informs the      Sales Industry. His commitment to customer
to more buyers and allows them to fast track       incoming purchaser. Don’t keep anything in        service, attention to detail and success rate is
the receipt of cumbersome documents. On            the dark – communicate and put yourself in        well known by hundreds of satisfied buyers
the other side with all of the improvements        the buyers position.                              and sellers of businesses.
and fast tracking of documents all over the
12 business broker                                                                                                        www.linkbusiness.com.au
                                                                                                                                                                      FinAnce



                            Why Use a Finance Broker
                            Managing Director, Tony Taylor specialises in developing creative
                            finance solutions for businesses.
                            After 21 years working for a major bank and 6 years as a finance broker        3. banks are not fair...
                            specialising in obtaining finance for businesses I feel well qualified in           A very experienced business person once told me that Banks are
                            advising those looking to buy a business to see a Finance Broker. I have            happy to give you an umbrella when the sun is shining and take
                            used some real life examples to demonstrate these advantages.                       it away when it is raining. If your Bank suddenly decides it does
                                                                                                                not want your business anymore you need someone on your
                              1. A broker will know which bank to apply to for your                             side to help. Your Broker will be able to help find alternatives.
                                 finance requirements...
                                   While the number of finance alternatives has dwindled due                    EXAMPLE: Last year one major Bank decided that it would
                                   to the Global Financial Crisis (GFC ), there are still significant           review its client portfolio and exit those that in their opinion did
                                   differences in Bank policies. If you are looking to buy a business           not meet minimal lending standards. Most lending Contracts
                                   a Broker will be familiar with the Bank’s policies.                          you will sign enable the Bank to demand full repayment of the
                                                                                                                loans at any time. (It is important to seek legal advice when
                                   EXAMPLE: Client applied for a loan to purchase a                             signing loan Contracts). Clients received a letter from the Bank
                                   Manufacturing Business with a significant amount of Plant                    advising them that they wanted full repayment of all loans
                                   and Equipment. We needed funding against this equipment                      within 30 days, if not they would proceed with legal action to
                                   to make the deal work. One of the big four Banks would only                  sell the security. This was despite the client being up-to-date on
                                   lend Auction Value, the other will lend Fair Market Value. The               all loans and never missing a payment. We wrote to the Bank
                                   difference between these two values in this case was over $700k.             and provided Cash Flow projects and reasons for poor profit
                                   The deal was done. The client purchased the business.                        performance over the past 12 months and what was being done
                                                                                                                to rectify. This bought us some time to enable full refinance at
                              2. saving you money...                                                            better rates and lower repayments. Clients have since met the
                                   We all know that a Broker should source the best possible                    projections & trading well, and paying much lower interest rates.
                                   interest rates and fees, however this is only part of their role.
                                   A Broker’s relationship with a client should not end when the           4. A broker needs your business to stay in business...
                                   Business has been purchased, they should be a critical part of               While having a good Bank Manager is important, they are still
                                   your Business helping to Manage your ongoing relationship                    paid a salary and for the most part they do not rely on getting
                                   with your Bank and finances. The Bank Manager works for                      you the loan before they get paid. Sure they are paid bonuses
                                   the Bank and they have profit targets to meet so they must                   on lending growth amongst other targets. A Broker on the other
                                   maximise their return to the Bank from each client. Your Broker              hand has to get you the loan and have it draw down before they
                                   is there for you.                                                            get paid. What this means is they are going to work harder to
                                                                                                                get you your loan to help you achieve your goals. The reverse of
                                   EXAMPLE: I was given documents by the Bank for the client to                 this is that the Broker does not believe that your application has
                                   sign for increase lending to build a factory. The interest rate was          much chance of success they will be honest and not waste your
                                   9.8%. Upon questioning the Bank and requesting a different                   time on a loan with minimal chance of success.
                                   product (i.e. Commercial Bills) we saved the client over 3% on a
                                   $7m loan. Do the Math!                                                       EXAMPLE: Over the last six years I have had numerous
                                                                                                                occurrences where clients have come to me saying they spent
                                                                                                                six weeks waiting for a decision from their Bank and finally they
                                                                                                                were declined. This normally turns out one of two ways. Firstly,
                                                                                                                we can’t understand why it was declined and apply with another
                                                                                                                Bank and get loan approved. Alternately, there was no chance
                                                                                                                of success in the first place and the clients should have been told
PHOTO shuTTersTocK imAGes




                                                                                                                this from the outset.

                                                                                                         We could go on, however why go to a Bank when you can go to a Broker
                                                                                                         who can access almost all Banks?
                                                                                                         ________________________
                                                                                                         For more information contact :
                                                                                                         Tony Taylor, Director, SCR Finance on 0402 809 660


                            www.linkbusiness.com.au                                                                                                           business broker 13
    oFFice desiGn
                                                                                                  CORPORATE OFFICE DESIGN

    Corporate Office Design                                                                                            William Shillingford, MSIDA.JP
                                                                                                                       Director
                                                                                                                       Corporate Office Design


    Evolves & Changes                                                                                                  t: 0414 886 122

                                                                                                                       william.shillingford@gmail.com



    With Time                                                                                        •	
                                                                                                     •	
                                                                                                          Interior	Design
                                                                                                          Home	Décor
                                                                                                     •	   Furnishings



      A
              s an architect, one of the most exciting things about corporate office                 •	   New	Home	Design	&	
              design is its ever-changing and evolving nature. More than ever, trends are                 Construction
              changing rapidly as a reflection of tremendous advances in technology, the             •	   Corporate	Office	Design
    environmental movement and the strength or weakness of the employment market.
    Today, there are several significant design trends that are having a profound impact on        The	 Design	 Firm	 has	 office	 interior	
    our industry, including the “green phenomenon,” demand for high-tech office space and          designers	 who	 are	 highly	 skilled	 in	
    the return to more private offices and away from the ubiquitous “office landscape” plan.       office	interior	decorating.		We	will	help	
                                                                                                   you	 stand	 above	 your	 direct	 competi-
       Green buildings, or sustainable facilities are rapidly gaining momentum. New develop-       tors	by	starting	afresh,	or	updating	your	
    ment, tenant improvements and building renovations are all subject to green initiatives        existing	spaces	for	a	new	“cutting	edge”	
    as more companies look to incorporate these elements into their spaces. As architects,         professionalism.
    this is welcome news because we no longer have to convince clients that we can design
    green while still being conscious of clients’ bottom-line needs.                               Business	 and	 office	 interior	 decorating	
                                                                                                   is	quite	different	from	residential.		Your	
       There are numerous ways to incorporate green                  Demand for                    Design	Project	will	be	custom-designed	
    into buildings other than solar panels or Energy Star         high-tech office                 by	a	team	of	professionals.
    features. Light bulbs with dimmer switches; recycled          space design is
    materials in furniture, floors and wall coverings, even     another trend that                 When	 designing	 and	 planning	 a	 com-
    composting and/or waterless toilet systems are just a        is increasingly in                mercial	personality	some	types	of	ques-
    few. It is refreshing that both tenants and landlords are         demand!                      tions	to	start	with	would	be:
    becoming more aware of green building design. It allows                                           •	 What	is	my	target	market?
    us to explore other creative design alternatives.                                                 •	 Is	 my	 office	 interior	 seen	 by	 my	
                                                                                                          clients,	and	how	often?
       The demand for high-tech office space design is another trend that is increasingly             •	 Do	I	need	a	reception	room?
    in demand among tenants who are either moving into new space or retrofitting their                •	 Do	 my	 employees	 spend	 long	
    existing space.                                                                                       hours	here?
                                                                                                      •	 Are	sales	closed	on	site?
       With the tremendous technological advancements that have been occurring over the
    past several years, companies are requiring space that features Wi-Fi capabilities, larger     All	 Corporate	 and	 Office	 Designs	 are	
    floor plates and tremendous power and data centre functions.                                   developed	 with	 Great	 Attention	 to	
                                                                                                   Detail.
            Every corporation today is cognizant of having its space designed to
              accommodate technological infrastructure, not only people. This new                  Ultimately,	 Our	 Message	 to	You	 Would	
   Green        awareness puts a premium on flexibility and reorganisational potential             Be:
  buildings      because of the rapid changes in tel-data and information retrieval systems.
 are                                                                                                      Business	design	planning	
rapidly              Another trend in corporate office design is the return to private offices,      is	based	on	your	“making	the	sale.”
gaining           which was a trend in the 80’s and 90’s, and the move away from the cur-
  momentum!      rent trend of open spaces. The reason for the increasing popularity of more       The	Design	Firm	understands	this	busi-
                traditional offices is the fact that a great many corporations are maintaining     ness	 climate	 and	 will	 start	 afresh	 or	
              current staffing levels or even reducing head counts.                                update	 your	 existing	 spaces	 for	 that	
                                                                                                   “cutting	 edge”	 professionalism	 that	 is	
      With companies continuing to invest in technology, there is less of a demand for new         so	needed	in	today’s	highly	competitive	
    employees and therefore a reduced need for square footage. Designing for a company             marketplace.	 	 This	 will	 help	 you	 stand	
    that is downsizing its office spaces requires organising space so that there are a smaller     above	your	direct	competitors	and	result	
    number of cubicles and “carrels.”                                                              in	increased	sales	for	your	company.
     14 business broker                                                                                            www.linkbusiness.com.au
                                                                                                                     oFFice desiGn


