[EP 026] On Your Terms: The Commercial and Legal Elements of Preparing a Business for Sale (Part 1)

Today’s episode is part one of an exciting two-part series with Andrew Cassin of Acquisiti. In this episode, we talk about Andrew’s book “On Your Terms” - which is a great read for business owners out there who are gearing up to sell in the future. Before we dig deep into the contents of the book, (which we will be doing in the second half of this series!) we open this series by taking a step back to talk about the story behind the book

CLICK HERE to download the transcript for this episode.

Episode Highlights:

  • A Book Born Out of Frustration
  • Education Prior To Transaction
  • Legal Wrap Up

Hi, it’s Joanna Oakey here and welcome back to The Deal Room Podcast, brought to you by Aspect Legal.

We have another exciting series lined up for you, and today’s episode is part one of a two-part series with Andrew Cassin of Acquisiti.

In this episode, we talk about Andrew’s book “On Your Terms” – which is a great read for business owners out there who are gearing up to sell in the future. But before we dig deep into the contents of the book, (which we will be doing in the second half of this series!) we open this series by taking a step back to talk about the story behind the book, the unique opportunities that it offers to accountants, and the difference that it makes for anyone who’s thinking about preparing their business for sale.

So, let’s get started!


A Book Born Out of Frustration

Joanna: Andrew, thank you so much for coming to join us today to talk about this fabulous book of yours “On Your Terms.” Let’s start perhaps by giving our listeners a little bit of insight into you. So a bit about your background and what led you to write your book.

Andrew: Absolutely. I guess in summary I’m a licensed business agent in New South Wales. I’m licensed to sell businesses under the Property, Stock and Business Agents Act.

I set up my own firm Acquisiti back in 2004 and I’ve been doing the valuation and sale of privately owned businesses in the lower mid-market for about 15 years now. So I’ve been in the game for quite a while.

I tend to specialise in services type businesses so I’ve got quite a lot of experience and mostly I get my experiences in companies like recruitment companies, marketing communications, training organisations, IT services, healthcare. These are the sort of the areas that I tend to specialise in.

As you pointed out I published my first book back in 2015 called “On Your Terms” with the subtitle 101 ways to prepare a business for sale or succession.

Joanna: That would keep someone busy for quite a while, wouldn’t it? Going through it.

Andrew: Well, I didn’t really write it as a 101 tips and insights rather than a prescriptive procedural type of book which you often find on the bookshelf if you go into business planning books or anything like that. They tend to be, do this step one, do this step two, step three, so on and so forth. You end up with this wonderful plan.

I did design my book more to be a you can dip in and dip out at any point. You can do post-it notes all over the place. You can quite easily just grasp the concept in a paragraph or two rather than having to go through you know. There’s a lot of fluff in a lot of other books. Let’s be honest about it.

I try to keep it really easy to read but as much information in there as I possibly could.

Joanna: Yeah. Right. And so how did it come to writing a book? What led you in to run into this process? Because I mean writing a book is a big thing, right? There has to be a big driver there. Clearly you had seen a lot that led you into feeling like there was a book in this, something that you really needed to communicate to the public.

Andrew: Yeah. I’d love to be able to say that it’s been my lifelong dream to be an author and I finally found something to write about that people might want to read. But it was actually frustration, Jo.

I was getting clients coming to me with their businesses and expecting the world, expecting someone to jump somersaults over their business, pay overs for them and then there weren’t. There were terrible warts on them and they weren’t well set up.

One of the problems with being a business broker is that your relationship with your client comes right at the end of the business cycle. It’s when the business owner has finally thought to themselves “You know what? It’s time to leave. It’s time to get out.”

They need to sell. They are not interested in taking advice. All they want is someone who’s going to do a transaction and get them what they’ve been told they can get.

And recently this year I had a transaction fall over and I think it was mainly because the vendor was told that her business was worth five to seven times a bit. Someone had just plucked this range out of the air with no real hard market data behind it. So her heart was set on achieving this sort of range and it’s just not. It’s not good for business broker to be put in that situation because you know you can’t hit the vendors expectations.

