Sam Penny (00:00)
Thanks for joining me for this special episode of Built to Sell, Built to Buy. I'm Sam Penny. Now, most business owners think it's about the profit or maybe the growth or even the potential, but step into a broker's world and you'll quickly learn that deals don't fall over because of the numbers, they fall because of fear. Today, I'm joined by Australia's leading business broker, Sally Stuart, to pull back the curtain and reveal what...
actually makes a business sell. And also what secretly kills the deal. So if you're thinking about selling now or in a few years, this is the inside track. Let's dive in to the broker's mind. Sally welcome.
Sally Stuart (00:45)
Sam that was a lovely introduction thank you very much it's a big shoes to fill.
Sam Penny (00:50)
Well, I think it's, I'm really looking forward to this episode, Sally. For those of you ⁓ out there who haven't met you, what's your journey into business broking?
Sally Stuart (01:00)
So yeah, I've been a business broker for 11 years now. I moved into business broking from being a doctor recruiter. So I worked with doctors for the first 10 years and I started with junior doctors and moved into senior doctors and then I was in GP, GP locum and firm. And three times in two months, I heard GP clinic owners tell me that they just didn't want another locum.
They wanted a local with a view to that person being able to take over their patient base so that they could retire knowing that there was a safe pair of hands looking after their patients that they may have treated and four generations of the same family. So they really were particular about handing over their legacy to someone that was quite capable. And I heard this three times in two months. I thought, well, hang on, there's an niche that's not being filled. So maybe someone needs to fill that. Maybe that person is me. So I did all my training and half of those
images behind me are registrations for different states. So you need a different registration for each state that you're practising in. And at the moment I can sell in all states of Australia apart from Tasmania. And it's so small that there's other people down there they can look after Tasmania. at the moment I've got registration to sell across the country apart from Tassie. And I've been doing that successfully now for 11 years. So
Last night we had a celebration within the Link Sydney office. I was number one for the most recent fiscal year. And nationally for the 2024 calendar year, I was number one broken nationally. So I've been pretty busy. I sold 20 businesses in calendar year 2024 and 15 businesses in the financial year 2025.
Sam Penny (02:42)
Wow, so it sounds like my intro really stacked up then to the hype. So now, Sally, from your perspective, what makes the role of a broker so misunderstood in the deal process?
Sally Stuart (02:45)
Hahaha!
I think a lot of people didn't even know that there is a business broker. A lot of people don't know that there is such a role. So apart from it being misunderstood, some people don't even know we exist. And then to go to find that there's a specialist business broker in a lot of industries, it's another eye opener. So I'm a specialist business broker in the health space. I only support doctors, dentists, allied health, aged care and NDIS business owners. There might be people that only support
hair salon operators and anti-aging, there might be specialists in the car space, but there's also generalist brokers. So some brokers will sell whatever the next phone call is, but I'm very particular. I can only talk about the health space, which I, like I said, have been doing for 11 years. So I can talk a lot about it. I know absolutely zero about garage doors or widgets. So this is my space.
Sam Penny (03:48)
So following on from that then, what do most people think that brokers do and what do you actually...
Sally Stuart (03:54)
Lend money. Lots of people think I'm
a finance broker, but I'm not a finance broker.
Sam Penny (04:00)
So ⁓ what do you spend most of your time doing?
Sally Stuart (04:04)
So as a business broker, what we do is to try and match the buyer with the appropriate business and or building to purchase. So as brokers, we have the same registration as real estate agents, but a hell of a lot more training because with a residential, you get a listing, you do your marketing, you open the doors, people come through, maybe you have an auction or a
⁓ a quiet sale, but it's usually over and done with within a month or six weeks. So within business broking, it might be a 6, 9, 12, 18 month transaction. So we say to people when they're asking. It's not a sprint race with us, it's a marathon. So residential, can compare in the Olympics to a sprint.
Usain Bolt type exercise, but with us, it's the marathon and it takes a lot longer. It's more tedious. It's more ⁓ psychologically taxing. And you just have to remember that. Let the business ⁓ keep running under your steerage, but engage your broker to be your third party intermediary so you can retain your focus on the business and not worry about selling it. You're not selling it yourself.
broker is helping you to sell it. So it's important to let the broker do their job.
Sam Penny (05:32)
Yeah. Okay. So now let's try and get inside the seller's brain for a moment. What are the real reasons why buyers walk away from a deal, even if the financials look pretty solid?
Sally Stuart (05:44)
So last year I did some reflection on the 20 sales that I had and there were 20 different reasons. So I can't answer that in one sentence. Each sale is different and it withdraws or sabotages for different reasons. So for example, there was a clinic that I sold up near Newcastle, business and building. I had two exact buyers, same price. One had a GP in their buying group, the other one didn't.
So because doctors can get up to 100 % of their finance from the banks and there's about eight banks that are tripping over trying to lend doctors money because the risk is so low. ⁓ And also the doctor is going to be able to add income and profitability to the practice. But because the doctor buyer wants 100 % loan, they're going to go to the banks that will loan that. And some banks insist that they use the legal side of that same company.
So that legal side was very difficult to deal with. It effectively said to the vendor, we'll rewrite your contract. Your lawyer is not giving us what we want. So that deal fell over because of the lawyers that were associated with the bankers for the doctor buyer group. And it came back that the non-doctor buyer group successfully transacted on that deal because they didn't have that tied in complications with the
financier and the lawyer, which was interesting. I've never had that before. So that didn't transact. And that was because the vendor felt that he wasn't being believed or valued. So there was a little bit of ego in the room with that one. But we eventually transacted. ⁓ Different lawyers impact.
sales differently as well. So if you've got a friendly lawyer on both sides, that's your ideal. But unfortunately, lawyers are still putting their kids through university and they are not driven to settle. So they're driven to put their kids through university. ⁓ Unless you engage with a lawyer who is a fixed fee lawyer, then it can draw out and transactions can take way longer than they need to because the lawyers are putting their kids through university. So unfortunately,
It's important that both buyers, so we're talking about buyers brains and sellers brains, they need to engage their brains when they're engaging a lawyer and ask all the right questions. Do you have capacity to take on more work? Are you going on long service leave or an overseas holiday that will impact on my timeline? Do you have experience in doing this sort of work? Are you a commercial lawyer and are you a fixed fee commercial lawyer? So it's really important that they understand
who they're engaging and what their capacity to do the work that they're being tasked to do is.
Sam Penny (08:43)
Yeah, so ⁓ some pretty basic questions there for the lawyer. Do you see that the law side of things, the lawyer is one of the major reasons why deals fall over and why buyers walk?
Sally Stuart (08:56)
Yes.
Yes. Let me say that again. Yes. So I'm like a matchmaker. So I'm a glorified matchmaker for businesses in this space. And I will find perfect buyers for the practice. And then when it gets tied up with the lawyers, the lawyers will crucify a lot of deals.
Sam Penny (08:59)
Wow. Yes. So ⁓
So then.
So then do you have a short list of lawyers that you work with, that you like to work with, yeah, fantastic. And do you obviously then share that with both the buyer and the seller to get the transaction done?
Sally Stuart (09:24)
Yep. Absolutely.
Absolutely. So like I'm a specialist business broker in the health space, we also have specialist lawyers in the commercial space. So you don't want a lawyer that's going to court for criminal charges because they have to prepare to go to court. They have to be in court. Then they have to debrief after court. They don't have time or interest in doing the admin. So commercial lawyers administratively heavy. So they don't have time to be doing admin. ⁓
for a commercial sales transaction. Equally, you don't want someone that's involved in family law. That's very emotional. Again, a lot of time in court. So I always instruct my both parties, buyers and sellers, that they need to engage a commercial lawyer and they are not allowed, like you are not allowed to engage a family lawyer. And I don't care if he is your brother-in-law or you went to uni together or your besties, no.
have to engage a commercial lawyer because that's the difference Sam between getting a deal transacted and not getting a deal transacted. And even if that buyer wants to buy it and even if that seller wants to sell to that person, if you've got the wrong lawyer in, it's not going to happen.
Sam Penny (10:39)
right
All right, well, let's shift it up into perhaps ⁓ something a bit more positive, away from the law side of things. Tell me what kind of businesses Spark Bidding wars and why.
Sally Stuart (11:01)
Sexy businesses. So a sexy business has got growth potential. It's on an upwards trajectory, year on year growth, ⁓ engaging and embracing new technology ⁓ fully. So I've got a whole list of 10 things. It ticks boxes. And that might be having fully utilised consulting rooms or rooms. It might be not just your nine to five Monday to Friday. There might be extended hours. There might be early starts, late finishes.
There might be hot desking. So no one has an allocated room. All the rooms are set up exactly the same and you have a roster of which room you're going to use for the day. There's weekends, there's people coming in and they're doing ⁓ various service offerings. So it might be VMOs visiting medical offices, it might be allied health and they are able to fully utilise the room. So the more the rooms utilise, the greater the profitability.
So if you've got a stable workforce, you haven't been losing a lot of people. People have been there. The knowledge hasn't been walking out the door every six months. You've got to establish referral bases. Like there's so many things that tick a lot of boxes for people. If they're using old technology, that's like a lot of my doctors are still using faxes. So, you know, trying to introduce AI into that scenario is challenging.
But a sexy business is a growth business. ⁓ It's on an upward trajectory. It's modern. It's fully utilising. It's high profit. And their benchmarks are on track with their industry. So I'm trying to sell a business at the moment. We've got five doctors and I think we've got 11 support staff to support five doctors. Like that's cray cray. The amount of ⁓ profit that you have is
significantly impacted in a negative way because you're trying to provide over and above additional services to your doctors. Maybe they don't need all that support. Maybe the patients can be a little bit more independent and do online bookings as opposed to ringing up and tying up reception staff and having to put on additional staff to answer phones and call people back. There's a lot more modern ways to get a lot more profitability out of businesses. So the ones that sell are the sexy businesses. And it might be that
We don't even know how much that business is worth. You've got NDIS, that's a fairly new industry. And if we don't know what the profit multiples are, it's hard for us to put a price on it as brokers. And we might put it on the market as an expression of interest. So if I don't know what it's worth, but I can see potential and I can see that it's going to create a bidding war, I won't put a price on it. And chances are we're going to sell for a lot more than we thought it was going to sell for.
Sam Penny (13:46)
So then talking about the buyer's emotional state, how does that show up in deals?
Sally Stuart (13:52)
I think my buyers are mostly medical and Sam, they've had six years and then another four years of training. They've had 10 years trying to knock the emotionality out of them. So they see all sorts of things. They see people at their worst and most vulnerable times. They see people in crisis and a lot of their training is around being able to diagnose and being able to help in a non-emotional way. So I don't
have lot of emotionality in my bias, if I'm honest. ⁓ And it's just the sector that I'm in, I think. If you were to look at hair care and anti-aging, totally different. So I know there's a specialist hair broker and she would say that her lady practice ⁓ salon owners would ring up and they'd be very emotional, but it's a different sector. My sector is very calm.
Sam Penny (14:45)
That must be nice and probably a big reason why you chose that sector.
Sally Stuart (14:50)
That's why I'm still here.
They're very professional. Most of the people I deal with are super professional, super polite, gentle, kind people, business minded, majority, not so much, but that's changing as well.
Sam Penny (15:06)
Now let's switch over to the seller because you must see a lot of self sabotaging. So what is one thing that you see sellers consistently doing that sabotage the deal?
Sally Stuart (15:20)
They have ⁓ supersonic accountants that want to absolutely minimise their tax. So they're going to put their business through three different entities. Money might come in through a proprietary limited, then it might go to family trust one and then more money goes in and out through family trust two. And by the end of the day, I'm not a forensic accountant, so I can't work out.
what the real profit of that business is. And I say to people, if I can't work it out, there is no way your buyer will have any idea about the profitability of the business. It makes it harder to sell. ⁓ in so much as yes, I applaud what their account is doing for them with the structure from a tax perspective. It is really difficult to sell unless they are prepared to undertake a whole nother project and get their account to create what we call ⁓
special purpose financial statements and they created not for tax returns, not for anyone else to know about it except for the buyer, then the buyer's accountant. And then it's clear. We see that money that's coming in. We see the money that's going out and it's only the business related income and expenses on that document. So another thing that has just come up again this week, if we don't see all the money coming in, we can't see all the profits. So people have got
pathology income coming into another entity. And then I'm trying to do an appraisal. So they've said they want this price. And I said, well, your numbers don't support that price. But then they said to me, our pathology income, I'm like, well, where is it? It's not on here. So it's not a form of self-sabotage per se, but it is ⁓ unnecessarily.
red flagging the business because people want to see reasons to buy the business, not reasons why not to buy the business. And I try and remove as many red flags as I can.
Sam Penny (17:21)
And buyers are buying confidence and yeah, there might be history of P &Ls there, but you know, particularly clean books is a big part of the confidence that they're buying of what I'm buying today. Does that reflect what it's going to be like in one year, two year, five years time?
Sally Stuart (17:41)
The main issue that I see there is short leases. So without a lease for one year, two years, three years, five years time, there's no medical centre. So I had a conversation with a lady practice owner this week. I said, when is your lease up? next year. I said, is there another term? Do you have another three or five year term? No. Can you get another three or five year term? Maybe. So I said, you need to be jumping on that conversation with urgency to talk to the landlord.
But I've been there 17 years. said, but I can't sell 17 years of history to someone that wants to be there into the future. I have a clinic at the moment. I have an offer that's accepted, but I have no lease. So he came to me at the time of market renewal and it was subleased. So it's in a shopping centre, but it's not dealing directly with the shopping centre management. It's a sublease of another health business.
So that one still hasn't transacted two years later because he had a market review. He didn't tackle that market review before trying to come to market. He tried to then come to a market review. He and the landlord couldn't get agreement. They had to go to a new... So they both had someone give them market feedback. They couldn't agree. So then they had to go to an independently appointed shopping centre reviewer.
They didn't accept that. So it's a whole process that's wasted so much time, energy and effort. he done it before he came to market, it would have been sold by now. But now then the landlord has gone, well, hang on. You didn't pay any marketing for the last eight years. So it's opened up a whole other can of worms. So leasing is one of the major things that the landlords need to have right.
before they can expect to have a decent sale of their business. Because, the P&L's look perfect. The profit's great. But if you've only got six months left on your lease, what have you got to sell? Because that landlord can come in and change those locks. If you're not going to renew your lease, yeah, I don't expect you to be there for the next 10 years. I'll sell it for you. But you need to go and get that market review done. You need to go and get that lease extension, that new term of
two by two by two by two by two or five by five or three by three by three by one. Banks love 10 years. Seven to 10 year lease is what a bank is looking for to lend that money to you. But that's probably the most self sabotagey thing I do. I do see and that's lease, lease amnesia for one of the better word. They forget.
Sam Penny (20:24)
Ha
Fair enough. So continuing on with buyer confidence, how is buyer confidence affected by ⁓ the owner's day-to-day involvement in the business?
Sally Stuart (20:38)
Yeah, good question. So a business that's highly dependent upon the owner has a high risk because what happens if that buyer walks out for the business owner walks out the front door and gets collected by a bus, there goes your business. So what we see that does to the sales price of a business, it reduces the sales price of the business.
because of the weighting factor. So we look at either the real profit is the earnings before interest tax depreciation and marginalization. And then we multiply that by a proper multiple, which is impacted by the high risk in a negative way on the owner. So oftentimes it's one replaces one. So if I'm selling a GP practice to a GP who's going to take over that patient base, happy days. But if that's not the case and it is a lot more
dependent on the business owner. Particularly, I see this when it comes to supervision and support of junior doctors. So the senior clinician in the practice is usually the practice principal or owner. So for them to have particularly level one junior doctor, that's one on one. the senior doctor must see every single one of those junior doctors patients. So it's very onerous. And until that junior doctor reaches level two, it's not profitable.
But it's really hard and it negates the sale. And I have one at the moment. The senior doctor can't leave because they've made that commitment to the junior doctor. So that's very difficult. It can stall a settlement until that junior doctor gets approved by the governing bodies to work at level two, which means the senior doctor is no longer responsible 100 per cent for their patients. Then that settlement won't take place.
Sam Penny (22:11)
Hmm.
So why do you think so many owners overvalue their business?
Sally Stuart (22:36)
Because their accounts tell them. So accountants don't have records of business sales. I've been selling businesses for 11 years. I've got 11 years of records. I know what the profit multiple is. But accountants will go, oh, well, you paid a million, let's say a million dollars, you paid for this business two years ago. Therefore, the goodwill is worth a million dollars. And you spent 400,000 on new 3D printers. So the sales price
Sam Penny (22:39)
Ha
Sally Stuart (23:04)
Must be 1.4, but we know that they're going to negotiate. So why don't you go to market 1.5? So therefore, Mr. