Episode Transcript
[00:00:01] Speaker A: Welcome to Between2Langros and today's guest is Chris Davey. He runs an accounting firm with one, an awesome name, speak a lot and two, an interesting niche. They are called Accountica and they specialize in buy side advisory, exit optimization and search funds. First went through today we focus in on search funds because that's ultimately we talk about what a search fund is, how to decide if a business is fit to buy typical equity structure, what savvy buyers are looking for, how to learn more about search funds and where to start and some resources to begin your journey and a bunch of other topics.
And with that, I present you Chris Davey. You're slowly getting over your irrational fear of Davy. Does this count for joining me today?
[00:00:48] Speaker B: Well, thanks for having me.
[00:00:50] Speaker A: James does ages since we spoke. I feel like we speak a lot and then it's been a long time.
[00:00:55] Speaker B: You know how it is these days.
It's just so meetings, meetings, meetings after meeting.
Years ago podcast chat. You first went through early adopters hub. Exactly.
[00:01:04] Speaker A: That's like that's the way. And then you helped us out at account which was like chatting with a very interesting otherwise where there were probably more vendors than people that showed up. But I am gonna get you wasn't.
[00:01:16] Speaker B: A whole heap of sales talk about.
[00:01:17] Speaker A: Your journey to start. Like how you've got here. Right. Talking to each other where how did you like you were starting the accounting space. When I said the question don't I find what you're doing you're slowly getting a little bit. You're in Russian spirit speaking now does this. The reason I think interesting is because I've noticed many accounts I know in.
[00:01:36] Speaker B: A way getting involved in search funds but you know, sorry, not search in investments varying levels. Buying a business meetings after meetings after meetings.
[00:01:44] Speaker A: Creating like raising capital and then deploying it.
[00:01:48] Speaker B: Exactly.
[00:01:49] Speaker A: That's like you know, just seeing things just like you know, chasing friends or a friend. Otherwise it becomes I can't say weird. I want to have him on this podcast eventually because the deal gonna get used. But you know, I've just noticed accountants like how you. I think it's a really interesting angle where. Yeah, let's start talking about you'll start now and from the start because I find what you're doing really interesting.
Just to jump forward a little bit you're involved in the search fund space. The reason I think this is interesting is. Yeah I've noticed many fell into it honestly just because I was getting involved in search funds or sorry in investment varying levels. Whether it's buying a Business kind of.
[00:02:28] Speaker B: Natural I was always like getting raising.
[00:02:31] Speaker A: Capital and then deploying it.
[00:02:35] Speaker B: I've just.
[00:02:35] Speaker A: Seen very like my twenties you know Jason Andrews a good example a friend of mine in Perth who I can't say yet I want to have you on this podcast eventually the deal's not fully done Retrospect you know I I've just noticed a lot so I think it's really interesting.
[00:02:49] Speaker B: I was a terrible employee but yeah.
[00:02:50] Speaker A: Let'S start tell me about minimum done.
[00:02:53] Speaker B: And from the start but really enjoyed I still enjoyed the work 24 years like 10 years or so and it was a bit of a grass greener thing fell into Sunshine coast so there really wasn't a lot of commercial accounting Moved to Brisbane kind of natural I was always a numbers got a commercial gig so I was hated it absolutely complex in public practice and then I had to go through my 20s which is bit of a light bulb sneezing okay I'm actually pretty good 2000 I was practiced 10 years then what if I actually and I was I would say in retrospect I did the bare minimum so I was a terrible employee honestly working for bare minimum done and general SMSF mortgage broking financial practice for like 10 years or so then it was a bit of a grass greener thing to direct also this is growing up on the Sunshine coast so it's it really wasn't a lot of accounting established account so as moved to Brisbane 24 after that got a commercial hated.
[00:04:01] Speaker A: It but I really I love the name of your firm and then I had the how did you come up with a counter code bit of a.
[00:04:07] Speaker B: Light bulb moment I thought okay I'm actually pretty good at this.
It's one of those things what if I actually tried laying in bed at night Sunday night going all right I'm going to start my own business.
No idea what the name is Yeah I was I got to make something working and it kind of just rolled every time and I needed to make business advisory even though it's a fake language breaking oh man I wish I.
[00:04:30] Speaker A: Had your level foresight to direct a role there. I've named a lot of things then sounded great eventually four years ago you say or say them on person you.
[00:04:42] Speaker B: Have to spell that every time after.
[00:04:43] Speaker A: That content snare is obvious but I really I love that it sounds obvious but it's like the amount of content how did you come up with a category Snare is just not that common of a word and our parent company is called actuarial Good luck spelling that.
[00:04:56] Speaker B: Laying in bed at night. I'm doing Sunday night going all right, I'm going to start my business. Tell me specifically what the name is how and it kind of.
And I needed to make it.
[00:05:08] Speaker A: You obviously had a bit of experience in this because you've done like preparation. Oh man. We can talk about this. Actually I had I think the whole like consequence. People often think I've named a lot of things I need to do ecom or I need to do. You say them on the Internet tradies, whatever. Or say yours is kind of like it's content snare. Exit prep is obviously advice around sounds obvious. Tell me like buy side advice. We get the snare is just not common of a word. Love this. How did that. Our parent company is called Actura. Good luck.
[00:05:40] Speaker B: So we basically niche down to.
But service offering rather than an industry.
[00:05:46] Speaker A: Like specifically about basically because your firm.
[00:05:50] Speaker B: All of the work from what I.
[00:05:51] Speaker A: Understand is quite firm focused. Like you obviously had a bit of experience because you've done like exit preparation.
[00:05:56] Speaker B: That we're already doing with search.
[00:05:58] Speaker A: Talk about this actually for a little.
[00:05:59] Speaker B: Bit is I think you know the.
[00:06:01] Speaker A: Whole like concept of people often think is like.
[00:06:07] Speaker B: Advisory because we're looking tradies. We've got all of that.
[00:06:10] Speaker A: Yours is kind of we're looking in.
[00:06:12] Speaker B: A business and then we're exit prep.
[00:06:14] Speaker A: And tell me buy side. Buy side advisory.
[00:06:20] Speaker B: What am I looking at? What are the major issues? Where's the gap?
[00:06:22] Speaker A: How did that come about?
[00:06:23] Speaker B: And then we put that in place over time. Yeah. So basically niched down to. So a service offer.
[00:06:29] Speaker A: You are essentially on both sides.
The way I see like it's like.
[00:06:33] Speaker B: You'Re working.
[00:06:36] Speaker A: But then you're also working with other businesses to make them business.
[00:06:40] Speaker B: That service for others that we're already doing research so through how much energy resources they put into finance. Engineering may not be perfect. We're looking at pretty. We've got all of that criteria criteria that's looking for in a business and then we are pretty specific. So your business comes to me I take a look at it. Okay. From AI what am I looking at? When I saw that as issues. Where's the gap Just waste of put that in place over time. If we could basically get these businesses a business owner you are essentially on.
[00:07:15] Speaker A: Both sides set them up.
[00:07:16] Speaker B: Is the way I work with a.
[00:07:18] Speaker A: Buyer to say like this is a.
[00:07:20] Speaker B: Good business or not.
[00:07:21] Speaker A: But then you're also working with other.
[00:07:22] Speaker B: Businesses to make them a better business. Amazing engineering business. But then any sort of come around Background okay we've got another person over here who searches how much energy time energy research so tell me about into.
[00:07:34] Speaker A: Finding business just define that assume I'm a dummy because I am especially when.
[00:07:39] Speaker B: It comes to searches Sorry there's no.
[00:07:41] Speaker A: Perfect tell me about raw definition if.
[00:07:43] Speaker B: You don't know what it is it's probably a good place it may actually be really good for pretty much two and I see that as models waste of resources so if we just a name honestly for what people have been doing business owners which is back in looking for businesses to buy them up and potentially connect them as much as it was the portion of the initial thought process around it very simple. Right. You know if you've got the traditional model is an amazing engineering business that was established in 1984 Stanford. Okay and a person around put them together a student so tell me about MBA thinkers just defined I didn't want.
[00:08:21] Speaker A: To go down the startup route especially.
[00:08:23] Speaker B: When it comes to startup man and you know the problem is there are raw deficits a little bit higher probably a good place to start. So the professors basically put their capital together basic models so raise self fund which meant that is it's just a name honestly graduated what people have been doing now forever which is looking for and eventually potentially their ideal people's money to do a portion of know that part time but the traditional model is different so it is established in 1984 and it basically come around from so.
[00:09:00] Speaker A: Yeah okay so a student going through.
[00:09:02] Speaker B: The MBA are they often you know.
[00:09:05] Speaker A: Just like one person you don't want to go down they're going out on their own friends and family type stuff. So the professors that's step one right. You got to get commitments.
[00:09:20] Speaker B: Yes yeah so which meant that this like student investment graduated was now investing in the nursing and yeah where you get these investors from the other point there I should mention is that so like we kind of know the reason why there is a lot of success with returns. So it is really a big step is because they're active investors, advisors, mentors.
[00:09:44] Speaker A: So yeah so hey we're just going.
[00:09:46] Speaker B: To throw 50k at you and are.
[00:09:48] Speaker A: They often one person that's kind of just getting they're going out on their own.
[00:09:55] Speaker B: They're going to try and more typical in Australia to try and get you.
[00:09:58] Speaker A: Know friends and family type stuff.
[00:10:00] Speaker B: And then there is also an accelerator.
[00:10:02] Speaker A: Model that's step one right in the.
[00:10:04] Speaker B: Southern hemisphere so it's really not many of them so you could kind of think of it like three or four Seed investment I guess and that's really you're seeing a person the partner. Yeah where you get these from Sorry the other partner really should mention somebody who's done this many many many times before they've got reason why there is data businesses is because kind of plug and play investors advisors from day one hit not hey we're just gonna throw 50k again am I totally not that.
[00:10:35] Speaker A: Or is completely off market do you feel that accounts are in a pretty.
[00:10:39] Speaker B: Good position to do this kind of work in Australia we don't really have that many partnered searches which part of the world and then there is also an accelerator model it's only one of.
[00:10:48] Speaker A: Them the reason why I do people is because you guys get to see.
[00:10:53] Speaker B: Australia so many businesses and that's really really similar to you get to see.
[00:10:58] Speaker A: Model what other than works what doesn't.
[00:11:00] Speaker B: Work like what kind of somebody who's.
[00:11:01] Speaker A: To look out for you know how.
[00:11:03] Speaker B: To many times before due diligence which I would like I speak to accounting friends of mine he set up the.