Joanna: Yeah. And of course those multiples are available out there. That’s not uncommon. But it needs to apply to a business that is prepared in the right way for sale. I guess really that’s your point here, isn’t it? In terms of your book and the concept of preparation.

Andrew: Yeah. The book was 15 years at that stage about 12 years of frustration, accumulated frustration and learnings, and looking at all the pitfalls and obstacles. So you often hear of business owners who decide they don’t want you to bargain. They will go and sell themselves.

It takes a long time and a lot of water under the bridge to actually learn all this stuff. You can’t just pick it up overnight and expect to get a fantastic result. It takes time to properly prepare. That’s the first thing that I really wanted to communicate through the book. Also, most business owners who are only concerned about themselves, and that was the other thing I wanted to communicate out there.

You can't just pick it up overnight and expect to get a fantastic result. It takes time to properly prepare. - Andrew Cassin #TheDealRoomPodcast Click To Tweet

The book has been set up to look at the business through a whole range of different perspectives and absolutely the individual perspective is key, or is always one of the key ones.

They need to think about what’s important to them when they’re going to sell their business. But they also have to take into account all the other stakeholders that are involved including the buyer, potential buyer, their employees, their customers, suppliers, their advisors. There’s a whole range of different perspectives you need to look at their business through if you’re going to set it up correctly.

So really, what I wanted to do was just get all these information out there in a manner that was going to be able to influence the highest number of people so that when they finally came to me with the business ready to sell, it was well thought out. It was well prepared and they were going to be realistic about what expectation or what result they were going to be able to achieve with me when we actually take it to the market.

Joanna: I want to spend most of our time talking about the content of the book but I think it’s actually interesting also hearing the story behind the development of the book. So I guess firstly how long did it take you to write? How long did it take you to get all of these ideas down in a coherent form?

Andrew: Well, it would take two years to get it into a coherent form.

You know when people write new year’s resolutions and they decide to go to the gym to lose weight. Six weeks at the gym and they work really hard and then it sort of tails off. It was very similar with writing a book.

I went hammer and tongs for about three months and got about halfway through. And then the steam ran out. It took me another 18 months to finish it from that point, or to get it to the point where I could actually send the manuscript to a publisher.

And I end up self publishing. I didn’t go through the normal channels. I just couldn’t find and probably to my own fault, I didn’t try hard enough. But at that time I couldn’t really find the right type of publisher who would be jumping all over it to take to market so I decided to self publish. Keeping in mind also that the book is not designed to make money. It’s not designed to make money through the sale of the book.

It’s designed to make money in the future when someone has read it and set their business up and so they come to me and I make money out of the fees at that point. So I tend to give the book away more often than not. I send it out as a marketing piece even though it’s a good size. It’s got great thud value which is a really interesting concept.

It’s always appreciated. I particularly love it when someone comes to a meeting with the book and it’s got little flags and post it notes all the way through. They say “I’ve read all this. I’ve done this and done that.” Yeah, and it’s fantastic.


Let’s Take A Break

Let’s take a short break. When we get back, Andrew talks about the difference this book can potentially make for business owners who have read it prior to going to market versus those who have not. Quick clue! Education is key in preparation.

And that’s next! This is Joanna Oakey, and you’re listening to The Deal Room – a podcast brought to you by Aspect Legal.


Our Business Sales And Acquisitions Services

Aspect Legal has a number of great services that help businesses prepare for a sale or acquisition to help them prepare in advance and to get transaction ready. And we’ve also got a range of services to help guide businesses through the sale and acquisitions process. We work with clients both big and small and have different types of services depending on size and complexity. We provide a free consultation to discuss your proposed sale or acquisition – so see our show notes on how to book a time to speak with us, or head over to our website at Aspectlegal.com.au.




Talking Law – A Sister Podcast

If you’re interested in hearing smart legal tips for business, The Deal Room’s sister podcast – Talking Law – is perfect for you! These two are now among the top legal podcasts in Australia!

