The Next Step

Debt Advisory for Australian Searchers

Paul O'Farrell is an experienced banking professional and chartered accountant with over 30 years of international banking and risk management experience with companies such as PwC, National Australia Bank and Bankwest. He has an in-depth understanding of the issues facing businesses when applying for finance and a strong network of relationships throughout the banking industry. Paul's blend of corporate banking, credit risk, and business assessment across a range of industries provides an interesting perspective for those looking to be proactive with their financial position and also their banking options, including funding for growth. It was really fun talking to Paul. We had a chat about the Australian debt markets and what they mean for small businesses. He helped me understand the lens that banks apply when assessing debt and lending for small businesses. And he also discussed the ways in which you can integrate the debt process with the rest of your search and acquisition processes to remove any perceived hurdles in leveraging your acquisition. Debt can be quite an unfamiliar thing for a lot of people that are considering search or are already going through a search process because borrowing money for a small business is quite a unique process. It's important to make sure that you understand it's not as much of a hurdle as what you might first perceive. It's actually something that can really supercharge your deal and also help with the returns from an equity perspective. Show Notes:02:05 – Paul talks about his background and experiences and what exposed him to the search fund model. He also talks about the succession aspect of the Australian market as the prior generation (Baby Boomers and older Gen X) will have their retirement in 5 to 10 years.06:20 – Paul talks about his perspective on small business lending and small business debt markets in Australia, and what bankers are looking for in a searcher and the business that he is operating. 16:57 – Paul talks about how much of a hurdle debt is for small businesses and how the search process will put you at an advantage over others. 28:27 – Paul talks about what should be the right thing to do for those people starting their search journey but are not very familiar with the debt process from a business perspective. Connect with Pete: LinkedIn Connect with Paul: LinkedIn

Search through the legal lens

Nima Sedaghat is the co-founder of Wayfinder Capital, the first institutional fund of search funds and searcher-led transactions in Australia and a partner of Australian law firm HWL Ebsworth, a full-service commercial law firm with offices all around Australia. He's been advising business owners, executives, Australian and foreign investors, as well as sponsors on restructures, mergers, acquisitions, and investment transactions for almost 15 years. Since 2017, he's been active in the Australian search fund ecosystem. He was introduced to the search fund model by a well-known person in the Australian search community Nick Bamford. He has continued his journey in search and met a lot of interesting people in the community. In this episode, Nima shares with us his knowledge not only in relation to legal and structuring issues but also in relation to the Australian search fund ecosystem. In this conversation, I had a great time getting into a bit of the nitty-gritty detail from a legal perspective in relation to the search fund structure. This is something that can be an unnecessary hurdle for those people thinking about search as a career path. Trying to consider the legal and tax implications of the search fund structure can be daunting, so it's great to know that there are people in Australia that have considered the application of the commercials of a search fund from a legal and tax perspective. It's really great to have people like Nima in our community who are helping people come to market. I hope you enjoy the conversation. Show Notes: 02:08 – Nima talks about his previous career and how the Search fund model was introduced to him by Nick Bamford who is a well-known personality in the search fund community here in Australia. 07:25 – Nima talks about the key attributes of the search fund structure from a legal perspective, the Australian search fund structure itself, the investor's rights, and the technicalities of tax implications on searchers in the Australian market. 16:05 – Nima talks about the foreign investments into the Australian-based search vehicle and what are the factors that would affect the Australian market and the hurdles that it is dealing with. 18:16 – Nima talks about the search community, the people he met along the way, the current activities that the Wayfinder Capital is working on, and how local investors give comfort and confidence to searchers in the market.26:30 – Nima discusses the next stage for the Australian market, what to look forward to in 2022 and how raising awareness about the model would greatly affect the community. Connect with Pete: LinkedIn Connect with Nima: LinkedIn

Search Fund Lending in Australia - a perspective from Australias leading Neo Bank