[00:11:08] Speaker A: Lead this one guy I'm thinking about right now I did a lot of M and A work in his previous life from day one and the way he feels about businesses I am like I don't know how did you know do you feel that accountants I would be pretty this kind of I tried to do this because I just don't know what to look for and I feel like when you're exposed to this many businesses and like literally the inner world the reason why I kind of I do think like there's no hiders you guys get to see probably could see a way to hide if you're super good at like you get to see dodging things but what doesn't work like what someone could be on LinkedIn for you know 9 figure business in the account I speak to accounting friends you know you know this one guy I'm thinking about right now that's why I did a lot of M and A work in his previous life.
[00:11:57] Speaker B: Yeah you're right in that you know.
[00:12:00] Speaker A: The way he so many different businesses I'm just like how did you know.
[00:12:05] Speaker B: I think we've all things likely accounts like I would dealt with clients completely screwed if I tried to do this.
[00:12:11] Speaker A: Because I just don't know what to.
[00:12:12] Speaker B: Look for and I feel like where they've started something done okay like literally.
[00:12:17] Speaker A: The inner workings they kind of realize.
[00:12:19] Speaker B: That industry that they're actually there's no.
[00:12:21] Speaker A: Hiding really they're probably not there and.
[00:12:25] Speaker B: They'Re struggling for every time things but.
[00:12:29] Speaker A: And you know actually though someone could be on LinkedIn being like nine figure.
[00:12:32] Speaker B: Business operators other businesses in other industries.
[00:12:37] Speaker A: There'S no yeah so that's why I feel like now does this have anything to do with your work Are you helping people you know exit those businesses and then go and buy again like.
[00:12:48] Speaker B: Is that something sizes all that kind of stuff and I think we've all has it happen again have kind of process one of them at the moment fell into their business where they've started something it's actually done residential and commercial cleaning business at the kind of realized by time that turns out industry that actually really hard finding workers the margins are just not there and truly struggling for every tiny people in from overseas to and it's actually going to turn up can be really there are so.
[00:13:18] Speaker A: Many industries any industry where there's a high turnover industry oh my God like I could not do that okay now does this have any but I you're are you helping people you know exit this is hard then go and buy again like out of business like I see some random thing someone's fallen into.
[00:13:37] Speaker B: Definitely definitely on the cards.
[00:13:41] Speaker A: Could be way harder than it looks right but I'm just like commercial things seem simpler.
[00:13:45] Speaker B: Over there residential and commercial cleaning business funny turns out people would really hate you and your business finding workers can't wait to run something like that literally grass is always green having to get people in from actually get somebody who's going to turn up full time the.
[00:14:01] Speaker A: Whole man There are so many industries any industry where there's a high turnover I look at that like my goal we have a fairly low yeah but I I'm not gonna lie I fantasize about any of those kind of things sometimes too good God this is hard I hate like run that kind of business or like I see but some random thing that someone's yeah okay so what are you doing now is a search I don't have I'm not seeing describe search fun way harder than it looks right but I'm just like that search fund seems simpler over there no yeah sorry what is search fund I.
[00:14:32] Speaker B: Think that's fun because you're not as friendly people were looking at you and your business Carl Wellington or something like that prior that's when I first came.
[00:14:42] Speaker A: Six or seven years ago but at.
[00:14:45] Speaker B: That point in time there was only two people in Australia Jake from SME Ventures and Lou from Wayfinder Capital.
There wasn't really average an ability to do you need a graphic research if I wanted To Southeast Queen Stay here love it here. But if I found a business in Calgary what you're doing now is a search investors would expect can you describe search funds for search funds Search fund ausf. That was the.
[00:15:15] Speaker A: No yeah sorry. What does search fund OZ do Because you're not a search fund yourself.
[00:15:18] Speaker B: Right. And then backtrack a bit I was going to do a search to start Egypt. That's when search funds first came across the model six or seven years ago there's only two people to speak to Australia actually one ventures and we need capital away find capital and equity and it wasn't really the majority changed geographic pretty quickly actually if I wanted to capital live in South Queen 3 years ago Stay here Interest rates increasing inflation investors people tried to move a bit. Right. So my light bulb moment was through a county of what I basically did for the most part businesses why don't I solve this problem three years ago at the ETA forum and essentially doing things Jake does three things we need the businesses that are raising capital.
[00:16:18] Speaker A: Are you actually investing CEOs.
[00:16:21] Speaker B: Yeah we need more capital equity so search fund itself major constraint literally just a company with shareholders agreement the challenge is to the market. So that was you know three years interest rates were increasing stuff so you know. Yeah so my capital moment was investor accounting other investors most parties help people businesses in one equity basis where why don't I try and solve this problem I should hope a bit the search raising some capital so and essentially what is pretty typical so you do simple numbers normally 500 600k raise so you're.
[00:17:02] Speaker A: Raising capital Are you actually investing in.
[00:17:04] Speaker B: Other search firms is ideal. Yeah 500 easier for my numbers 1 initially just a company with a fancy shareholders agreement ownership Right So now when the term itself is Flash is what it is but at the end of the day statistically it's about three out of four. Yeah and so what we do when they acquire we get refusal investors other investors we put capital actually invest in equity that's another big part of the risk management side of it. You should go back to work with a search capital up to two years. So let's determine how they operate what is printable if we want to have a large it's normally a 500k rate can be up to 22 year search for a solo actual acquisition 600 if we're ideal happy to Sometimes you have to go that has a step up 1 unit 50k becomes 75% with equity ownership we're just a minority shareholder at that point If Flash went because not every searcher will acquire this kind of model really interest me when they but again like we get first right of refusal it would be a huge mistake.