In our Talking Law podcast, I dissect a different topic each week that I have seen impact businesses, and I will then provide actionable tips for you to avoid that risk, or to use that legal area to your advantage.

We release new episodes every 10 days. You can listen to our episodes on www.talkinglaw.com.au or subscribe to our Talking Law podcast on iTunes to be the first to know when a new episode is out. Now back to the show!


Welcome Back

Welcome back! Earlier, we heard Andrew’s story – how his years of experience and frustration pushed him to finally write a book that will hopefully help business owners in preparing for sale or succession. Let’s keep the conversation going and discuss the opportunities that this book offers to accountants who want to do more than just compliance work for their clients and to business owners who are looking into selling in the future.


Education Prior To Transaction

Joanna: Let’s talk about that for a second. We’ll come back to the content in a minute. I promise we will talk about the content.

But let’s talk about this. The difference between someone who has read this book and then is coming to talk to you versus someone who’s had no connection with the book. So someone who has had no connection with some of the concepts or all of the 101 concepts that you’re talking about here. What’s the palpable difference that you see in people who come to you and talk to you after they’ve read the book and understood some of the concepts that are in here.

Andrew: I think you just put your finger on it. It’s all understood.

Joanna: Yeah.

Andrew: It’s an alignment.

Joanna: Yeah.

Andrew: I’m not educating them during the conversation.

Joanna: Yeah.

Andrew: The conversation is much more attuned to or in line with reality. And they get it. They tend to get more the concept of what it takes to actually sell a business and how important it is to prepare. So that’s probably the main difference.

Otherwise, I’m meeting with them and you spend half the time educating them and trying to correct misconceptions that they may have. That’s really difficult.

Joanna: And I think many people listening to this podcast who aren’t the business owners themselves who are involved in the sale or acquisition of a business, for us as advisors there is so much of a component of our role that relates to the education prior to transaction.

For us as advisors, so much of our role relates to education prior to transaction. - Joanna Oakey #TheDealRoomPodcast Click To Tweet

I’m hoping our accountants who are listening in are listening closely to the sorts of things you’re saying here. Books like this are a way that they can pass on information that is highly useful and relevant to their customers, their clients if they think their clients are within let’s say five years, maybe five to 10 years of preparing their business for sale. This is a way (books like this and education like this) business owners can understand the elements early enough for them to make a difference.

Andrew: Absolutely. To be quite frank, my accountants got a couple of boxes in their office to give to their clients because they can see how they can add value to their clients. They can be seen to be making, to be doing something that adds value by saying “Look. We’ve got a book here from one of our clients and we really recommend you read it.

They’re not pushing their own service there. But what they’re doing is they’re establishing themselves as someone who’s looking after their clients and their interests. I think that’s really important.

There’s someone else. And for the life I can’t recall who it is I actually gave a box of books to as well and they hand them out to their clients as well. It just helps establish them in a better light with their clients as well.

Joanna: Absolutely. I think it’s a really great value add.

Andrew: Would you like a box of books Joanna?

Joanna: Give me a box of books, Andrew. That’s fabulous! I’d love a box.

Here’s a point for our accountants if they want to get in contact with you. We’ll have some links from our show notes through to Andrew and his website acquisiti.com where you can make contact with Andrew if you’d like a box of books so that you can be providing them to your clients to help them get prepared well in advance of a sale.


CLICK HERE to get a copy of our free e-Books.

Legal Wrap Up

Joanna: Next week we close this two-part series out by delving deeper into the contents of Andrew’s book. We will identify the usual suspects for business sale disappointment and recommend some practical changes that you can make for your business to get it to a business sale ready state. Most importantly Andrew ends this series with some hot tips for advisors, brokers and accountants working in the M&A space.

But for now I wanted to talk briefly about the legal elements required to prepare a business for sale. If you would like a little bit of information about these legal elements, we have an e-book that details all the elements required to prepare a business for sale from a legal perspective where we outlined the areas that I’ll talk about today and also include a checklist of the considerations and action items required.