   This trend, called “hotelling” workstations, is common for companies
that are more frequently employing individuals who spend most of their
time on the road or mostly work from home, and only need part-time
workstations in the actual office.

   The construction of more private office space is oftentimes a cost-
effective business decision because the construction of this type of
space is typically built into landlords’; work letters, whereas with open
space planning, workstations are considered furniture, which is a cost
that is normally the responsibility of the tenant.

  Because of these trends, as well as for economic purposes, companies
will continue to demand increased productivity and therefore be less
inclined to over-commit to space.

  The challenging and rewarding aspect of an architect’s job is to keep
up with the evolving needs with each unique client. New products,
materials and innovations are being introduced to the marketplace at
an increasingly rapid rate.

   In order to be fully effective today in understanding and anticipating
clients’ needs in a change-dominated business culture, architects and
designers must become change agents themselves.




                                            Feeling the Financial Squeeze???
              We can Help with OUR HOSTED DESKTOP SOLUTION and IP TELEPHONY
                           SAVE on IT and Telecommunication costs!
JCRIT can provide the right hosting solution to resolve your IT infrastructure challenges whilst simplifying your IT management.
Support your company with virtual, dedicated, co-located or fully managed hosting services through our strategically located data centres.

 Keep your business connected around the clock with our industry leading hosting
hardware and software technologies.

IP Telephony
The highly flexible IP environment is widely used as the primary method of
connecting people and devices. IP Telephony leverages this technology to SAVE on
telecommunication costs.

Take advantage of this technology to boost your businesses revenue, increase
productivity and enhance customer satisfaction by replacing traditional phone
systems with IP phones.

For more information on Hosting Service and IP Telephony Services with JCRIT, call
07 5572 3213 or email our professional consultants at support@jcrit.com.au
                                                                                        JCR Computer Company trading as JCR IT PTY LTD
                                                                                                 PO Box 422, Burleigh Heads, Qld 4220
                                                                                                            Website: www.jcr.com.au
                                                                                               ACN: 080 124 929 ABN: 81 080 124 929
linK




SO WHAT IS DIFFERENT ABOUT LINK?
Major change in the industry is on the horizon




                                                                                                               david Fitzgerald,
                                                                                                               managing director,
                                                                                                               linK




   This was the first question that we asked Aaron Toresen,           sellers of businesses so that we were clearly better than anyone
 Managing Director of LINK Business Franchising Ltd, when he          else in the industry.
 came to see us six months ago. His answer was direct, bold and
 spoken with sincere confidence “We sell businesses, achieve            We had made a list of what was lacking in the industry and
 results and provide a customer service better than any other         how we could achieve the required standard. High on our list
 business broking firm in the world”. Anyone bold enough to           was a CRM (Customer Relationship Management) system which
 make a statement like that in a foreign office to 4 of the most      had to be developed specific to our industry and cater for sellers
 experienced and successful business brokers in Australia had our     and buyers of all businesses. We had looked at enough CRM’s to
 attention.                                                           realise that anything we purchased would need to be severely
                                                                      modified at a significant cost and take an enormous amount of
    Aaron went on tell us of his quest to travel the world, meet      time to be developed to meet the high standards we required.
 with the best business broking firms, share information and find     Just over three years ago LINK had come to the same conclusion
 out what LINK could do better. His conclusion was that while         and proceeded to develop and build the BOSS (Business
 there were some very good, large and professional brokerages         Operating System Software) system from scratch. The BOSS
 out there none of them had a strong working Franchise model          system was developed by business brokers for business brokers
 that met all of his required high standards. He learnt a lot and     specifically to simplify, facilitate and streamline the complicated
 was able to gain great ideas from many firms as some were            and often time consuming process of selling businesses.
 excellent at customer service yet behind on streamlining
 information and others had first class systems that were broker         When Aaron showed us the BOSS system and went through
 friendly and poor on customer service. He realised that to be the    its enormous amount of features we were extremely impressed
 best he needed to build it himself.                                  as it had more bells and whistles than we had imagined and
                                                                      exceeded the standards we believed needed to be met to be the
    Timing can be everything and at this point in time it was right   best in the industry. Also you did not have to be a Rhode Scholar
 in Aaron’s favour. We had the Licence for NBS (National Business     or an astronaut to drive the system, it is very broker friendly and
 Sales) on the Gold Coast and had been contemplating our future       relatively simply to use as it prompts you for information and
 as we wanted to be able to improve our service to buyers and         ensures all of the required data is entered into the system.
16 business broker                                                                                             www.linkbusiness.com.au
                                                                                                                                       linK

  BOSS has a highly sophisticated buyer and seller requirements
identification and matching database management system that ensures
the widest variety of businesses are marketed and immediately brought
to the attention of qualified buyers looking to buy a business within those          DUPLICATING SUCCESS
parameters. It also allows the broker faster and greater access to more
comprehensive data and detailed information on businesses for sale and             The current economic climate is causing contraction
buyer requirements which saves time and allows us to provide a quality             in many industries, however LINK is bucking this
service for all of our clients.                                                    trend and is continuing its growth phase as demand
                                                                                   remains high for quality businesses. LINK is expanding
   LINK was more than the BOSS software program, it is a Franchise System          throughout Australasia with 4 branches in New
that has been operating, developing and growing for over 13 years with             Zealand, and 2 in Australia and a further 3 under
strong ethics, high standards, and innovative ideas and is at the forefront        consideration. We are also currently in discussions
of professionalism in the industry. They wanted us to join their Franchise         even further afield with potential partners in South
group as they had researched the market and believed that we not only met          Africa and California. Worldwide the business
their high standards but would add enormous value to their brand through           broking industry remains largely fragmented and
our combined experience and unprecedented success. We too saw the                  unsophisticated, whereas our highly developed
benefits of joining an international business brokerage that was light years
                                                                                   processes and quality control systems are world class
in front of anyone in the industry as it would allow us the opportunity to
                                                                                   and are attracting interest from operators looking to
fast track our ultimate goal of providing a standard of service to sellers and
                                                                                   take business broking into the 21st century.
buyers of businesses better that anyone else in Australia.