[00:18:13] Speaker A: Because I don't think I we don't know enough you know about other businesses invest so this is accountants again like.
[00:18:18] Speaker B: I think the risk management side of it we get to work searching for up to two years to determine how they operate. Where do you start if we want to have a larger stake at the moment basically can be up to 20 actually want to do a lot in the actual acquisition did you Google search fund I'm number two so I took to basically lead research searches that has a step up of 50% 75 worth of equities we're just a minority shareholder at that point from this far end I've seen Alex Hormozi sounds like Cody Sanchez on Instagram this kind of model I know how to do this dead twinkle right but again like for me I feel like business just do a quick turnaround huge mistake because I don't.
[00:18:59] Speaker A: No no you know about other business.
[00:19:01] Speaker B: MBA graduates accountants again probably fairly large businesses if someone is interested in going down this path startup failures where do you start you know in quotation all of that is a learning process actually what I do a lot if I knew this levels of readiness from so.
[00:19:31] Speaker A: What in this case do they end up shutting down their startups These ones.
[00:19:36] Speaker B: Were like already I'm just gonna buy business just a quick turnaround and flip it for 3x no problem with that too I've got to a place where MBA graduates cruising along they're not looking for that of hockey Sally Larry anymore up need it and startup then failures because all of that mindset shift I was talking about it's been a light bulb moment for a couple people positive oh wow profitable model even I've been.
[00:20:09] Speaker A: In this exactly right now focused on contest but they're all time so what in this case do they end up shutting down their startups to go back already failed behind use the profit to go buy something so then like you.
[00:20:27] Speaker B: Know if I wanted have got to.
[00:20:29] Speaker A: A place where let's say let's say.
[00:20:31] Speaker B: You were coaching along they're not lique.
[00:20:33] Speaker A: That'S what this was really it's just a free no seriously like if someone wants to start yeah how do I learn what is the price it just seems like a black box to me.
[00:20:45] Speaker B: That other people do really hard totally at the moment already and at the moment so if somebody comes to talk.
[00:20:52] Speaker A: Profitable you know I've been in this exact spot several times.
[00:20:57] Speaker B: 100 but there.
[00:21:00] Speaker A: Were times where I was like you know maybe we just step back stop investing so hard.
[00:21:06] Speaker B: Give me all your money.
[00:21:07] Speaker A: I'm gonna go and use the profit.
[00:21:09] Speaker B: To go and buy something at that point in time.
[00:21:11] Speaker A: So then like you know what I.
[00:21:12] Speaker B: Wanted to do is there is some really let's say.
[00:21:15] Speaker A: Let's say you were coaching me plenty. This was what this was really.
Yeah and we'll definitely come up seriously like if someone wants.
[00:21:25] Speaker B: Which is a really title here's a what is the.
[00:21:27] Speaker A: Process it just seems like a black box to me that like other people.
[00:21:30] Speaker B: Do and I'd score totally is at the moment 100 the best book and at the moment so if somebody comes and talks to me you know from like I'm talking to you now from like kind of what you're at now contemplating. So you're just learning good idea. What do I need learning about the model. So sort of skill set quite ready to jump it would be once I've how do I actually do it what the amount of money I'm going to get. How do I find yeah actually find injury. What I normally do is there is session proof kind of amazing book really really hard plenty all the way through.
[00:22:04] Speaker A: To value creation and we'll definitely link them up in the show notes. Okay.
[00:22:09] Speaker B: John Simon's book which is a really.
[00:22:11] Speaker A: Good title Areas of expertise.
[00:22:14] Speaker B: This is school and I just call it the Bible unless it's the best.
[00:22:18] Speaker A: Does the searcher you mentioned industry before. Like someone's an engineer and they think about buying an engineering company.
[00:22:24] Speaker B: Like the point you're at now is.
[00:22:25] Speaker A: That the typical thing they go into.
[00:22:26] Speaker B: An area what do I need because you mentioned talent. What sort of skills do you have a CEO all right. Once I've committed those things have to be the case.
They also know the industry well like actually fine. What we look for is enduringly profitable kind of thing. There is a lot.
So what happens Quite a bit yeah his people and then all the way through to value creation. Traditional search especially you have to do your PPM about your industry thesis because I've thought about this why you all.
[00:22:57] Speaker A: That kind of areas of expertise.
[00:22:59] Speaker B: But what typically happens is you know unless linked to their does the searcher.
[00:23:04] Speaker A: You said you mentioned industry before like someone's an engineer and they think about.
[00:23:07] Speaker B: Buying an engineering company quite often see.
[00:23:08] Speaker A: Pivots Is that the typical thing go into an area that they know because you mentioned talent manufacturing again bringing in.
[00:23:16] Speaker B: At the moment like normally those things.
[00:23:19] Speaker A: Have to be the case they bring in talent and they also know the.
[00:23:22] Speaker B: Industry well like there has to be the fit there and yeah like as an example it's actually who was a lot a debt collection so what happens quite a bit SAS his people's model looks great on paper traditional everything nearly everything your industry why you but what typically happens is ground experience where they really add value CEO and owner of a debt collection business then I quite often see pivots started aged care and yeah makes sense so the numbers actually makes sense but super common at the moment ethical moral but those kind of specific reasons there has to be I guess it's like alignment chose an example how do I hear there are many.
[00:24:13] Speaker A: Businesses debt collection in business definitely wouldn't.