Frank Versace is the Chief Risk Officer at Judo bank, one of Australia's newest banks. Judo is taking on the long-established big four banks in the Australian market, with a focus on Small to Medium Businesses... and they're doing a great job at it, too!Through his broad banking experience and first hand involvement building Judo, Frank has a wealth of knowledge and insights in relation to Small Business Lending, including the things that Searchers should consider when preparing for those initial discussions with a bank.I was excited to have Frank on this week's podcast because of the clear overlap between Judo's target market and the kinds of businesses that Searchers typically seek to acquire. In this conversation we cover a whole range of things from the early days of Judo, their own startup experience and vision, and importantly, their approach to the Small Business market.Show Notes: •03:14 – Frank shares about his Judo Bank journey and how it came to life in the first place a few years ago and how it's evolved over the last couple of years.•06:36 – Frank talks about what Judo is trying to bring to the Australian market, what is approaching that Judo bank is taking to try and fill the gap.•09:27 – Frank and I discuss the search fund model in terms of not only finding a business to buy but then leading, operating, and growing it over time.•13:10 – Frank gives some knowledge of how you'll understand why your business is different, how it's uniquely positioning in its market.•15:54 – Frank shares about how you can conduct a relationship with your customers.•22:08 – Frank talks about how to prove the sustainability of the earnings profile.Connect with Pete: LinkedInConnect with Frank: LinkedIn

Search Fund Accelerators thru the eyes of the Searcher

Rob Gaunt is the Chief Executive Officer of Ace Training who recently took on that role after successfully completing an acquisition of it as a searcher (potentially Australia’s first traditionally funded successful search!).Through his time searching, Rob had the opportunity to look at a whole range of businesses across Australia before pinning one down to acquire, so he has plenty of great insights to share.In this episode of The Next Step Podcast, I speak to Rob about how he came to search in the first place, what his reflections on the search phase were, and what it looked like to actually work through a deal and get it to completion. For anyone out there that is thinking about taking on a search, Rob delivers some raw, recent first-hand experience that I'm sure you'll find very valuable.Show Notes•01:30 - Rob shares his journey about the last two weeks of being in a training company as the CEO.•02:45 – Rob talks about his career before search and what it was about search that made him interested.•07:11- Rob and Pete talk about search, how to build, own and operate a business.•09:37– Rob shares about his experience in SME ventures and how that helped him search his journey.•13:48 – Rob and Pete discuss what a partnership can do to a search and how it can help you become successful in a business.•16:36– Rob shares tips on how to determine what type of search to do.Connect with Rob: LinkedInConnect with Pete: LinkedIn

The Reality of Being an Operator

In this episode of the Next Step Podcast, I speak to Jack Lancaster. Jack's currently the director and CEO of Evolution Surgical, a business he acquired as part of a self-funded search. Jack's got a broad and diverse background, including spending time studying in the UK and even attempting to start up his own business from scratch. Jack went into search in early 2020 (an interesting time to start a search with COVID 19 hitting!) and successfully acquired Evolution Surgical in October 2020. I spend some time with Jack talking around the different aspects of search, with most of the discussion revolving around his first nine months in the hot seat of operation. Jack shares some amazing insights straight from the front line around what it looks like in those first three months after buying the business, what people should be aware of when they first get their feet under the desk, and the kinds of things they should look out for in that those first 12 months of operation. Connect with Jack: LinkedInConnect with Pete: LinkedIn

Investing in Australian Search

Tim Moore and Jake Maisey run Dorado Capital, one of the few Australian family offices actively investing in search funds. Dorado has invested in traditional and self-funded searches both in Australia and overseas. Tim has an MBA and is a chartered accountant who started his career in investment banking and led a self-funded search that resulted in the acquisition of Surpac, a software business servicing the mining industry. Before joining Dorado capital, Jake was at KPMG in corporate finance for five years and spent several years in the UK with Stenprop (a Real Estate Investment Trust).In this episode of The Next Step Podcast we cover a range of topics, but particularly on the themes that bring a good perspective on what investors are looking for when they consider searches and backing searches. We also touch on what investors should be thinking about when considering search as an asset class. I hope you enjoyed the episode.Show Notes: · 01:35 –Tim and Jake talked about how they come across search and asset class and what are the things that they have been doing to really get themselves up the curve of what search is as an opportunity.· 6:17– Pete and our guests discussed investments offshore, particularly in the UK market, comparing the Australian and UK market's maturity and the opportunities that are coming for the Australian market. · 09:07 – Pete and our guests talked about the range of structural options when it comes to establishing a search in the Australian market.· 13:28- Pete and our guests discussed the increase in the volume of searchers, executives, and operators that are thinking about coming to market, whether it is a self-funded or a funded vehicle model of search.· 18:39- Pete and our guests talked about the kind of characteristics of a searcher that is defined to be backable by investors and the necessary steps to continue in order to keep lighting a fire under the Australian search market. Learn more about Search Fund and entrepreneurship through acquisition and connect with Pete, Tim, and Jake: Connect with Pete: LinkedIn Connect with Tim: LinkedIn Connect with Jake: LinkedIn