To get a copy of the book, just check out the show notes or head over to this episode page on our website. Go to www.aspectlegal.com.au, find the podcast section on that website and look for Episode 26.

This is a great publication that provides some simple education in preparing businesses for sale that is also particularly relevant if you’re a business gearing up for sale, but also if you’re a business adviser and have clients considering a sale then this is a great free publication that you can pass to them. So feel free to get in touch and we can send you a free copy that you can distribute to them.

All right. So what are the legal elements that you should be thinking about when preparing a business for sale? Whether or not it is your business or a business that you are advising on.

The very first area that we would suggest be focused on is the structure of the business and the sale structure. This can mean two different things. So the structure of the business effectively means how is that business owned and held at the moment. Is it through a company owned by a trust? Is it through a company owned by individuals? Is it a trust? Is the trust owned by or the beneficiaries of the trust people that can be distributed to? Are they individuals? Are they companies? Are they other trusts?

These are the sorts of things that you should think about well in advance because the way a business is structured can often have a large impact on the amount that ends up in the business owner’s pocket at the end of the day. You need to think about the suitability of the current structure of the business so the current business structure and then you also need to think about what the likely sale structure will be.

There’s different ways to approach sale structures. Generally speaking you can have a sale of a business that’s a company that is a sale of the shares or you can have a sale of the assets of the business component and there’s different pros and cons for each of these approaches.

If you want to see more or hear more about the pros and cons of each of these different approaches of how to structure the sale of a business, then check out the e-book that I was talking about. Head over to our website or the show notes and you can get a copy of our e-book there where you can read in further detail the differences between structuring your sale in one of each of these different ways.

Now sale structure can also mean how is the consideration going to be paid to you. We can have a consideration that comes to us 100 percent upfront or via a deferred payment or via an earn out.

Deferred payments means a payment for the business that’s not all paid at the beginning and that can comprise of an earn out so that means something that is contingent on the way the business performs in the future. Or the payment might be a fixed payment but the payment being made at a later point in time.

There are different considerations to consider if you’re adopting one of these second or third options in terms of how consideration will flow to the seller. If you’re looking at deferred payments that are a fixed amount, then you need to ensure that you have considered how you secure the payment into the future. So how was it that you ensure that the buyer actually pays that amount. And how do you protect that payment into the future.

For earn outs, you need to consider how you structure the earn out in order that you maintain the control you need to get the highest likelihood of actually achieving and receiving the earn out at the end of that earn out period. So it’s all about making sure the earn out detail is appropriately structured.

We have a number of episodes of The Deal Room where we talk about earn outs so just skip through some of the history of our Deal Room recordings where you’ll find episodes where we specifically talk about earn outs. And of course it’s a tricky subject so we actually talk about the nuances of earn outs both from a commercial and a legal perspective in many of our podcast episodes even if we haven’t highlighted in the show notes. So go back and have a listen to a few of our podcasts you’ll probably find some earn out tips there along the way.

Now what are some other issues from a legal perspective that you should be thinking about in preparing a business for sale. I don’t want to take too long today. I don’t want to bore you so I’m just going to list the sorts of things that you should be considering above and beyond the concept of sale structure that we’ve talked about so far.

And then if you’d like more information you can see one of our previous episodes, Episode 4 where we talked in more detail about some of these elements in priming your business for market. Also as I’ve said before, head over to our website for the podcast and you can download an e-book where we go through each of these areas in a lot of detail.

But just as a quick overview the other things that you should be thinking about from a legal perspective in priming your business for sale and for market is a timeframe. How quickly will you want to move? And indeed it’s important I think to bear in mind the question as to whether or not you are happy to stay on with the business post sale.

If you are happy to stay on with the business post sale, you’re likely to expose yourself to a larger pool of buyers. Not all buyers will require that but sometimes it’s a useful element to have in place.

If you are happy to stay on with the business post sale, you're likely to expose yourself to a larger pool of buyers. - Joanna Oakey #TheDealRoomPodcast Click To Tweet

But of course if you want to get out of your business quickly or if something happens to your business that requires a quick sale obviously you reduce the period of time that you might be able or willing to stay with the business after the sale, which just means you need to be aware of the impact that this might have on timing.