[00:24:16] Speaker B: Want to own SAS model looks great on paper financial metrics awesome.
But just being like nearly everything wanting.
[00:24:23] Speaker A: To be associated everything could be limiting.
[00:24:26] Speaker B: My actual question if you're at a networking event in 2 years time I answer your question happy and proud.
You should actually do always recommend you talk to any other and every other searcher which I know most so the numbers again makes sense but ideally do an internship.
That's a really good point.
Day in the life of a search actually is like yeah there are many businesses and we say kind of the main attribute you could have as well getting started in Australia anybody who wants 35 IRRs maybe a lot of but come on in and join the party Just a quick one but yeah talking to those investors I only got to the big point the next searchers should actually recommend really quite difficult to raise any other traditional capital searcher which I've last guy most invested in basically in Australia spot over nine months and he was an absolute talk to them ideally B2B sales guy literally went to the nth degree from the inside out find a day in the life of the search actually as well it tells you a lot about hard to kind of grind persistency is kind of the main attribute you could have it's interesting like getting started talking to the other investors.
[00:25:51] Speaker A: How hard it is to raise money.
[00:25:54] Speaker B: 35% IRR I guess because that's come on in and join the party plugged.
[00:25:58] Speaker A: Into is like.
[00:26:01] Speaker B: Those investors early is another big big valuations have fallen off.
[00:26:04] Speaker A: A cliff in the last several years.
[00:26:06] Speaker B: With a traditional fund at the moment.
[00:26:07] Speaker A: It'S really quite difficult to raise traditional capital.
[00:26:10] Speaker B: Right. I'm not so convinced we invested in.
[00:26:13] Speaker A: Took which yeah that's like a whole other topic that's probably you mentioned sales.
[00:26:20] Speaker B: Guy the daily life. What is the daily Life worldwide to find these investors. So it tells you a lot about the It's a sales funny talking to brokers starts with brokers and it's interesting.
[00:26:33] Speaker A: Like how hard it is to raise money incredible buyer. I mean this kind of mirrors and.
[00:26:41] Speaker B: It really depends who you're talking to. So if you're talking to a broker you want to say that you're a searcher because valuations are falling off a cliff.
Coming coming around to the fact that.
[00:26:52] Speaker A: Various factors I I thought I was.
[00:26:54] Speaker B: Playing into it in a way because we're looking for really good businesses and brokers which.
[00:26:59] Speaker A: Yeah that's like a whole other topic that's probably a bit far beyond this. But you mentioned wait so the daily life. What is the daily life And I should have done this earlier than what's the difference then between a searcher and someone honestly.
[00:27:13] Speaker B: So like talking to brokers especially in the brokers and insuring really anything other than you understand that you're a credible buyer definitely going to utilize some other people the term and it really depends on your it's not.
[00:27:27] Speaker A: Is that not normal anyway? Like I know people that buy businesses and then may not actually they'll have someone help funding. You know, like is it technically search if you go and ask for your friends and family and this new entity and then go and use that, is that still search or is that like you're like you're not quite there yet. That's quite a few drinks.
[00:27:46] Speaker B: I think it is in a way comes back to.
[00:27:51] Speaker A: Can you just clarify I should have done this earlier then like what's the.
[00:27:55] Speaker B: Difference then between a surger and just buying actively like now what to do is hold the hand of really anything letting them do that when there is fires to put out. Definitely going to utilize other people's capital and someone to talk to. It's not.
[00:28:11] Speaker A: Is that not normal anyway like I know people that buy a business and then they'll have someone help fund. You know like is it technically search if you go and ask me friends and family to stick some money we're in a different this new entity and then go and use that is that still search or is that like you're like you're not quite there yet understand.
[00:28:29] Speaker B: The model like my search in a way as I say it comes back to the model that we know works when you've got different people who don't fully understand advisor, mentor, network. Really good questions that we now trying to do this because we're holding hand of the new CEO we're letting them do that that's interesting but when there is fires to put out you've got someone to rely on like talk to.
[00:28:55] Speaker A: It sounds appealing and not appealing honestly.
[00:28:57] Speaker B: I had dinner with one of my searchers yesterday and actually more productive meeting meeting but that everything's we're in a different space different environment something said before other people understand the model like myself and researcher ah Sebastian his name is.
[00:29:17] Speaker A: I have always thought it would be so hard to find people to run things when you've got you've never done.
[00:29:24] Speaker B: Who don't fully understand the assume like.
[00:29:26] Speaker A: A CEO I know people that do this like some friends of mine sometimes.
[00:29:30] Speaker B: Overlook because we're I don't know the.
[00:29:32] Speaker A: Name for it but they're a listed company in the US and they buy yeah it's other small business and they it sounds appealing and not run the same time and that to me sounds so scary because like I will say I feel like the people that run things are everything's very but that everything's you're saying that's not the choke point anymore I don't so they're both kind of interested in running but capital is larger constraint yeah money than the talent the equity side for what it would.
[00:30:04] Speaker B: Be so hard I don't think it's as hard to raise capital for the acquisition I've never done so this is why when you're talking about a CEO.
[00:30:11] Speaker A: Thinking and I know people going down the traditional friends of mine have like.
[00:30:14] Speaker B: Start talking to investors but at the.
[00:30:18] Speaker A: Same time time the company and they.
[00:30:20] Speaker B: Buy sometimes and has happened is people find that while they're still raising and now you've got a much easier sounds.
[00:30:28] Speaker A: So scary I feel like the people.
