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Longevity Can Be An Attractive Proposition When You're Buying A Business

Garry Stephensen

Article Author: Garry Stephensen
Position: Managing Director
Read time: 5 mins

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The Intriguing Proposition

Justin Ryan, a director of the Ryan Family Trust, wasn't actively seeking a purchase but, when an intriguing proposition crossed his screen in an email from Lloyds Corporate Brokers, his interest was piqued.

Haverford is a 132-year-old business selling netting. It has had only two owners - both families - and is now in the hands of a third, the Ryan Family Trust. 

The attractions for Mr Ryan included:

  • well-established brands

  • a small business in a niche market

  • diversified suppliers, including in India, China and Korea

  • product sold across a range of industry sectors, including sports, petcare, industrial and agriculture

  • strong margins

  • very effective online sales - Haverford has a full-time, in-house web developer/marketer who analyses online SEO reports and other data. 


Longevity can be an attractive proposition when you're buying a business


Australian Businesses with longevity in the market are often more attractive than new startups for several reasons:

  1. Established Brand and Reputation
    Long-standing businesses have usually built a reputable brand that fosters customer trust and loyalty. Their reputation can lead to consistent revenue and better customer retention.

  2. A Proven Track Record
    Longevity often signifies stable operations and a history of generating steady profits, making the business less risky for a potential buyer or investor.

  3. Established Position In The Market
    These businesses likely hold a recognized place in the market, often with established customer relationships and supplier networks, providing a competitive edge over newer entrants.

  4. Refined Business Systems & Processes
    With years of operation, long-standing businesses tend to have well-defined processes and systems, leading to greater operational efficiency and cost effectiveness.

  5. Resilience Through Tough Economic Cycles
    Companies that have weathered economic fluctuations demonstrate resilience and adaptability. This reassures buyers or investors about their sustainability through future possible market changes.

  6. Better Access to Financing
    Lenders and investors are often more inclined to fund established businesses with solid financial histories. This makes it easier for these companies to access capital for further growth.

  7. A Loyal Customer Base
    An established business often has a dedicated customer base, reducing the need for heavy marketing expenses and provides more predictable revenue.

  8. A Skilled Workforce
    Longevity can lead to a well-trained and loyal workforce, contributing to operational stability and reducing the costs and challenges associated with high turnover rates. 

  9. More Detailed Financial Records
    Long-term businesses usually have extensive financial records, which help potential buyers assess historical performance, making it easier to predict future earnings and conduct due diligence. In sum, long-standing businesses are typically perceived as less risky and more predictable investments than new startups, often leading to higher valuations and increased interest from buyers and investors.


View our track record of business sales.


"I've been reading Lloyds regular lists of businesses for sale for many years, but was just waiting for the right business. It was a sheer fluke, but I'm very happy," Mr Ryan said. 

While older-style industrial businesses are less popular in the private equity market, in which Mr Ryan operates professionally, this one lent itself to family ownership and enabled the Ryan family to continue the Haverford tradition. 

Haverford was established in 1888 by JA Fuller, then continued by his son JH Fuller. 

Robert Winney, from whom Mr Ryan bought the company, joined the business after leaving school in 1965, worked his way up to general manager. He acquired the company from the Fuller estate in 2003, after the family line ended. 

Mr Winney's sons, Mark and Daniel, also work in the business and continue to do so under the Ryan family ownership. 

Robert Winney was semi-retired and approached Lloyds in 2020 when he decided it was time to move to full retirement. 

Lloyds Corporate Brokers conducted a marketing campaign that generated about 50 qualified domestic and international inquiries, conducted numerous site inspections with prospective buyers, and received multiple formal offers. 

Mr Ryan, his wife Joanna, and his son Nick met the Winney family, toured the Sydney warehouse site, and made an offer Mr Ryan describes as "fair and equitable". Armed with knowledge of the business and having developed a rapport with the Winney family, Mr Ryan said he was only ever interested in offering a fair price for the value he identified in Haverford. "You can get a lot of tyre kickers who want to get assets for a steal, but that's not my approach." 

Lloyds NSW Director Karen Dado facilitated the sale. "She did a great job; she's a straight shooter," Mr Ryan said. 

He praised the Lloyds online data room that enabled the sale to progress smoothly through due diligence to signing and completing the transaction. 

With trust and confidence between buyer and seller, the sale was negotiated with ease. 

"We continue to have a partnership between the Winney and Ryan families with Robert Winney retaining ownership of the property and his sons continuing to run the business," Mr Ryan said. 

"I am a hands-off owner, but we talk often and the business is outperforming expectations." 

Mr Ryan is enthusiastic about driving growth, particularly with online sales, but will hedge growth plans against stock availability in a Covid-19-affected business environment. 

"I love the fact it's an online and wholesale business, rather than retail," he said. 

"Retail is tough and I don't want to deal with large retailers. Haverford sells its own brands, straight to customers with no intermediaries, and that's attractive. 

"It's a gem of a business and we're maintaining the family tradition. Its pedigree has stood the test of time."


Are you in a similar position? Contact the Lloyds team today:

Business Broker - Garry Stephensen

Garry
Managing Director
Business Broker - Karen Dado

Karen
Director NSW
Business Broker - Geoffrey Tulett

Geoffrey
Lloyds Corporate Partner - Mergers & Acquisition Specialist
Business Broker - Jack Phillips

Jack
Corporate Advisory
Business Broker - Edward Alder

Edward
Director Victoria
Business Broker - Dianne Reynolds

Dianne
Research Director and Corporate Broker

 





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