                                                                                   LINK has a powerful and fully integrated broker
   Meeting the LINK international standards also requires us to have the best
office facilities and infrastructure in Queensland and arguably Australia. Our     operating system (BOSS) which is the backbone of
new office facility was designed by renowned architect William Shillingford        operations and allows remote access, automated
and situated in the Varsity Lakes CBD. We needed to develop a high-tech            processes, reporting, marketing and process
office design that could enable us to offer the best quality service that          management among many other features. As no
meets the demanding and challenging needs of sellers and buyers. This              quality business broking software was available
required us to have plenty of space for client service areas and state-of-the-     internationally LINK developed the bespoke system
art technology and office equipment as well as additional office space for         from the ground up.
more business brokers and specialist back-up staff all in a user and customer
friendly environment.                                                              With a focus on results and only engaging the most
                                                                                   professional, proven and capable business brokers
   Our customer service standards have improved dramatically with four             in the country, LINK are a long awaited solution for
new key executive positions required to meet the LINK Franchise System             business owners and advisors who want professionals
Standards: we have a new Operations Manager to oversee the smooth                  they can rely on. While most organisations will espouse
integration of the BOSS system so that we can maximise the benefits for            virtues of integrity and ethics, these statements are
buyers and sellers; a new Office Manager to provide back up service and            usually hollow and are often contradicted by their
facilitate contract management for Business Brokers; a new Marketing               actions. We strive to maintain the vision we built this
Executive to manage the sophisticated database and information service             business on; Facilitate the sale of businesses ethically,
system; and a Franchise Manager to understand and work with the                    professionally, confidentially and with utter integrity.
hundreds of Franchises operating in Australia so that we can provide
potential buyers and sellers with up-to-date and accurate information on
                                                                                   If you require business brokerage services either on
the various franchises available.
                                                                                   the sell side or buy side, please contact a LINK office
                                                                                   and if we don’t yet have one near you, it won’t be far
  The LINK difference is outstanding and for anyone selling or buying a
                                                                                   away!
business you will find our service, information, knowledge, systems, facilities,
technology and experience second to none as we have truly lifted the bar in
our industry. Don’t take my word for it. Come and see for yourself as we are
happy to meet any challenge and show you in person what you can expect.

                                                                                                             Aaron Toresen
                                                                                                             Managing Director
                                                                                                             LINK Business Franchising Ltd




                                                                                                                                           TM




www.linkbusiness.com.au                                                                                                  business broker 17
plAnninG



Buying a Business & Growing It
Catherine O’Keeffe of Xplode Accounting explains the
structure and setup involved in buying a business
                                                                                                                                 catherine o’Keeffe
                                                                                                                                 principal,
   There is an enormous range of articles and advice available today                Once you know your business, tell as
                                                                                                                                 Xplode Accounting
aimed at your first foray into business. It can be very daunting knowing            many people as possible! You often find
where to start, and who to listen to. We talked to Catherine O’Keeffe,              that support and referrals can come
Principal of Xplode Accounting for advice on things to consider before              from unsuspecting places.
you enter the business gauntlet. Catherine was able to give us the
following advice:                                                              3. start as you intend to continue
                                                                                    Whether buying or beginning a business, many budding
  1. Know why you are going into business                                           entrepreneurs will try to cut costs where possible. Often, the
       People go into business for a range of reasons. Some are trying              temptation is to “start the business” and worry about structuring
       to build an empire, some are trying to build a job. Before you               later. The problem with this approach is that changing structure
       start out, you need to understand what it is you are trying to               can have significant Capital Gains Tax and Stamp Duty costs, and
       achieve. This simple idea will then help you identify the types              trading in inappropriate structures may expose your assets to
       of income that you will receive (active/passive) and the types of            undue risk.
       expenditure required (branding vs advertising). It will also help
       your advisors give you the best structural advice from the outset.           Just like a building inspection before you buy a property, money
                                                                                    spent on professional structural advice can save you money and
  2. Know your own business                                                         heartache in future.
       Whether buying a business, or starting out from scratch,
       you need to understand your new business inside and out.                4. prepare for growth
       Traditionally this is done through a business plan.                          When purchasing a business, often clients aren’t prepared for
       In my experience, the best business plans answer the following               the level of working capital required to run the business. When
       important questions:                                                         performing due diligence on a business, entrepreneurs should
                                                                                    ask the question “ how much working capital do I need to run
        •	   who are we                                                             this business now, and how much if I grow 20%?” This way, the
             What products/services do we provide? Who are our com-                 first year after purchase is not stifled by your lack of funding.
             petitors? What differentiates us from the competition?
        •	   where are we going                                                5. Know what you don’t know
             What is our market – now and in 5 years? What is our staff             In any business proposition, you should examine what skills
             level/turnover/customer base 5 years from now?                         and attributes you have to contribute to the business. For
        •	   how will we get there                                                  skills shortfalls, you may need training, or the assistance of a
             What is our marketing plan? How will we address the                    professional advisor. For example, if record keeping and details
             competition? How much funding is required for capital                  are not your strength, consider getting a bookkeeper from the
             investment and for working capital? Where will those                   outset. This can save costly accounting fees down the track, and
             funds come from?                                                       can also help give you some timely feedback on your business’
        •	   how will we know when we are there                                     performance in its initial stages.
             What are our KPI’s (Key Performance Indicators)? How
             often will we be measuring the KPI’s?                             It’s also important to find a business accountant that understands
                                                                             what you are trying to achieve, and can provide you with meaningful
       A business plan is not just for new businesses. In fact, a business   advice. Ask other business owners who they would recommend,
       plan is just as important when you are buying a business. This        and don’t be afraid to change accountants if you are unable to get
       is because it will help you identify how you can improve the          the feedback your business needs. After all, for the time, passion and
       business you have just acquired.                                      money that is invested in your business, you can’t afford not to receive
                                                                             great advice.
       A business plan should be a working document. We often find,
       particularly with new businesses that some of these aspects           ______________________
       will change particularly in the first 3 years as market conditions    XPLODE Accounting is an exclusive accounting firm specialising in
       shape your business.                                                  growth-stage businesses. Based in Bundall, Xplode offers a range of
                                                                             one-on-one business advising, taxation and accounting services.
18 business broker                                                                                                        www.linkbusiness.com.au
                                                                                                                               due diliGence



                         Due Diligence
                         Barry Morwood of McDonald Balanda and Associates
                         Lawyers discusses the essential part of the deal
barry morwood,
consultant solicitor,      Unless they have some special sixth sense or intuition,       time in the contract for the job to be done properly.
mcdonald balanda &
Associates lawyers
                         most people buy a business based on the information             Accountants will usually need to inspect extensive books
www.mba-lawyers.com.au   given to them or representations made about it before           of the business including tax records for at least several
                         they agree to buy.                                              years to validate the seller’s information.

