Aaron Toresen is busy – selling businesses for others has turned into a successful business for him. His Auckland-based brokerage firm Link now operates in Australia, South Africa and, as of recently, the US. In a brief New Zealand break between Los Angeles and Port Elizabeth, he talked to Latesha Randall.
The “world’s fastest growing business brokerage” – really?
The brokerage industry is immature, undeveloped and led by an older generation of tech-adverse people. We invested a lot in systems… our back-office IT platform was a $1.5m development project. It’s paid off – we now have 200 Link brokers around the world.
What does that look like in $$?
Group turnover has just reached $30 million. There’s been dramatic growth in the last four years following the bounce-back from the recession. That was a tough time, but did show who was meant to be in business and who wasn’t.
You’ve just expanded into the US – can you compete in that market?
There are lots of competitors, sure, but we reckon there hasn’t been much change in the last 10 years. We are counting on marketing packages and tools that put us light-years ahead. For example, we developed a complex business valuation tool alongside Auckland University’s statistics department – they just don’t have tools like this over in the US.
If you could use one word to describe the Kiwi business owners you meet, it would be …
And what makes a good broker?
I’ll give you three words this time. They’ve got to be self-driven – have buckets of motivation. Results-focused. And have integrity – you just can’t survive without it. Over the years I’ve let three of our best brokers go due to lack of integrity. I’ve got zero-tolerance for it.
You must see some crazy stuff going down – what’s the strangest business you’ve ever sold?
There was the pet crematorium… only ever sold one of those. Oh, and a lady who approached us to sell her bondage dungeon – straight out of 50 Shades of Grey! We decided not to, the market was a bit niche.
Photography: Fairfax NZ
Our sweet spot is the bracket of $500,000-$20 million companies – a lot of them are fast food franchises and hospitality businesses.
Any that would surprise us with their turnover – unexpected winners?
Yes – we sold an Auckland furniture manufacturer that was highly profitable. Staggeringly so in fact. I was surprised to see that the cheaply made stuff in China wasn’t dominating, they were doing it all here and turning over upwards of $15 million.
Are most business owners in control of when they want to sell? Or is it driven by circumstance?
It’s 50/50. You find most people have had their accountants talking to them for a long time about preparing for it, but often things don’t go to plan. There are a myriad of reasons people have for wanting to sell their company – it might be ill health, deciding to retire, or the kids not wanting to take over the family business.
And when you’re not chasing down business deals, I hear you’re stalking deer and boxing …
I’ve always been a keen deer hunter – I spend two or even three weeks in the bush each year no matter what. It’s grounding, getting away from computer and tech. I’m heading to my South Africa Link conference soon and you can count on me sneaking away afterwards for some hunting. The boxing is in my blood; my Granddad was a light heavyweight champion. It’s a tough sport, takes you outside your comfort zone. And it gives you perspective too – even a bad day at work mostly isn’t as bad as being punched in the face.
Top five tips for selling your business
1. Engage a business broker early in the process. Ideally, find one with expertise in your industry and demonstrable results.
2. Price the business correctly. While it may seem like a good idea to ask a high price and see what happens, in reality it tends to repel serious buyers and you may limit your chances of success. The key is to look at sales comparisons with similar businesses and ask a realistic price.
3. Get your books in good order. It doesn’t matter if you haven’t been perfect in the past, what matters is that you have clear explanations that will withstand scrutiny. For example you may have spent $50,000 on an unsuccessful marketing campaign and this cost will not be repeated in future years. You are quite within your rights to add this cost back, effectively increasing the profit by $50,000. This process of normalising accounts needs to be done carefully and appropriately.
4. Presentation matters. Just as you would mow the lawns and paint your house when it’s time to sell, the same philosophy applies to selling a business. A tidy operation will always feel like an easier business to take over. Do your staff have uniforms? Is your office tidy? Is your warehouse in good order and well organised?
5. Be patient and keep your eye on business. A business will typically take two to six months to sell. It is easy for a business owner to “switch off” during this period as they plan the next stage of their lives. Stay focused and keep the business ticking over strongly. Buyers will look at the current performance carefully and have concerns if it appears to be flagging.