[EP 254] Ask Me Anything: Should You Ever Push Back Against Your Accountant’s Advice?

Connect with Nigel Hall

Nigel on LinkedIn

Bonza Business and Franchise Sales Pty Ltd

Relevant Episodes

EP 248 The Inside Scoop on Market Trends: How to Secure Financing for Your Next Business Purchase with Nigel

EP 252 Tech & Disruption in the Business Sales Industry: Insights from Bonza Business and Franchise Sales Director Nigel Hall

Leave us a review:

iTunes: https://podcasts.apple.com/au/podcast/the-deal-room/id1267098895

Transcript below!

Note: This has been automatically transcribed so will be full of errors! We are not providing it to you as a word-perfect version of the podcast but just as an easy way to provide you with a different way to be able to scan for information that might be relevant to you.

Joanna:
Nigel, thanks for coming onto the show to our Ask Me Anything section. What can I answer for you today?

Nigel:
Well, I think one of the things I’d like to discuss is it we find that accountants are the key players quite often key players in transactions because they’re a trusted adviser to the business owner. What we are finding, however, is that, on occasion, the accountants are giving advice that’s probably not market relevant anymore. There may have been your candidate for 20 years, they don’t want to let go, they’ve never actually sold a business or sold many businesses, and they’re not up to speed on where the market is. And because of that, the seller made it for advice. Recently, we’ve had a NDIS business where NDIS, the tight the license is tied to the company. And the accountant has refused to sell the business to do a set Jessa and said, an asset seller which has killed six deals for us with this one seller, and she will not budge. So how do we cope with that? Jo? What would you suggest?

Joanna:
Yeah, that is a really tough one. It’s something that I’ve seen in the market as well. And I’ve spoken to a number of people about I think, the very first thing and look, we have a lot of accountants who listen into this show. So the very first thing, you know, is on the accountant side is the importance of education. But it’s also that education for our buyers and our sellers to understand when they can push back against the advice that they’re receiving. And I think the reality is, you know, there’s this difference between an accountant who can serve a business in terms of the general day to day accounting or compliance function, versus accountants who deal out regularly in business sale and acquisition transactions, and they can be two completely different things. And that shouldn’t be, you know, an embarrassment to an accountant that shouldn’t be, you know, I think the most important thing is to, for the accountants to understand and for indeed, our buyers and sellers, our clients to understand that it’s not a failing in their accountant skill set, it’s just that most business, most accountants don’t regularly deal with businesses that are buying or selling, because many businesses only ever sell once in the lifecycle of one particular owner. And, you know, the reality then means that they very rarely come across businesses that have been bought and sold, as opposed to, you know, us in the market who are dealing with hundreds of buyers and sellers, you know, generally in any, you know, particular year. So, you know, that the first thing is to not have this misunderstanding that accountants are expected or should understand this stuff, you know, you go to the people who who deal regularly in the market, you know, like, you guys, as brokers, like us from a legal perspective, where we deal almost, you know, entirely 60% of our business is dealing in sales and acquisition. So we do it all day, every day, it’s being able to know who to turn to for that particular advice. The second thing is to understand that there can be the information that you’re getting from your, from your accountant, and maybe even from a lawyer, if you’re dealing with a lawyer who doesn’t deal in this space very often, or any other advisor who’s advising your business that doesn’t deal in the space very often, is that they, they, they’re not necessarily right, just because they’re, you know, a professional within their, their professional space. And I think this concept of value is super important. I’ve seen it so many times where sellers go to market, pushing back on what brokers have said, brokers who have a real understanding of what’s happening in the market, because they believe the information that’s been provided by an advisor, say for example, an accountant or someone else who, who is basing, you know, using sort of, you know, these sort of set multiples in their mind of what businesses as a whole are worth rather than understanding of, you know, the fact that there’s industry differences, differences between businesses, and that this whole three times profit is not like the lens that you can put on every single business in every single instance. You know, because like that’s the that’s what can happen, right? But then we have these sellers who who come to market and then get a buyer and then get a deal and then suddenly think Do you know what, I think I could get a better deal out there. So they cast away that deal that you guys as brokers probably know is actually a really good deal and we quite often not know, you know, that that often.

Joanna:
The first deal is actually the best to come to a seller on the market, that they push that to the side go for something else, because I think they’re their accountant has given them a belief that there’s more value that they can get out of the market if they stay there, and then they just sit there for ages and get stagnant. You know, and that’s a, that’s a sad thing to watch. When, you know, when when we can all sort of see the train wreck the writing on the wall, you know, in events like.

Nigel:
Yes, I think you’re quite correct. You know, the, there’s nothing worse than a business sit in there for 12-18 months, because it’s overpriced. And the seller won’t listen, because they’ve had advice from a third party expert, it may have been against or not, even sometimes from one of their friends who sold their business and knows everything about it.

Joanna:
Exactly. And they their friend down the street that, you know, just happened to get a great deal. And you know, now they’re extrapolating it across everything else. Absolutely. and did you have a second question?

Nigel:
I do. Actually, Jo. Yeah. So one of my frustrations in the market is we’re constantly qualifying brokers and moving people through the chain to build our team, the qualifications of real estate qualification, and it really has very little to do with business broking. And I’ve been pleased to see New South Wales and Western Australia introduced CPD that is relevant to business brokers. However, there doesn’t seem to be enough content.