                           The expression “due diligence” is just the commonly
                         used name given to the process of appropriately checking           “the best time for a full
                         that information before completing the transaction. It’s a
                         natural and essential part of any deal.                             due diligence is after
                            From the buyer’s viewpoint, a contract with conditions           the contract is signed”
                         making it subject to appropriate due diligence enquiries
                         is great: the seller is bound to the deal while the business       The legal due diligence can embrace a wide variety of
                         is checked out. If it doesn’t, the deal is cancelled, deposit   checks. They will normally deal with the entitlement to
                         refunded and no further liabilities exist.                      use the name of the business and its intellectual property
                                                                                         rights, title to all business assets, validity and currency
                            It’s also a fine selling tool. The seller has the comfort    of any necessary government licences for particular
                         of knowing there’s a committed serious buyer - and              industries, compliance with government regulations such
                         conditions allowing verification is a powerful persuader to     as in the food or child care businesses, town planning
                         buyer confidence.                                               permits or consents needed for the business and
                                                                                         obligations to employees.
                            It follows that the best time for a full due diligence
                         is after the contract is signed. Actually, in some cases it        If the business operates from leased premises, the
                         can’t happen until then. Often Lessors of the business          terms of lease will be reviewed to ensure their continued
                         premises, significant suppliers and franchisors will deal       availability on acceptable terms. A general review can be
                         only with buyers who have already signed a contract.            crucial in checking options, rent reviews, repair obligations,
                         Why? They don’t waste time dealing with tyre kickers - just     landlord entitlements to relocate the business or terminate
                         those clearly considering a future business relationship as     the lease altogether, allowable uses under the lease,
                         demonstrated by the purchase contract already in place.         signage rights, the area leased or the obligations to carry
                                                                                         out renovations during the term and the like. Franchise
                            Business sale contracts routinely include conditions         agreements, supplier or buyer agreements should be
                         making the transaction subject to the purchasers being          reviewed if they are fundamental to the business.
                         satisfied with their enquiries about the business and its
                         associated assets. Any aspect of the business important to         Incidentally, it’s worth noting the broker’s role in any
                         the continued operation of the business can be the subject      business sale. Good business brokers know the kind of
                         of a due diligence. Some due diligence clauses, including       information prudent buyers need. They gather it from
                         relating to financial and leasing aspects and asset title       the seller and present it to the buyer. What they don’t do
                         warranties, will be built into the standard contract - but      - they can’t – is investigate, verify or warrant its accuracy.
                         others may need to be negotiated into the contract, such        That has never been their function. Buyers should check it
                         as checking town planning approvals.                            themselves.

                                                                                            So, due diligence is vital. The broker makes the deal
                         Kinds of due diligence: The financial due diligence is          happen with information given on behalf of the seller. The
                         done by the buyers accountant. The standard Queensland          seller knows it’s likely to be checked under due diligence
                         contract, for example, gives the buyer a number of              clauses. The buyer has confidence to sign up on a deal with
                         business days to verify the financial information presented.    those clauses, verify, then settle. No tears later.
                         Of course, its important to promptly engage a suitably          ________________________
                         experienced accountant for the job and allow enough             Barry Morwood, MBA Lawyers (07) 5539 9688
www.linkbusiness.com.au                                                                                                           business broker 19
inTerview



Juggling Family Life and a
Career In Business Broking
Interview with LINK’s Business Broker -
Nicole Nguyen
how long have you been a business broker? Over 4 years                     my youngest is in bed. This is my time to surf the Internet and Skype
has your career lived up to your expectations? Definitely and I am         my family.
honestly looking forward to the next 10 years! This career offers me       what do you like most about being a business broker? Lifestyle and
everything I could possibly want: financial freedom, lifestyle, exciting   job satisfaction
challenges and a high level of satisfaction. When a client can genuinely   what do you like least? Paperwork – although, I put this on myself
show appreciation for your work - it makes it all worthwhile.              ‘cause I like things done right the first time.
how many children do you have? Two. One aged 2 years 4 months              why do you feel you are a successful business broker? I don’t like
and the other 3 months.                                                    to waste time on things that won’t produce a result. Results make
how does a woman like you juggle family life & career? It’s easy           everyone happy.
when you have the flexibility to work from home and work your own
                                                                           what is your goal? To semi-retire at 45 and still be business broking –
hours. I can juggle appointments and phone calls during the day and
                                                                           LOL!
catch up on paper work at night.
                                                                           what do you wish someone had told you about the industry? That
describe your typical day? My typical day revolves around what’s
                                                                           women can make good business brokers!
going to produce results. This way I’m more productive and can
prioritise on what’s important.                                            would you recommend business broking to other women?
                                                                           Definitely. This is probably one of few jobs where you can enjoy your
when do you find the time to relax? Honestly? About 11pm when
                                                                           family and be successful.




        ARE YOU LOOKING FOR
        AN EXCITING REWARDING CAREER?
        LINK Business Broker Opportunities
        If you have business and/or mid-level management                      Email: goldcoast@linkbusiness.com.au
        experience this may be the professional job for you.                  Ph: 07 5572 2122 to make an appointment
                                                                              (all enquiries will be held in strict confidence)
        We are “the authority on selling businesses” and we
        offer:
          •	   Gold Coast leading information systems
          •	   Ongoing support in a team environment
          •	   Stability
          •	   Comprehensive and ongoing training
          •	   Generous, rewarding commission structure
                                                                                             www.linkbusiness.com.au



20 business broker                                                                                                     www.linkbusiness.com.au
                                                                                                                                       plAnninG



Getting Ready To Sell Your Business
Advice to sellers

                        S
                               elling your          Being organised is key, pre-empting what a         domain name. If you as the seller are not the
                               business is not      buyer may want to see as part of its due dili-     registrant steps should be taken to rectify this
                               necessarily just     gence will mean a request is not unexpected        before a buyer is found.
                        a matter of a signing       and there will be no delays in providing the
                        a contract. It involves     information sought.                                Stock: Check your supply agreements. If you
                        a consideration of all                                                         purchase stock on credit, it is likely that the
                        aspects of your busi-       In addition to the financial statements and        supplier retains title to the stock until such
                        ness and as a seller the    books and records of your business, a buyer        time as it has been paid for in full. The general
                        best time to do this is     will be entitled to see every document critical    rule is that you cannot sell what you do not
                        before you have found       to the operation of your business including        own.
rebecca brookes,
Associate,
                        a buyer.                    premise leases, material contracts with suppli-
Ffrench commercial                                  ers and customers and plant and equipment          can the assets be transferred?
lawyers                 If you are unsure about     hire purchase agreements and leases.
                        what will be expected                                                          Is each of the contracts you have identified
                        of you or don’t know        Below are some tips for getting ready to sell:     transferable to the buyer? Some contracts
what to expect from the sale process, seek                                                             require the consent of a third party before
advice from a professional who is experienced       idenTiFy business AsseTs ThAT will                 a transfer can be effected. Most commonly
in business sale transactions. Don’t be afraid      Form pArT oF The sAle                              premises leases require the consent of the
to ask your proposed advisor about their expe-                                                         landlord before an assignment can take place.
rience, you want someone that specialises in        Prepare a detailed list of your business assets,
this type of transaction.                           including:                                         If a statutory licence is required to operate
                                                                                                       your business, the licence may be personal to
Presenting your business for sale profession-         1.   Unencumbered Plant and Equipment            you and not transferable, find this out early.
ally and being able to supply information                  - items of plant, equipment, machinery,
quickly will show potential buyers that you are            furniture, fixtures and fittings that you   conTrAcTs
organised and will ultimately lead to a smooth             own outright. These are also known as       Prepare a copy of all of the contracts you have
sale process.                                              fixed assets which are used for carrying    identified so that these are ready to be given
                                                           on the business.                            to a buyer upon request.
As a seller you need to be prepared to let            2.   Stock – identify each item of stock by
a buyer carry out a due diligence on your                  type.                                       If there are contracts to be transferred to the
business. Due diligence is the process where          3.   Intellectual Property – registered and      buyer your sale agreement will need to pro-
the buyer undertakes a close examination of                unregistered trade marks, copyright         vide sufficient time to obtain the consent of
all aspects of your business, not just financials          materials, domains, business names,         any third parties.
but all things necessary to carry on your                  websites.
business day to day.                                  4.   Contracts – hire purchase agreements,       Always bear in mind that it is in your best
                                                           plant leases, premise lease, supply         interest to clearly identify all of the contracts
The easiest way to prepare yourself for this               agreements, service agreements, host-       required to carry on your business. Failing to
process is to take a good look at your business            ing agreements, customer agreements,        do so could mean you are left with the burden
from the buyer’s perspective. Prepare and                  third party rights to use intellectual      of a contract which is of no use to you after
implement a detailed plan of action to get                 property.                                   settlement.
your business ready for sale and due diligence:       5.   Statutory Licences – many business
   •	  Identify business assets that will form             require a statutory licence to operate,     Addressing the above matters as soon as you
       part of the sale;                                   for example if your business is a res-      decide to sell will ensure that you are prepared
   •	  Identify all agreements that are                    taurant that serves alcohol the liquor      for the process and being prepared usually
       required to carry on the business;                  licence will need to be transferred.        results in a smooth handover at settlement.
   •	  Ensure that all legal documents relat-
       ing to the business are up to date;          do you own each asset identified above?            __________
   •	  Make sure your financial records are         Make sure that you own or have rights to           This article was written by Rebecca Brookes,
       accurate and up to date;                     transfer the above assets. As an example:          Associate & specialising in commercial law
   •	  Ascertain if your assets are transferable                                                       at Ffrench Commercial Lawyers. She can be
       and whether third party consents are         Domain Names: A quick online search will           contacted on (07) 5591 7555 or
       necessary.                                   verify who the domain registrant is for your       email: rbrookes@ffrenchlegal.com
www.linkbusiness.com.au                                                                                                           business broker 21
FeATure



Australian private companies show
resilience through the storm
KPMG Annual Private Companies Survey has shown that mid-sized
Australian businesses are weathering the effects of the global
financial crisis remarkably well but are battering down the hatches
for the next year


T
        he results indicate that despite             to business. However private companies                 unnecessary expenditure and reduce staff
        suffering what is considered to              seem to be prepared to act, with 90 percent            costs, they remain remarkably positive. At
        be the biggest downturn since the            of respondents claiming to be very well or             the time this survey was undertaken, twenty-
        great depression, Australian private         moderately well prepared to take advantage of          six percent of businesses believed we have
companies are not experiencing a credit led          any opportunities during the downturn.                 already reached the bottom of the downturn
recession. Instead they believe that consumer                                                               albeit with a tough twelve months ahead.
sentiment is steering their fortunes in the          Employment is often a lagging indicator                Nearly half (46 percent) rated the medium term
short term. Such findings certainly challenge        of economic health and on this basis the               prospects good or very good. A further forty-
a common perception that the credit squeeze          surveys’ findings are somewhat equivocal on            three percent felt prospects in the next three
is strangling Australian business.                   employment prospects. However issues of                year period would be average, while eighty
                                                     employment were high on the radar this year            percent said the long term outlook (5 years
Well over half (62 percent) of respondents have      with questions on headcount introduced to              and beyond) was good or very good.
told us that the availability and cost of credit     the survey for the first time. The majority of
is having little or no impact on their activities.   respondents (52 percent) reported a reduction          Overall, Australian private companies have
The drop in interest rates has provided only         in employee headcount over the previous six            maintained a tight ship in handling the
minimal relief to private companies, with            months as a direct result of the economic              choppy waters of the past twelve months.
rate cuts not being fully passed on to private       climate.                                               There will no doubt be market changes that
company borrowers, although it was agreed                                                                   result from the economic downturn – these
that rate drops and the Government’s stimulus        This years’ results confirm a trend in the             are usually beneficial to the economy, though
efforts had helped to maintain consumer              importance that private companies place on             can be challenging for those directly involved.
demand.                                              attracting suitably qualified employees. Private       Yet Australian private companies are well
                                                     companies are taking concerted action to               equipped to come through the storm, and
Many private company executives also                 avoid headcount reduction, using a range of            take advantage of any opportunities that arise
felt that if there was a credit crunch it was        mechanisms to retain good staff.                       after the deluge.
predominantly for the big end of town
and that it was very much a sector related           The survey showed common alternatives to
problem, affecting property, construction and        redundancies were requesting employees
manufacturing hardest.                               take long service leave (27 percent) and
                                                     annual leave (50 percent), along with reduced
The results also suggest that many private           working hours (20 percent). Nearly half of all
companies entered the downturn with lower            respondents (43 percent) had put a freeze on
geared balance sheets compared to public             salary increases.
companies. One respondent claimed that
banks were knocking on their door for the            It is also interesting to note that despite the
first time ever, though it seems that many           downturn, a third of all respondents are still
businesses are waiting to see how things play        struggling to find appropriately skilled labour
out before borrowing further.                        and many believe the skills shortage will
                                                     return with a vengeance when the good times
Forty-two percent of respondents had                 return. A skills shortage was reported across
                                                                                                            _______________________
                                                                                                                                                              PHOTO shuTTersTocK imAGes




cancelled major projects or business expansion       all industries but remained high in the mining,
                                                                                                            David van Herwaarde is a Partner with
plans compared to fifteen percent in 2008, and       manufacturing and utility sectors, showing
                                                                                                            KPMG’s Gold Coast practice.
a further 57 percent deferred plans in the short     that the traditional trade skills are still in short
term.                                                supply. This also shows that even in the worst
                                                                                                            For a copy of KPMG’s 2009 Private Companies
                                                     of times, the need for skilled people remains.
                                                                                                            Survey, please visit www.kpmg.com
Overall there appears to be a slowdown in            While the results show private companies
anything considered unnecessary or not core          are taking appropriate measures to minimise


22 business broker                                                                                                            www.linkbusiness.com.au
 linK


 How To Buy A Business
  Most people believe that buying a business is like
                                                                                                                      Guy cooper,
  buying a house and while there are many similarities                                                                marketing director,
                                                                                                                      linK