The Four Seasons of Search

In this episode, I talk about the four seasons of search. I think the seasons of the year are a great metaphor to help searchers understand their own journey and the different 'seasons' they will find themselves in along the way. This episode is for all those people out there that are thinking about taking the search journey. If you are someone that's is just about to start a search or have already begun, but you want to get a better context of what's that journey look like holistically, then this would be a really valuable ten minutes of your time. It will give you a helpful overview of the search experience, from start to finish, and a few pointers along the way as you find yourself in each of these very distinct phases of the search. I also highlight some of the questions you should be asking your investors at each of those stages too. I've been through this process many times both as a search and an investor, so I have shared some insights on how you can leverage your relationship with your investors in such a way they can help you through each stage of the journey. I hope you enjoy the four seasons of search and find it useful when framing your own journey and what to expect along the way.

All things Search in Australia, including our first institutional fund

Lui Pangiarella – founder of WayFinder Capital and Second Squared. Both of these companies are active contributors and participants in the search fund ecosystem here in Australia. Lui co-founded Second Squared a couple of years ago to help build the community of searchers here in Australia. They've just recently founded WayFinder, Australia's first institutional fund focusing on the search fund model.In this episode of The Next Step Podcast Pete and Lui have covered a whole range of things and discuss a lot of exciting themes that relevant to investors and searchers alike. Lui has a depth and breadth of understanding of search and search fund asset class and as an opportunity for searchers and operators. We delve into a bit more the concept of the fund that he's raising and how that will contribute to the growth of the model here in Australia. Show Notes: · 01:32 –Lui talks about what brought him to search and his journey on search. · 03:08–Pete and Lui talk about what are the attributes of a market that is appropriate to search and what are the fundamentals of the Australian market that lean towards the model of search.· 07:00 – Pete and Lui talk about how he founded Second Squared and made it a vehicle to run searches in Australia, and talk about the characteristics of searchers in Australia. · 11:40-Pete and Lui talk about searchers' development and pattern recognition and what are the attributes that makes them a good searcher. · 16:13-Pete and Lui talk about the Wayfinder and what it means for the market and how it helps the search community. · 21:55-Pete and Lui talk about the view and reputation of the Australian search to the international community of search fund. Learn more about Search Fund and entrepreneurship through acquisition and connect with Pete and Lui: Connect with Pete: LinkedIn Connect with Lui: LinkedIn

Lending to Searchers - the US experience

Show notes· 01:40 –Heather talks about her how she came across and embraced the search model and its community · 04:19 –Heather talks about how the SBA (Small Business Administration) helps the search community in the U.S.· 07:42 – Pete and Heather talk about the capabilities and coachability of the searcher have an impact on his/her success· 12:05- Pete and Heather talk about the structure for bigger banks to lend to smaller businesses and its ability to invest on the search model· 17:10-Pete and Heather talk about the process of communication after having debt on a bank, what is in the U.S. market and how it is different from the Australian market and the future of Banks involvement search fund businesses? Learn more about Search Fund and entrepreneurship through acquisition and connect with Pete and Heather:Pete Seligman: LinkedIn Heather Endresen: LinkedIn

The pros and cons of the Self Funded Search

On this episode of "The Next Step", I speak to Michael Chew, who's the Managing Director of Flywheel Effect, which is a self-funded search vehicle based in Melbourne, and looking for deals across Australia. I've known Michael for about six months, since he first thought about starting a search. It's been great to get to know him and his approach to this challenge of search, because I think it's a really thoughtful approach. I've seen him evolve his thinking around the model as he's gone through his search, both in terms of what it means for him, and the businesses that he's seeking out, but also as it means for the search model more broadly. Given that he is a self-funded searcher, I've used this opportunity to really dig into that model, as opposed to the traditional model. In the episode, we look at the pros and cons of each and tried to understand what might make a searcher select one model or the other, but also what the pros and cons might be for an investor of those two models. We cover a range of ground. Over the past few months, I've spent a bit of time talking to him about his search along the way, and this was a great opportunity for us to explore some more kind of conceptual aspects of the search fund model, self-funded search, what it means for you, and in particular, your family and the impact of that. We also look at the way in which his thinking around search and his approach has evolved over the last few months. I hope you enjoy the episode.Connect with Pete: LinkedInConnect with Michael: LinkedIn