Joining us today is Simon Bedard, the founder and CEO of Exit Advisory Group. In this episode, Simon and I cover some really interesting topics about the remuneration model in business broking and some of the challenges facing the industry, and perhaps the opportunities that this brings into the future. This raises some good issues that we should all be thinking about in terms of value creation and how we all align ourselves to really getting to that right outcome for all of the parties in a business sale transaction.
This episode is certainly useful listening for brokers, M&A advisors, accountants and anyone who is looking to appoint someone to help them in the sale of their business. So keep listening. Here we go!
- Simon’s background in the M&A space
- Why are we talking about this?
- A problematic remuneration model
- Issues with the commission only model
- An alternative remuneration model
- How the retainer model works
- Dealing with pushback from clients
- How to contact Simon
Simon’s background in the M&A space
I started out business about 3 years ago mostly because I saw real need in the market around this sort of broking space. Going back a bit further, I certainly had a lot of experience around finance investment. I guess I’ve always really had this sort of value driver within me, and understanding what drives value for people in business, really anything in life.
Most people put a dollar into something they want to get two dollars out of at some stage so I have always been fascinated with what drives value. I started a business in the past, bought into another company and then sold out. I’ve been through all that sort of experience and long story short I was looking for a business to buy back around 2013 and I found my experience engaging the business broking sector was a real mixed bag.
Why are we talking about this?
We’re at this stage of the game where we understand that there are issues out there. It’s probably really easy and quick to sort of fire off and say “Oh, brokers are terrible… this happens and that happens.” But I think it runs a bit deeper than that. I think if we all take a step back a little bit, you start to see some of the moving parts and some of the sort of cause and effects that could be leading to poorer outcomes for business owners.
Whenever there’s a perception anywhere about problems within an industry, there’s also an opportunity for early adopters to find a better way. If you’re one of those early adopters who are jumping on a better way, quite often you get the ability to establish a market before the rest of the industry catches up. So I think it’s an opportunity. – Joanna Oakey
A problematic remuneration model
The commission only model generally leads to poorer outcomes for business owners, business brokers and invariably it actually creates a pretty poor experience for buyers as well, because it leads to poor planning and preparation.
Some vendors need to be asking the question whether they’re appropriate finish line is actually selling. Sometimes decisions can be made in an emotional state and part of planning is really asking what is it that you really want because let’s face it, none of us are born to do business. We’re all born to live. Your business should be a vehicle to help deliver the life that you want.
Life is a wonderful teacher. Experience is a wonderful teacher. But it’s a really expensive lesson and it costs you a lot of time and it costs you a lot of money. Realistically, the idea of working with professionals is that you stand on the shoulders of somebody who’s been there before. You get to look over the fence, over the hill and understand what the journey should be like in an ideal scenario and you plan it properly.
Issues with the commission only model
- Where remuneration only sits at the finishing line, it can become really hard to feel that you’re getting value as a broker or a consultant from spending a lot of time in that preparation phase.
- If you’re a broker or an advisor in this space and you’re being remunerated on sale, that makes it really hard for you to be open to pushing alternatives for your clients.
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
An alternative remuneration model
When it comes to the actual model of how we work, we talk to our clients about the fact that we charge a monthly retainer and why we do that. It’s really about saying that we want to take the time to make sure that we’re really prepared. We want to understand your business because if we have better preparation, we’re going to have a better process and a better outcome.
We actually take the time upfront with our clients to run what we call an internal due diligence process. In other words, we put on the lens of a buyer…and we go through everything from the financials, the operational side of things, all of these systems and processes.
Buyers are ultimately buying your future stream of profits…but they will apply a discount factor to that valuation based on how much risk they see in your business.
How the retainer model works
We certainly see ourselves more as as a strategist and advisor…Selling a business is really one step of a process and it’s not the only option.
There are three real components about what we do – 1) how do we help create a strategy and build value in your company, 2) how do we help you do exit planning and an exit strategy and 3) business sales, which only occurs if selling is the best option that they want.
If the broker is actually receiving a retainer, their interests are more focused on the client’s need.
Dealing with pushback from clients
You’ve got to be brave enough to sort of say no, this is a better model and here’s why we believe in it and be able to have that discussion with your clients.
We take a lot of confidence out of the fact that we know we can deliver value. We know that if we run this properly and we spend the time up front that we will get the better outcome…There is a cost to everything and that cost is usually time and money…I think it really comes back to being able to talk through it and demonstrate that value to the client.
If you don’t have the confidence around that pre-planning phase, then go and talk to someone, spend some time to look at that because ultimately we want to change how this industry is viewed and we all want to deliver better outcomes for our clients and all the various stakeholders. We’ve got to look at different ways of doing things.
It’s almost a marketing and education component, being able to clearly articulate the value in a different approach in order that within the industry can provide more value and are remunerated for providing more value along the way. – Joanna Oakey
How to contact Simon
Check their website at www.exitadvisory.co
Or visit them at: Level 40, Northpoint Tower, 100 Miller Street, North Sydney NSW 2060
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