  the process is completely different.
 Buying a business is a major lifestyle change which can be fun, excit-        sure that all of the information is correct and that this business
 ing, challenging and very rewarding providing you do it properly.             is exactly what you want. You are only fully committed to the
                                                                               contract once all of the conditions of sale have been met. By
 The steps are simple and must be done in order:                               taking this step, you need to engage a Solicitor to advise you
                                                                               on the contract and complete the legal due diligence and your
 1.   see your finance broker or bank and find out how much money              Accountant to complete financial due diligence. If you carry out
      you can borrow then add this to the cash you already have to             due diligence before entering into a contract you may save on
      establish how much you can afford to invest in a business. While         legal and accounting fees however, if someone else buys it in
      you may not want to spend all of this on a business you need to          the meantime then you have effectively wasted your time. My
      know your maximum limit.                                                 advice, if you find something you believe is good and you like it
 2.   meet with your Accountant to tell them that you are looking to           then buy it, as good businesses are always in demand and if you
      buy a business and ask them to review your structure (company,           like it then you can be sure others do too. Also, to do a thorough
      partnership or trust & taxation set up). Advise them that when           due diligence most sellers will only give out detailed financial
      you find the right business that they will be required for due           information once they have entered in to a contract.
      diligence.                                                          9.   you have now entered in to a contract to purchase a business.
 3.   establish what sort of business that you would like to buy.              How exciting! Make sure that you have a good solicitor that is
      What are your interests? What are you good at? What skills do            experienced and understands business sale contracts as you need
      you have? Remember a business is a lifestyle change therefore            your solicitor to guide you through the sale process and advise
      you must buy something that you are going to enjoy.                      you at each step, beginning with the contract to purchase. Your
 4.   Know your income requirements and financial needs. If you                Accountant will ensure your structure is right and do a thorough
      need to earn $100,000 a year from a business to live comfortably         financial due diligence. Your Solicitor will ensure that contract
      and meet your financial commitments then this forms part of              deadlines are met for finance, due diligence and the receipt of
      your criteria. (Consult your Accountant or Finance Broker if you         information as well as transfer of assets, intellectual property
      are unsure).                                                             and payment of encumbrances. When you buy a business legal
 5.   so you know how much you can afford, what would interest                 ownership is extremely important and requires the preparation
      you and your income requirements; now “start looking”. You               and signing of a lot of necessary paperwork.
      need to learn what businesses that meet your criteria are worth.    9.   The business stacks up, passes due diligence, meets your
      You need to speak to business brokers, get information on busi-          criteria and you are moving on to settlement. Now you get
      nesses you see advertised and get to know what their real value          very excited! You are one final step away from owning a business
      is. This will take time however, it is time well spent.                  and making a lifestyle change. For the most part your solicitor
 6.   be prepared as you may not get everything you want for the               will prepare everything for settlement and instruct you on what
      price that you can afford. You may need to compromise which              you need to do. You need to get your own house in order so that
      may mean prioritising your requirements or criteria. Like house          you are prepared to commence running this business the day of
      hunting you never get exactly what you want however after you            settlement. The seller usually stays on for 2 weeks tuition so there
      purchase and move in it becomes home.                                    is no need to stress as you will be surprised how quick you learn
 7.   you have now looked at lots of businesses, spoke to many                 everything.
      business brokers and received advice from everyone includ-
      ing the cab driver and your daughters’ gym instructor. By           There are no short cuts to buying the right business. Jumping any
      now if you are not totally confused or have given up you know       of these steps will only cause you unnecessary stress, expense and
      exactly what you want, what it is worth and what is available.      ultimately cost you more time. All through the buying process the
 8.   you find a business that you believe is right for you. Do you       business broker is there to help you, chase up information and then at
      buy it right away or carry out due diligence before you buy?        the contract stage manage the process so that everyone is happy and
      Neither answer is right or wrong. If you buy it first, that means   a mutually beneficial outcome is achieved by all parties. You also have
      entering into a contract with the seller to purchase the business   your Accountant and Solicitor to guide and advise you.
      and under the standard terms and conditions of sale of a business   ____________________
      you must have sufficient time to do due diligence. In doing so,     Guy Cooper has been a successful Business Broker for over 15 years
      you have effectively taken the business off the market so that no   and has helped 100’s of people buy businesses, improve their life-
      one else can buy it, while you complete your homework and be        style and make money.
www.linkbusiness.com.au                                                                                                      business broker 23
leGAl perspecTive




michael webb,
partner,
sp&G lawyers



Franchising & Where Are We Now?
Michael Webb looks at the importance of the Franchising Code


T
        he Franchising Code of Conduct came into effect as a               The Committee made eleven (11) recommendations which aim
        mandatory Code in July of 1998 pursuant to the Trade               to raise the standard of conduct of franchising in Australia; these
        Practices Act, with its purpose to regulate the conduct of         recommendations included the following:
        participants in franchising towards other participants.
                                                                              1    that the Government investigate the benefits of developing
The importance of the Franchising Code can be seen in a Court action               a simple online registration system for Australian Franchisors
commenced by a Franchisee in the case of Ketchell –v- Master Education             requiring them on an annual basis to lodge a statement
Services Pty Ltd. The issue in this case was whether or not a technical            confirming the nature and extent of their franchising network
breach of the Franchising Code rendered the Franchise Agreement                    and providing a guarantee that they are meeting their
illegal and unenforceable. The particular requirement in the Code                  obligations under the Code and the Trade Practices Act;
was that a Franchise Agreement could not be entered into until the
Franchisee provided the Franchisor a written acknowledgement that             2    the inclusion of an obligation to act in good faith in relation to
the Disclosure Document and the Code had been received, read and                   all aspects of the Franchise Agreement;
had an opportunity to be understood. The Franchisor had failed to
ensure the Franchisee had provided this document before entering the          3    that the Trade Practices Act be amended to include pecuniary
Franchise Agreement.                                                               penalties for breaches of the Code.

“ persons contemplating buying into a                                      On the 21st of June 2009 the Minister for Innovation, Industry Science
franchise can spend between 3 to 6 months                                  and Research advised the next step in the consultative process is for
investigating and undertaking research before                              any party wishing to provide comment on some or all of the issues
obtaining business or legal advice ”                                       raised by the Joint Committee they should to do so by the close of
                                                                           business 10 July 2009.
Initially the New South Wales Court of Appeal held that a Court cannot
enforce a Contract prohibited by Statute and concluded the relevant        Whether any recommendations will be enacted in the Code when next
breach rendered the whole Agreement illegal and void, thus making          reviewed and amended is yet to be seen.
the Agreement unenforceable. On appeal to the High Court, the
decision of the Court of Appeal was reversed. The Court held it was        Included within the submissions to the Committee, were issues
not the intention of the Trade Practices Act to automatically make void    relating to pre-contract enquiries. Through these submissions, it
any Franchise Agreement where there had been a technical breach.           appears that persons contemplating buying into a franchise can spend
Although the Franchisor was successful in that case, Franchisors that do   between three (3) to six (6) months investigating and undertaking
not observe the strict provisions of the Code or do not retain evidence    research before obtaining business or legal advice, and there was
that they have done so, are in a potentially vulnerable position in the    some discussion about whether courses should be conducted or made
event of a dispute with a Franchisee.                                      mandatory for Franchisees. Ultimately it was felt that the existing
                                                                           facilities through the Australian Competition Consumer Commission
The Franchising Code of Conduct is constantly under review, the most
                                                                                                                                                        PHOTO shuTTersTocK imAGes




                                                                           and its website for Franchisees to access and inform themselves
recent amendment had affect from the 1st of March 2008, and within         regarding the Franchising Code dispute resolution mechanisms and
3 months, on the 25th of June 2008 the Parliamentary Joint Committee       compliance were adequate.
on Corporations and Financial Services resolved to inquire into and
report on the operation of the Franchising Code of Conduct, with it        ________________________
tabling it’s report in December 2008.                                      Article was written by Michael Webb, SP & G Lawyers , the Leaders in
                                                                           Property & Business Law (07) 5538 2277
24 business broker                                                                                                      www.linkbusiness.com.au
                                                                                                                                 FrAnchisinG

                        While Franchising is not for everyone, for
                        many it has provided them with a lucrative
                        income and quality lifestyle that is envied by a
                        vast number of stand-alone businesses.
Mark Mansour was
a very successful       The benefits are simple:
and highly respected
Franchisor of            1.   A franchise is a system and usually a tested and tried     6.  Banks seem to understand Franchises more than other
UTK (Uncle Tony’s             system that works. Franchise systems are documented            businesses therefore making it easier to borrow funds
Kebabs) up until              and usually given to Franchisees in a simple easy to           for the initial outlay.
late 2007 when the            understand format.                                         7. Most Franchisors have a strong and knowledgeable
group was sold to Ali    2.   Franchises usually take the risk out of opening your own       support team to train, assist and troubleshoot for
Babas’ Kebabs. Since          business on your own which can often be very risky.            Franchisees.
this time he has         3.   You know what you are getting into as the Franchisor       8. Franchisees share knowledge as you become part of a
worked as a Business          must provide you with disclosure documents and the             family that supports one another.
Analyst for NBS               better ones are very transparent when granting you         9. A Franchise usually represents strong branding and has
on the Gold Coast             access to information and other Franchisees.                   established consumer confidence.
preparing businesses     4.   The Franchisor is there to support you and you have a      10. Most Franchisors are continually looking for better ways
for sale, developing          Franchise Agreement that binds them and you.                   to make their products and service their customers,
exit strategies          5.   The Franchise Council of Australia has also established        of which Franchisees will ultimately benefit. Most
and advising on               a Code of Conduct which the better Franchises have             will even do the testing at their expense so that the
Franchise Systems.            agreed to be bound to by way of membership.                    Franchisees only ever receive the benefits.