Nigel:
What I’d really like to see, and this is the question, what opportunity you believe there is to get a national license for Business Brokers, that actually requires a training to be a business broker that maybe need some financial competency, that maybe need some understanding of our businesses, right? Because that’s where I’d really like to see that moving in Australia, so that we do get a better qualified industry, people are real estate agents who occasionally might sell a business. Most business brokers out there function as Business Brokers on a full time basis and do a good job. But I feel so sorry for our clients who’ve been with a regional real estate agent who’s listed them, charge them advertising fees and taking it nowhere in 12 months, because they’ve lost a year of their life. And that’s so how can we get there? How can we get a better system, so brokers are better trained, and real estate agents are not allowed to sell businesses?

Joanna:
You know what I so agree with you Nigel, such a weird, I remember when I first started doing a lot of work in this market and realized that, you know, that the licensing for brokers was attached to real estate, I just couldn’t even understand it, because I had come from larger m&a deals. And that’s, you know, it can be a different space, you know, dealing with corporate advisors in that space, who, who have a different regime. But when you come into the space of SMEs, dealing with the sale and acquisition of businesses and realize that it’s connected to property, I couldn’t even see the connection, like what is the connection of property in business, because in my mind, they are completely a separate base and require a completely different skill set.

Joanna:
And also profile of, of someone who is successful as a broker because I see the success of brokers. And indeed, you know, these brokers are all in your team as well, Nigel, I see the success in in the sort of outfit that you guys run, because the brokers come at it from the perspective of being able to manage a lot of information and a lot of moving parts, it because business sales are one of these things where there’s just so many things going on in different areas, there’s a lot of counterparties, as well. So you’re not you don’t just have buyer and seller, you have the landlord, then you have the lawyers for everyone, and you have this sort of like this balancing act that you have to do between a whole heap of different parties, and then these these nuances of legislation that are really complex. So for example, employee entitlements, and understanding the structure of you know, a business sale versus a share sale, understanding, you know, with the impact of legislation, for example, like the retail leases act, that might have a different approach on disclosure requirements, and therefore, the period of time that might be required for for ensuring that you’ve ticked all the boxes that you need to tick as opposed to property that perhaps is a lot more, a lot less, it doesn’t have all of those issues in it, I guess, is the is the point. So are we heading or will we ever had head towards a national licensing regime? There’s been a lot of talk in the market about it. I’m a huge advocate for that huge advocate because I think at the moment, there’s just too much difference between the states and we deal all the time between the states, primarily Queensland, Victoria and New South Wales, but all of the rest of Australia as well. But I’m constantly dealing with the difference in each of the states, not just states in terms of the type of contracts that they use the standard form contracts between the states, which are laughable in terms of some of the differences. It’s just bizarre some of the differences that are in there. But also the way brokers work in each of those markets can be quite different as well. I think in Australia, we crying out for a national approach, I think it would be really good, it would be good for it just is something that buyers and sellers would really benefit from, but also this approach for the education and the licensing regime to acknowledge the difficulty and the different type of legislation and considerations that are relevant in the business sale market, as opposed to the property market.

Joanna:
So I’m with you, we I’ve been talking to a lot of people over the last couple of years about these, unfortunately, I’m not sure that we’re going to be disconnected from property anytime soon. And because I think the the regulatory task is just too hard. But I think we within the industry can therefore help to achieve what is probably unlikely to happen in the in the short term future. From a regulation perspective, we within the industry, can be drivers of the importance of a deeper kind of education, and that education, really focusing on the things that make a difference in our industry, which are all of those things that I talked about the understanding of employee entitlements, which which I find is is actually super complicated, and really misunderstood in our industry, and and all of the other legislation that that brokers, you know, ideally would be on top of in understanding what’s happening in, in a business sale environment. And of course, then there’s those soft skills that I also think are really important in terms of understanding how to deal with change management, that transition for teams, as people move from one business to another. That’s like, I don’t know, that’s like a whole whole nother level as well. But that isn’t a whole other level of training that I think is particularly important and useful in in this space, which you know, has no relevance in, in the property industry.

Nigel:
Thanks for that. Yeah, absolutely agree. I think the, from a training perspective, AIBB do a very good job. And we’ve put in our staff through those programs as well just to improve their level of understanding we do a lot of in house training, but I think a national business broker qualification that is recognised in each state would be a major step forward with a larger business content, your financials, how to run a business systems, all that so you can actually understand what a business is doing and how to value or price it properly and take it forward. Oh, yeah, absolutely. Right. And, you know, good call out there to the AIBB, really, you know, they really are trying to step up the education in the industry. And I just think they’re doing some brilliant things and a really important body to have so that we have a body that’s advocating for business brokers and the industry within Australia. So great. Call out there. And we’ll certainly in our show notes, we’ll link through to AIBB for anyone who’s listening and doesn’t know much about him might be interested in in some of their programs, and hey, it looks like Nigel might be looking for brokers as well. So we might put a link through to you and the team there.

Joanna:
Well, everyone, thanks for coming on the show today.

Nigel:
Thank you, Joanna. Pleasure being here.

Our Business Sales and Growth by 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 acquisition 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