Blog

Businesses in the Australian mid-market, of which there are 300,000 have a combined annual revenue of 41.trillion dollars making average of 10.4% net profit before tax. However, 20% of all operating businesses in Australia don’t make any profit! In this blog we address the very real question facing those owners who are not making any profit, is my business worth anything?

This is a frequently asked question as we meet owners considering their exit. The truth is, there are no easy answers to this question. We frequently see deltas of 50% or more between offers for the same business! Why so difficult? Why the volatility? The short answer is “strategic intent.” The motivation of the acquirer and the neatness of the business being acquired against the buyers’ objectives and preferences drives volatility. Two offers, 50%-100% apart are not uncommon, different parties see different things. Both offers are legitimate yet significantly different!

Congratulations to the shareholders Aerospace Equipment Overhaul and Sales (AEOS) on the successful sale of their business to SK AeroSafety Group. AEOS has a 60 year history and heritage supplying the aerospace industry in Australia.

As the host of the Troubleshooters Podcast, I’ve had the privilege of chatting with some incredible people, but my conversation with Pat Farmer back in Feb 2023—a professional Ultra-Runner, former politician, and all-around Australian hero—stands out as one of the most inspiring yet.

I’ve been predicting the demise of the grocers for three decades! By and large I’ve been wrong or let’s just say it’s taking longer than I expected. Carrie LaFranz in last week's AFR has an interesting take on this subject. 

The AFR reported on April 8th under the headline, $500m revenue family-owned pork processor kicks off sale; flyer out. This is the possible sale of a family owned and operated Meat Processor called BE Cambells. The article went on to report that the “bidder sources said a one-page teaser had landed in inboxes, spruiking the company’s “blue-chip customer base” and “strategically located processing facilities.” This widespread leakage is not just bad news for the shareholders its completely unnecessary.

This is a perennial question for most business owners contemplating an exit. The simple and truthful answer to the question, what is my business worth? Is that the business is worth whatever a buyer says it’s worth, provided the vendor agrees at a point in time! That’s it, simple. The fun starts when the vendor disagrees with the buyer and now we have a valuation gap.

Congratulations to Alistair Hood and his fellow shareholders on the successful sale of their business Ashton Manufacturing to Reilly Best. Ashtons are the leading casket manufacturer in Australia.

Congratulations to Stuart Edgely and his team at Emerald on the successful sale of their Alarm division to Red Smoke Alarms. The merged entities have now re-branded as K.P.S Australia Pty Ltd. We wish the buyer and the vendors well, confident there is strong alignment and a good-fit and that this deal made sense for everyone.