                               Selling Your Business & Want a Higher Price?
                               Done your numbers? Know what your business is worth? If you could prove
                               it was worth more than your trading figures indicate, would a buyer pay
                               more? Or decide more quickly? We can prove the real profit improvement
                               potential of your business. After that, you may want to increase your price -
                               or keep it yourself!

                               To learn more about how we can help you put your business into the best
                               possible condition to attract your top price, please go to:
                               www.profitune.com/sellbiz



                               Buying A Business & Want Higher Profits?
                               Done your due diligence with LINK’s professionals? Found your dream
                               business? Already have an idea of what it can do in your hands, based on its
                               past numbers? Like to stack the odds of that success in your favour?

                               We can accelerate you on your path, add certainty to the mix and ensure a
                               greater margin of safety than if you were on your own.

                               To learn more about how we help you achieve your business goals faster,
                               safer and more certainly, please go to: www.profitune.com/newbiz
linK




   How Do You Value
        A Business?
                           By David Fitzgerald


E
          veryone that owns a business or is       I had listened to his point now it was my turn.     broker that is actively and successfully selling
          looking to buy a business will need      I asked my learned friend a simple question         businesses in the market place. Also ensure
          to understand the answer to this         “How much is a motor vehicle?” He thought           that the business broker explains how they
          question. Eventually business owners     about it for few seconds then asked “What sort      arrived at that valuation and that you fully
will need to sell their business and must be       of motor vehicle?” I said a “Sedan that seats       understand why your business is worth that
satisfied that they received the price at which    5 people”. He preceded “What size engine?”          amount.
the business is worth. Buyers that invest in a     I said “6 cylinders” he said “What make?” I
business must be satisfied that the amount         said “BMW”. He gave this some very serious          In the United States they believe that valuing
paid is fair market price and that they will be    thought, for over a minute, and then decided        a business and selling a business, for the
able to get their investment back when they        it was time for him to phone a friend. After        purpose of putting it on the market for sale,
sell and even make a profit.                       speaking to his car savvy friend he looked at       are separate and specialist professions. You
                                                   me and said “Did you know that there are over       go to one firm for the valuation, then to the
A very successful and clever Accountant friend     100 different prices for the vehicle that you       business broker to get your business marketed
of mine, whom is now retired, once said to me      described if you take into account type, size,      and sold.
that there must be a simple formula for valuing    model, interior and available extras”. I didn’t
a business. He was adamant and insisted on         know this, however I was not surprised.             ULTIMATELY, the price of a business is
arguing the point with me. I listened to him                                                           measured by return on investment and return
intently as he put forward a strong argument       Buying a business or buying a car there are         on investment is measured by profit, risk,
that businesses should be valued at increasing     literally hundreds of variables that need to        lifestyle and other variables.
multiples the more profit they make. For           be taken into account. My Accountant friend
example if a business makes a net profit of        conceded the argument and proceeded to              In our next edition of Business Broker I will
$100k pa then it should be valued at 1.5 times     seek my opinion when valuing businesses             explain the numerous variables that need
net profit then if a business nets $200k pa it     from that day forth. It still did not stop him      to be taken into account when arriving at a
should be valued at 2 times net profit.            from grossly undervaluing a business when           valuation of a business. I will also explain the
                                                   ever he acted for the buyer or overvaluing a        affect that these variables have on the value of
Interesting concept and it would almost            business if he worked for the seller. Needless      a business.
definitely simplify the whole valuation process.   to say we had some great friendly arguments.
In his Accountancy business he would value
quite a few businesses each year however he        I have told this story to help buyers and sellers
would never be at the cold face selling them.      understand that there is no magic formula
I was valuing businesses, selling businesses       or simple equation. Buyers need to spend            ____________________
and working in an office with many successful      time and educate themselves by speaking             David Fitzgerald has valued and sold 100’s of
Business Brokers that only valued and sold         to business brokers, getting information on         businesses and his advice is sought by many
businesses. I knew all too well that there could   businesses they see advertised and get to           Accountants, Solicitors and successful business
never be a simple formula due to the amount        know what the real value of a business is.          owners.
of variables.                                      Sellers need to get a valuation from a business
26 business broker                                                                                                         www.linkbusiness.com.au
                                                                                                          linK




                                                                       Business
                                                                   opportunities
                                                                             Here is a selection of
                                                                      businesses LINK has for sale.

                                                                   For more business opportunities
                                                                     visit www.linkbusiness.com.au

                                                                           28 South East Queensland
PHOTO SUPPLIED & SHUTTERSTOCK IMAGES




                                                              TM




                                       Phone (07) 5572 2122                           www.linkbusiness.com.au 27
General Business                                                                                                                                                                TM




     Average Net Over
     3 Years - $600,000




                                                                                                                    ld
     Established 22 years this
     exceptional 4 x 4 Accessories




                                                                                                                  so
     Business is located on a main
     arterial road in Brisbane.

     Business is very active in
     the market and is run Under                                                                             Thriving IT Business
     Management. Sales remain
     strong and growing. Good                                                                                Net Profit $138,666pa
     lease available.
                                                                                                             •	Very reputable IT Provider       •	Secure cash-flow
     Great opportunity for a new                                                                               established over 20 years        •	Up-to-date new technology
     owner to build on a successful                                                                            with strong systems in place       solutions
     business model.                                                                                         •	Experienced expert team of       • Irreplaceable intellectual
                                                                                                               management and staff              property, systems and
                                                                                                             •	Enormous buying power             infrastructure.
                                                                                                             •	Specialised systems in place
                                                                                                             •	Central booking system             SET FOR MAJOR GROWTH!
                                                                                                             •	Services a large number of
                                                    Asking $1.8 Million + sav
                                                                                                               Blue Chip client base            Asking $295,000
                                                    ref 10180                                                •	Strong professional              ref 10157
                                                    contact Tim Craft                                          ecommerce site                   contact David Fitzgerald
                                                    ph 0411 874 452                                                                             ph 0411 693 588




     Cafe/Coffee Shop                                                                                        Furniture Repair & Manufacturer
     Recently refurbished coffee                    Husband/wife team can net                                2008 - Net $79,417                 The sale includes $50,000
     shop located in a suburban                     $110K on current figures.                                Husband/wife team can net          worth of Plant & Equipment.
     centre. Plenty of parking,                                                                              over $100k                            Would suit a handyman!
     has ex coffee rights in centre.                         EASY TO OPERATE!                                Largest manufacturer &                       So call now
     Turnover growing rapidly.                                                                               repairer of its type on the Gold     to make it your business!!!
                                                                                                             Coast. They supply and repair
     Owner works 6 days a week -                    Asking $150,000                                          all forms and styles of PVC        Asking $99,000 + sav
     no nights. Option to open on                   ref 10142                                                (poly) furniture. Factory has      ref 10178
                                                    contact Peter Jackson                                                                       contact Guy Cooper
     Sunday’s.                                      ph 0418 986 991                                          low rent and can be relocated!     ph 0431 227 644

Some images shown are for illustration purposes only and are not necessarily examples of the business’ products or services


28    www.linkbusiness.com.au                                                                                                                      Phone (07) 5572 2122
                                TM
                                                                                                           General Business




  Digital Printing & Design                                                              Manufacturer & Installation
  If you are into technology you • Wide range of clients -                               Expected Net 2008 - $200k plus
  will love this business!            small to government entities                       This business was established                   peoples homes.
                                      coupled with a broad range                         in 1992 and is located at the
  •	State-of-the-art                  of services                                        Northern end of the Gold                        Major player in their segment
      digital printing business              Excellent future                            Coast.                                          of the market
      incorporating all aspects of          growth potential                             There are two businesses, one                         Inspection is a Must!
      printing & file handling                                                           manufacturing canvas & vinyl
  •	  In-house production plus       Asking $295,000
                                     ref 10182
                                                                                         products in a well-equipped                     Asking $359,000
                                                                                                                                         ref 10156
      outsourcing                                                                        factory and the other involves
                                     contact Peter Jackson                                                                               contact Guy Cooper
  •   Weekdays only 8:30am-5pm       ph 0418 986 991                                     installing the product into                     ph 0431 227 644