[00:30:31] Speaker B: That come around and they're just like.
[00:30:32] Speaker A: Why would I very hard to find you're saying that's a choice anymore to.
[00:30:36] Speaker B: Search I don't when I don't have to yeah I mean they're both I think it comes down to capital is a large different risk profile so they've both got the way they want to invest the equity side on that traditional.
[00:30:48] Speaker A: That just made me think of spacs.
[00:30:49] Speaker B: I don't think it's as hard to raise all these people that are sticking.
[00:30:52] Speaker A: Money into this thing in the hope that they go and buy something eventually.
[00:30:56] Speaker B: Thinking maybe about going down the this is why I like talking to investors as well because start the search at exactly crazily effective whatever Trump sometimes and has happened people find that we're funding they're still raising their search capital to me now you've got a much easier any other listening investors the day and they're just fundamentals why would I value base like for someone's wage value does this asset when I actually create and they make a catch does it spin and I think it comes down to I think you might find persons different risk tangent little rabbit where they want to know because you're going to have too many accountants that just made me.
[00:31:33] Speaker A: Think of for a similar reason all these people that are sticking money. Yeah I wish I didn't do anything buy something eventually good I think even after the big run up this is.
[00:31:43] Speaker B: Why I like I like private as well because we are not my poor account easily having a look at my crypto tax calculator reports tomorrow I hate it. It scares me it gives me such a big issue and I think it's a big point for any other the accountants yeah okay so fundamentals like value.
[00:32:04] Speaker A: That'S something I really wanted to ask you.
[00:32:07] Speaker B: I said actually create what cash.
[00:32:09] Speaker A: This is such a big problem I.
[00:32:10] Speaker B: Think you might find. I see what I'm saying. Well one thing I probably should mention have too many accounts thrown into Bitcoin similar reason basically.
[00:32:21] Speaker A: So what do you. What do you. Yeah I wish I didn't do any I didn't throw any in that space terminology after that run up you keep saying the search I given you were sort of talking specifically about the person who is literally searching for business having a look at my crypto tax what do you mean by their outcome?
[00:32:35] Speaker B: I hate it. So in a traditional fund which is.
[00:32:39] Speaker A: Like is it's such a big 100%.
[00:32:41] Speaker B: Structured always this way is 8.33% percent after they've operated I had something I really want and then there's a sliding scale based on internal rate of return from 20 to 35 I probably should mention the end result search 25% equity because they're putting in is pretty bloody good.
So what do you typical size of business they're looking for Traditional terminology like gets me right like you keep saying.
[00:33:12] Speaker A: The searcher you are sort of talking specifically about the person who is literally.
[00:33:16] Speaker B: Searching for business actual practices it seems.
[00:33:19] Speaker A: What do you mean by their outcome.
[00:33:20] Speaker B: So then realistically if you're going to get 20 traditional 3 mil that's the. That's the structure always this way typically around 3 to 8 25% of that is better than after they've operated 1 million 8.33 how are they surviving while.
[00:33:37] Speaker A: They'Re searching for the business Are they taking a wage from all your initial.
[00:33:40] Speaker B: Investment typically so the end result is they get 25% equity for putting in to flirt Ben so I have had some typical Sydney looking for traditional searcher more expensive bit more expensive but no somewhere expensive it seems to end up around 3 to 5 realistically if you're going to get 25 mil that's the you know typically around 3 to 4 legals 25% of that cost is better than interns the 1 million business obviously.
[00:34:19] Speaker A: Always these interns how are they surviving while they're searching for the business Are they taking a wage from all the.
[00:34:24] Speaker B: Initial investors like is that actually get an office with an intern that capital really is a fund like really everyone loves the I'm full if you really want to learn rent a bit more expensive my more expensive can I increase my ways and I doing it all day in somewhere that's not so expensive free to do it on themselves else.
[00:34:49] Speaker A: I think working from home is completely fine for many businesses subscriptions your ongoing bookkeeping you need to learn off someone.
[00:34:59] Speaker B: Transaction so difficult interns remotely we have like always send a six hour loom video who's going to watch that from.
[00:35:08] Speaker A: What honestly experience we've had who wants to sit on a two hour call also you know it's just zooms are just drain like I'm an extrovert I find energy in talking to people at.
[00:35:18] Speaker B: Events you know everyone.
[00:35:22] Speaker A: Nothing like you really want to learn something so yeah.
[00:35:25] Speaker B: I feel nothing like just sitting next to someone who's doing it all.
[00:35:29] Speaker A: It sounds like a lot of the.
[00:35:30] Speaker B: Work setting them free to do it.
[00:35:32] Speaker A: On themselves working from home remote or like completely fine brokers from many businesses it's insane to me that this isn't somehow if you need to learn someone I know there's obviously directory types so like acquire is it acquire.com or micro acquire used to be called like does for SAS it seems to be like honestly how is there no aggregation on a two hour call also here zoom's a drain I am an extrovert I.
[00:36:01] Speaker B: Find talking to people at events startup.
[00:36:04] Speaker A: Person zoom drains the hell make everybody's.
[00:36:06] Speaker B: Lives outside of my areas of expertise Are you exactly right there um the publicly available it sounds like a lot of the work Australian businesses as well so when we're not talking about it's.
[00:36:18] Speaker A: A sales funnel or deals right so.
[00:36:20] Speaker B: Like proprietary outreach so literally scraping the insane to me that this is navigator the whole lot like kind of I.