And the reality is that businesses will often take a lot longer to sell than a business owner had considered would be the timeframe in the beginning. So get your ducks in line early and make sure your business is primed well and truly in advance of the time that you actually want to be out of the business both in order to give yourself space to find the right buyer on the right terms and also in order to give you the space to be able to serve on during a transition period if that is something that is intended with a new buyer.

The other things that you should think about is getting your house in order. By that I mean locking in the value of your business as far as you can contractually.

From any intellectual property perspective, it means being aware of your intellectual property and being aware of how your intellectual property can be protected and ensuring that you have everything in place so that when a buyer conducts due diligence on their business they feel satisfied that the intellectual property that they are purchasing in your organisation is protected.

You can also get your house in order and lock in value in the business by locking in key clients and key suppliers through contractual terms. You should make sure you understand the contracts that your business has signed and ensure that your business is ready for the due diligence process and that you have clauses or that at least you’re aware of any clauses in agreements that you are a party to that particularly require any consent on change in control or beneficial ownership of the business.

These sorts of clauses can be seen in many types of contracts. So it’s really important that you have someone who is experienced in the area of business sales and acquisitions review your contract from a legal perspective well in advance of you putting your business on the market in order that you can fix up any of these issues within your contracts if indeed there are any, and usually there are. Usually, there are many.

The next thing to consider is due diligence preparation. Now we’ll talk in the future podcast episodes specifically about due diligence and what you need to be aware of because due diligence is a minefield and most business owners who sell a business who haven’t sold a business before just are not properly prepared for the due diligence phase.

So stay tuned for future episodes of The Deal Room podcast where we’ll talk about this issue of due diligence in more detail and how to be prepared, and if you’re a buyer what you’re looking for in the due diligence process.

The other sorts of things you should think about in preparing your business for sale, having a confidentiality agreement that is appropriate for when you’re out finding a buyer. Make sure you have the right transaction documentation in place and there’s lots of mistakes that can be made with transaction documentation. But it’s important that you get the right advice about what transaction documentation is appropriate and that you prepare in advance so that once you find a buyer you’re ready to go.

And finally you should keep your eye on transition and integration and conducting business as usual. You need to think about how it is that you are going to ensure that during the busy period of dealing with due diligence and dealing with potential buyers you’re not taking your eye off the ball.

Because often what can happen is in a sale process which is a very time consuming process often, particularly for businesses that haven’t prepared well in advance. If they take their eye off the ball there can be issues that occur in a business. And of course if a sale falls over, then you’re still left running that business and you want it to be able to make it through the sale process in the same state that it went in.



All right. So that’s pretty much it for a brief snapshot on the legal elements required to prepare a business for sale. As I said before, check out our e-book if you’d like more detail about all of these things that I’ve spoken about and many more.

You are looking for Episode 26 of the deal room podcast and look for the links for downloading the e-book. And as I said this is also a great publication if you deal with clients who are considering a sale. So if you’re an advisor with clients considering a sale, you can get a copy of this free publication and distribute it to them.

And we also have an option of co-branding. If you’d like to be co-branded on this document so that you can pass it out to your clients, just get in contact with us via our website at aspectlegal.com.au. Use the contact section there and get in contact with us and we can talk to you about what co-branding options we have available so that you can pass this out to your clients with your brand also attached to it so they can see how much value you’re adding in their space.

If you’d like to listen to more of our podcast discussing the legal issues and preparing for a sale, then head back to Episode 4 where we talk about the legal tips in priming your business for market.

Well that’s it for today. Thank you so much for listening in. I hope you found this episode interesting. Part two is coming up soon with Andrew Cassin where we get into a whole lot more detail of what elements he suggests you need to focus on in preparing a business for sale.

And finally if you enjoyed what you heard today then please pop over to iTunes and leave us a review. Thanks again for listening and you’ve been listening to Joanna Oakey and The Deal Room podcast brought to you by the commercial legal firm Aspect Legal. See you next time.

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