                                                                                         IGA SUPERMARKET
                                                                                         Net Profit $271,835pa
                                                                                         Established 16 years by present                 supermarket is the anchor
  Copy Shop                                                                              owners in busy Suburban                         tenant in this centre.
  GREAT Potential                                                                        Centre.
                                                                                                                                         Supermarkets seldom come
  •		 stablished over 17 years -
    E                                •		 ood long lease and very
                                       G                                                 Turnover is strong and growing                  on the market - Owner selling
       4 1/2 by current owner          stable customer base                              every year. Solid Business                      due to other commitments.
  •	Located in Burleigh on the       •	Owner wants to retire                             that can easily be run under
       Gold Coast                                                                        management.
  •	Producing $165K Net with         Asking $435,000 + sav                                                                               Asking $1,300,000
      P & E valued at $250k          ref 10150                                           Additional years on lease                       ref 10188
                                     contact Tim Craft                                                                                   contact Peter Jackson
  •		 Owner works 5 days             ph 0411 874 452                                     can be re-negotiated as this                    ph 0418 986 991

                                                             Some images shown are for illustration purposes only and are not necessarily examples of the business’ products or services


Phone (07) 5572 2122                                                                                                         www.linkbusiness.com.au                                29
General Business                                                                                                                                                                   TM




     Huge Profits,
     - Fun Product!




                                                           rAer
                                                             cT
     Net Profit $233,435pa




                                                         nT d
     after Owner’s Wage



                                                       co un
     •	Considered the #1 Outlet
     •	Long established brand
       trading history - 13 years by
       current owner!
     •	Extremely profitable
       products that basically sells
       itself and only relies on
       word-of-mouth, reputation                                                                             Food Distribution
       and strong traffic flow                                                                               Trades 5 days with two             This business will continue to
     •	Systemised & documented                                                                               exclusive areas owned and run      grow and will eventually need
       procedures                                            Easy .......Fun.......                          under one business.                more vehicles to keep up with
     •	No industry knowledge                              and Exciting Business!!                                                               demand.
       required - experienced,                                                                               Currently netting $200k for        Little under $3 Million Turnover
       professional staff in place                     What more could you want?                             owner and is growing rapidly.              Motivated vendor
     •	New favourable lease in                                                                                                                          anxious to retire!!
       place                                                                                                 Established staff structure
     •	Great return on investment                   Asking $400,000 wiwo                                     that includes one full-time        Asking $620,000
                                                    ref 10176                                                salesman and two cold trucks       ref 10134
                                                    contact David Fitzgerald                                                                    contact Tim Craft
                                                    ph 0411 693 588
                                                                                                             with drivers.                      ph 0411 874 452




     Manufacturing                                                                                           Food Manufacturer
     Aluminium fabricating                          This business would suit a                               This business is located on the    •		 his is an ideal add-on or
                                                                                                                                                  T
     business producing specific                    boilermaker especially if you                            Gold Coast and exports most          stand alone business
     products for the scaffolding                   are keen to own your own                                 of its production to very stable   •		 & E valued at $693k and is
                                                                                                                                                  P
     industry. Strong regular                       business!                                                customers in the East.               all in excellent condition
     clientele base and stable staff.                                                                        •		
                                                                                                               Average Net over 3 years is                  Call now!!!
                                                                                                               $150k and growing fast
     Owner is willing to stay on to                 Asking $495,000                                          •		
                                                                                                               Budgeted to Net $175k in         Asking $450,000
     train.                                         ref 10171                                                  2010 as half the orders are      ref TC8118
                                                    contact Peter Jackson                                                                       contact Tim Craft
                                                    ph 0418 986 991                                            already on hand.                 ph 0411 874 452

Some images shown are for illustration purposes only and are not necessarily examples of the business’ products or services


30    www.linkbusiness.com.au                                                                                                                      Phone (07) 5572 2122
                          TM
                                                                                                    General Business
                                                                                 Great Concept,
                                                                                 Huge Profits!
                                                                                 Net Profit
                                                                                 $245,822pa
                                                                                  •	Established 5 years with
                                                                                    an exclusive territory and
                                                                                    located in a prominent
                                                                                    position on Brisbane’s
                                                                                    Southside
                                                                                  •	Very strong growth and
                                                                                    sales
  Fully Managed Brumby’s Franchise                                                •	Endless list of customers
                                                                                    from all parts of Australia
  •	Net this year $123,936pa     If you have good customer                        •	Easy automated systems
  •	Fully managed &              service skills and drive then                    •	Staff in place                                    GROWTH POTENTIAL
    experienced staff in place   you need to seriously consider                   •	Successful trading history                          IS ENORMOUS!
  •	Northern NSW, only one in    this opportunity.                                  that will only get better as
    township - Very Busy                                                            the concept expands and
  •	Best position in CBD                                                            awareness grows
  •	Sales up on last year
                                 Asking $375,000 + sav                                                                            Asking $350,000
                                 ref 10141                                                                                        ref 10148
                                 contact Guy Cooper                                                                               contact David Fitzgerald
                                 ph 0431 227 644                                                                                  ph 0411 693 588




                                                                                  Distribution & Wholesale
                                                                                  Net Profit $207,943pa
                                                                                  This home-based business was                    Included as part of the P&E is a
  Simple Supply Business                                                          established in 1996 and can be                  Big Mack Truck (Prime Mover)
  Solid Growth Opportunities                                                      located anywhere in South East                  & a 40 foot Refrigerated Trailer
                                                                                  or South West Queensland.                       Van; Total P&E value $141,300
  •		 et Profit $158,790 pa
    N                            •		 o bad debts
                                   N
  •		 ong trading history
    L                            •	Predominately Cash Business                    They transport small goods,                     This business is a dominant
  •		 reat Lifestyle!
    G                                                                             milk, bread, fruit & vegies and                 player in the region.
  •		 ream Trading Hours
    D                                                                             more.
  •		 ery relaxed customers &
    V                            Asking $235,000 + sav($90k approx)
                                 ref 10168
                                                                                                                                  Asking $495,000
                                                                                                                                  ref 10155
    work environment                                                              Owner’s work minimal hours.
                                 contact David Fitzgerald                                                                         contact Guy Cooper
  •		
    Strong Growth                ph 0411 693 588                                                                                  ph 0431 227 644

                                                      Some images shown are for illustration purposes only and are not necessarily examples of the business’ products or services


Phone (07) 5572 2122                                                                                                  www.linkbusiness.com.au                                31
                                                How much
                                              time can you
                                            spare to organise
                                             the sale of your
                                                business?


Many people will consult a professional doctor when they are sick, a licensed
motor mechanic to fix their car; yet one of the biggest decisions that involves a
                 sale of a business ........ many go it alone.
    Given the time and complexities involved, you have to wonder why?


 Well, look no further then the professionals at
 LINK. We can help you manage the sale of your           For a confidential
 business in a carefully planned way.
                                                     appraisal of your business
 Our business brokers have a combined
 experience of over 50 years and we can assist          call: (07) 5572 2122
 by providing impartial advice on how to
 manage the sale of your business in a planned,
 orderly manner ensuring that confidentiality is
 maintained, uncertainty avoided and the best
 price is achieved in the shortest time.                                         TM




 Furthermore, LINK has a large database of             www.linkbusiness.com.au
 buyers seeking businesses which can often help
 accelerate the sale process.

								
To top