[00:36:28] Speaker A: Know there's obviously directory types out there like the acquire is it acquire.com micro acquire used to Be called like it seems to be.
[00:36:36] Speaker B: Whereas in America how is there no aggregation New Zealand has a lot better information than Australia. So maybe we should and it to those much more difficult.
[00:36:46] Speaker A: So what information do you need in.
[00:36:47] Speaker B: The US Some startup person. This information that you make everybody's lives is just a lot easier to find outside of my expertise. You're exactly right. Just not easy publicly.
[00:36:58] Speaker A: Where like is this for Australia is this like reporting the government makes this.
[00:37:04] Speaker B: What you're saying proprietary outreach. So definitely you know scraping the Internet going through LinkedIn sales navigated we have to pay for kind of company best thing we can do like using employee account as a proxy for contact. This is a lot easier. Whereas right in America so this is specifically so much easier.
New Zealand has a lot better information than Australia as well. So maybe we should catch up to.
[00:37:29] Speaker A: Those So I didn't think about that. What information do you mean in the US and New Zealand places this is information that you listing you know but you're actually going out businesses.
[00:37:40] Speaker B: Of course it's not easy.
[00:37:41] Speaker A: I said out loud I'm a good girl. So where like it's this reporting like the government makes this stuff of course. Is that what you're saying?
[00:37:49] Speaker B: But yeah, well people are in New Zealand definitely in America it's so saturated. There's so many search funds as example so much bigger companies. People are expecting publicly kind of emails specifically from MBA graduates. It was contact details a lot didn't actually mention that. Right. In Australia there's specifically tertiary education about search and ETA something working on right now with Brooklyn University just open over there.
[00:38:14] Speaker A: Okay so I didn't think about that component.
[00:38:16] Speaker B: I thought you'd be sort of working.
[00:38:17] Speaker A: With lots of places that had quote unquote listings or brokers or whatever you were actually going outbound businesses.
[00:38:24] Speaker B: Think of it. Of course.
[00:38:25] Speaker A: Right, of course.
[00:38:28] Speaker B: But invest $50,000 this way any random person who just knocks on the door and says hey I know how to run a business but people owe me money. Yeah, probably not in America it's so saturated. There's really the market is so figure the people are expecting pretty much every other geography that's kind of emails Spain graduates. Because we know in Brazil that didn't recommend that but in Australia to be.
[00:38:52] Speaker A: Honest if someone did an MBA about.
[00:38:54] Speaker B: Searching ETA something I'm working on right.
[00:38:56] Speaker A: Now like equally as not likely to get my money trying to get that in I just don't like I wouldn't be like oh someone did a course you know like and.
[00:39:06] Speaker B: From this course.
[00:39:08] Speaker A: Because I was thinking when you said like and it's going to be people so it's 100 like creating content like social networks.
[00:39:20] Speaker B: Yeah probably not so building the tertiary.
[00:39:23] Speaker A: Education your Rolodex of people you know who are awesome. So if any of them pretty much.
[00:39:28] Speaker B: Every other geography yeah like in this.
[00:39:29] Speaker A: Works both ways but I'm thinking like potential investor it's like and Brazil it's gonna be someone I know and I've seen I mean to be honest if someone did an MBA drunk with and equally as not likely to get my.
[00:39:43] Speaker B: Money you're right in saying with the.
[00:39:45] Speaker A: I just don't like I wouldn't be like oh someone did a course like.
[00:39:49] Speaker B: And now shouldn't but dump them into.
[00:39:50] Speaker A: Three categories like I was thinking you know who would I invest in said bad and like the more common it's going to be people I know so it's 100% my brain started going to like LinkedIn creating content like social networks.
[00:40:04] Speaker B: Or someone else and on a larger scale scale and then operators and your.
[00:40:09] Speaker A: Rolodex of people you know who are awesome.
[00:40:11] Speaker B: So if any shown that you've been able to do something in the past.
[00:40:14] Speaker A: Yeah like in this world both ways But I'm thinking like as a potential investor it's like it's going to be someone I know I've seen operate I've seen talk and I've met a bunch.
[00:40:22] Speaker B: Of commercial very well post the search.
[00:40:31] Speaker A: Yeah it's funny two of those together.
[00:40:34] Speaker B: Shouldn'T but dump them into three first one is MBA graduate which we really don't have here none of them do quite well the more common is we get people from private again like when.
[00:40:44] Speaker A: You talk about like getting a PE.
[00:40:46] Speaker B: Guy familiar with doing deals I was like again someone else and on a larger scale and then it was the.
[00:40:52] Speaker A: Ex and they haven't operated that seems to be kind of important They've already.
[00:40:56] Speaker B: Shown that you're able to do something I don't know if it's and those people appear though with morals kind of as in the search phase whereas the you know the private but even taking.
[00:41:06] Speaker A: The moral side apart out of it it's before my brain acquisition I would like someone who knows two of them. You know welcome to Unless of course you're getting and today's guest someone who's proven that they he runs an accounting firm with one an awesome name yeah.
[00:41:28] Speaker B: And that's the kind of thing with.
[00:41:29] Speaker A: This model are called and they specialize in advisory exit optimization search funds Today we focus in on search funds.
[00:41:40] Speaker B: And.
[00:41:41] Speaker A: Attributes we talk about what a search fund is how to decide if a business is fit to buy equity structure what savvy buyers are looking for how to learn more about search funds and where to start and some resources to begin your learn that and a bunch.
[00:41:57] Speaker B: Of other topics should and with that I present you just be all about learning talking like stakeholder management ideally someone.
[00:42:05] Speaker A: To do the sales and someone you.
[00:42:06] Speaker B: Know there's always files to put out in Every text searches 90 days 100 days do nothing but talk but it's.
[00:42:11] Speaker A: Like small business again like when you about like that is a nice again probably still when there's lots of people involved in that because next that seems to be kind of important can I where are you planning on taking things.
[00:42:30] Speaker B: You can do that honestly just keeping.
[00:42:33] Speaker A: What I'm doing taking the taking the moral side apart like out of it it's amazingly ambitious talent my brain idiot.
[00:42:42] Speaker B: On the outside keeping I'm doing everything.
[00:42:44] Speaker A: I can I would be wanting someone.
[00:42:46] Speaker B: Who knows that I'll break I am.
[00:42:49] Speaker A: Unless of course you're getting someone who's proven that they can find a really.
[00:42:55] Speaker B: Good CEO the more people that yeah and that's kind of thing with this model and I think the experience bit of the knowledge traditional here is if they have ecosyste do they can't take every single skill has an attribute hardly any of succession plan investors saying businesses out there but it's kind of the point of the model they put in the SBA petition the government attribute the election for that business acquisition in that role the first year in the middle of writing for just be all about learning talking Australia as stakeholder management I know ideally you know there's always fires to put out process every textbook talking to 90 days do nothing because they're about 10 years ahead of reality just keep doing the fun stuff.
[00:43:51] Speaker A: Have you got a wait list so tell me what's what's next you got a newsletter so I'm guessing that's what you tell people where are you planning on taking.
[00:43:57] Speaker B: Things oh man it's a process hey what's on the horizon it's my first one obviously and just keeping doing what I'm doing it's selfishly super super work our friend Jason ambitious people and doing another one I'm doing good tips from him it's a great as you can.
[00:44:16] Speaker A: Tell I am so where can people.
[00:44:19] Speaker B: Go I forget which one search fund dollars bullish on the model is the one the more people want to be involved and have the experience you said.
[00:44:30] Speaker A: You didn't have to spell it knowledge.
[00:44:31] Speaker B: To assist or invest.
[00:44:38] Speaker A: This has been great.
I hope hardly any of them maybe listening to this get inspired by like this. This area is so interesting because I.
[00:44:46] Speaker B: Think put in the, you know, I.
[00:44:48] Speaker A: Think there's something in my future. People always say like see we get.
[00:44:52] Speaker B: Some government back, you know, gets acquired.
[00:44:55] Speaker A: Or you know, you don't have to operate anymore. You put operator in like what would you do? I'm always like, I got a million.
[00:45:00] Speaker B: Hobbies, I'm not doing anything as an emerging market.
[00:45:02] Speaker A: But if I had to do something, this is probably the thought process success.
[00:45:06] Speaker B: Around you talking to us Canadian searchers as well because they're about 10 years ahead of us.
[00:45:11] Speaker A: Yeah.
[00:45:12] Speaker B: Demographics.
[00:45:13] Speaker A: You just said it's a grind. I ain't doing that.
[00:45:15] Speaker B: And yeah, just get done the fun stuff.
[00:45:18] Speaker A: Yeah, yeah, exactly. I think but like you said, the search. You got a newsletter so I'm guessing that's where you put your books out.
[00:45:26] Speaker B: Yeah.
[00:45:31] Speaker A: I think that would be interesting to me.
[00:45:32] Speaker B: It's. You've written his book and.
[00:45:43] Speaker A: Well, yeah, we'll keep in touch in the event I become rich enough to. So where can people go to get on your newsletter? It's investing, mate. Thank you very much for coming and sharing today. Oz.
[00:45:55] Speaker B: Not a. Thanks for having me. Always fun chatting and I thought you.
[00:45:59] Speaker A: Said you didn't have to.
[00:46:02] Speaker B: I screwed that one up.
[00:46:03] Speaker A: This full circle. Oh mate, this has been great.
I hope you know even just a couple of people maybe listening to this get inspired by like this. This area is so interesting to me because I think, you know, I think there's something in my future in this. People always say like if you were to, you know, content snare gets acquired or, you know, you don't have to operate it anymore, you put an operator in like what would you do? And I'm always like, I got a million hobbies, I'm not doing on anything.
But if I had to do something, this is probably it.
[00:46:34] Speaker B: You know, you revert, you do a search yourself. Or would you. Or you could be.
[00:46:40] Speaker A: Yeah, no, no, the investor. I mean you just said it's a grind. I ain't doing no damn.
[00:46:46] Speaker B: You're done with Ryan. Move on from that.
[00:46:48] Speaker A: Yeah, yeah, exactly. I think. But I would like, like you said, the search investors get to be a kind of consultant almost like the advice advisory. Like that's kind of what you were saying there. I think that would be interesting to me.
[00:47:02] Speaker B: You. Yeah. Depending on equity state, you could also be non executive director.
[00:47:08] Speaker A: Yeah.
[00:47:09] Speaker B: Cool official advice.
[00:47:12] Speaker A: Well, yeah, well, we'll keep in touch and in the event I become rich enough to.
It's investing then. Yeah, I'll reach out. Mate, thank you very much for coming on out shout sharing today.
[00:47:25] Speaker B: Not a problem. Thanks for having me. Always fun chatting and can't wait to catch up at zero.
