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Preparing to Sell

Whether you’re just starting off, in a growth phase or winding down towards retirement, it’s important that you consider the following areas to ensure your business is in its best possible shape when the time comes to sell. In July 2016 we sold 50% of our brokerage group, and as a business we were certainly not ‘sale ready’ when we were approached by our purchaser. We learnt many lessons along the way and if we had our time over, would definitely have been better prepared. The whole process was completely foreign to us at the time and upon reflection almost 2 years post sale, there are 2 main areas I believe all businesses should devote some time to, even if an ultimate sale / exit is many years away. 1. Structuring advice: My business, like many current brokerage firms was set up a long time ago and whilst the Pty Ltd structure of our main trading entity was ok, some of our individual shareholders held shares in companies rather than trusts. This had CGT impacts for some of our shareholders and the potential to lead to higher than expected CGT costs. The correct advice years ago would have made things a lot easier but often at the time you’re not thinking about the ultimate sale of your business. We were referred to an excellent specialist tax lawyer who was able to advise us on restructuring options prior to committing to the sale. These same specialists were also able to advise the best way of dealing with all of the costs associated with the sale (accounting, legal, consultants etc) to...

Knowing our Customers

Living in the CBD for the past few years I enjoy a cosmopolitan life style. Six years ago a young husband and wife couple opened a coffee shop just down the road from our home. This was their first business they had owned and operated – all though the family had a history in the food industry”. Basically to establish this business they had to put all they had on the line. As a Finance Broker we all know how difficult it can be to raise funds for such people. Over the next four to five years they developed the business to where on some days they would serve over 2000 cups of coffee along with light meals etc. They also through this venture provided employment for up to eight staff per shift /two shifts a day seven days a week. Not an insignificant contribution to the local economy. After five years of seven days a week 15 hours a day they made the decision to sell the business. The new owners take over with the same staff, same coffee and food within a month the business had slowed substantially. The question is why? The original owners possessed that unqualified quantity that built a thriving business . The new owners took on a proven formula – did nothing particularly wrong but never the less the business slowed significantly. Whilst this article is talking about a coffee shop over the years we have seen many examples over many industries where a change of ownership (including generational change) has had a dramatic effect (both positive and negative) on the business. From...

CAFBA’s Response to the Productivity Commission

CAFBA has now put forward our second submission to the Productivity Commission, which concentrated on three key areas. CAFBA had previously acknowledged the work of the Commission in regard to distinguishing consumer and commercial finance. CAFBA particularly brought to the Commissions attention the unfavourable risk weighting currently attributed to small business lending, which could have the effect of banks recommending loan products that used the family home as security, as this provided a more favourable risk weighting. This should be addressed by APRA with APS 112, where a more favourable weighting could be attributed, particularly for equipment finance where the underlying asset has real intrinsic value. CAFBA also again highlighted the Point of Sale Exemption contained in the NCCP Act, which CAFBA believes could lead to poor consumer outcomes. CAFBA has been advocating the removal of the exemption for many years. It is pleasing that the POS Exemption was today raised at the Royal Commission into banks, and CAFBA looks forward to continuing engagement with Government, the Productivity Commission and the Royal Commission for a sensible outcome on this issue. To view CAFBA’s full response - click...

The More Things Change The More Things Stay The Same

I banked my first cheque as a broker February 1978; that’s right it was 40 years ago. The very word cheque, conjures up a bygone age, let alone the 40 years. Back then I was known as a Leasing Broker because the dominant product was leasing, due to its tax advantages. As the Tax Commissioner cracked down on residual value settings, forcing them in line with depreciation rates, hire purchase came into vogue.  The popularity of chattel mortgages didn’t take place until the introduction of the Goods and Services Tax. The speed of technological development over the years has been exponential. I recall well, our first facsimile machine. We were early adopters so in the first couple of years it was useless because not a lot of other companies had them. Prior to the fax machine, applications were typed, some hand written, and hand delivered to the lender. Signed documents were also hand delivered. Over time the fax machine became almost universal with the vast majority of small businesses having one. How prophetic that it is now almost obsolete. The introduction of the internet ushered in a new age in banking. No longer would settlement cheques be collected from the lender and hand delivered to the supplier. The fax machine then the internet bought the biggest changes. Documents and written information could be transferred instantly. The final trip down memory lane relates to the mobile phone. I recall prior to having one; again, we were early adopters; my day would be challenged driving around trying to find a public phone that hadn’t been vandalised. Some of you will well...

CAFBA Supports the Rural Finance Reform Bill

  In February the Rural Finance Reform Bill was presented to the House of Representatives by Rebekha Sharkie (MP for Mayo) and read for the first time. The Bill calls for an amendment to the Banking Act 1959 in relation to loans to primary production businesses. CAFBA supports this Bill, which follows on from the good work in this area by Kate Carnell and the ASBFEO. This Bill provides greater certainty for primary producers regarding their rights when in financial hardship. In her address to Parliament, Ms Sharkie made a couple of important observations recognising the cyclical nature in assessing business loans compared to consumer loans. Ms Sharkie said “ Primary producers ride the swells of international commodity markets, exchange rates and weather, their fortunes so often dictated by factors well beyond their control. Family farmers hope to make profits over a multiyear cycle, using the good years to build their financial buffer to see them through the bad.” This Bill avoids the problems associated with the drafting of NCCP 2. The ABSFEO commented that “This Bill will provide a range of suitable protections for small farm businesses. It reflects the recommendations of the Select Committee on Lending to Primary Production Customers and the ASBFEO Small Business Loans Inquiry.” Some important features of the Bill are: It also provides adequate timeframes for the primary producers to attempt to refinance their facilities, or sell their assets, without it impacting on the management of the farming business, or devaluing their assets through a “fire-sale” The one-pager, plain English fact sheet will more easily outline the primary producers rights and obligations as...

International Women’s Day- CAFBA’s Women in Leadership Program

CAFBA celebrates the women that have progressed their career after undertaking the scholarships in 2016 & 2017 - their participation and mentoring of other women in the industry is important to improve diversity. We would also like to recognise the women currently undertaking the scholarships, with the generous support of Macquarie, Capital Finance, TL Rentals, FAST, Thorn, Flexi, Westpac, NAB, BOQ, Get Capital and ANZ.       Kristina Alexopoulos, Moody Kiddell & Partners VIC Kristina has been with Moody Kiddell & Partners for the past five months as an analyst. She graduated from Monash University with a double degree in Commerce and Arts (Global), majoring in Finance and International Studies. She is passionate about using the rapidly changing business environment of today to find new opportunities and improvements for both her clients and colleagues. As a graduate, she is eager to gain skills to succeed in asset finance and become well known in the industry as a dependable and trusted advocate for her clients. Kristina has participated in Proforce sales training, AML certification and has completed a financial accounting certificate in her time at Moody Kiddell. She looks forward to beginning her Diploma of Finance and Mortgage and Mortgage Broking Management. Her goal is to find success as the leading broker in the country and follow in the footsteps of her colleague, Gareth Powell who won young broker of the year from BOQ. Kristina aspires to lead by example and one day leading her own team and inspiring a culture of success around her. She is honored to be a part of the CAFBA Women in Leadership Scholarship program and...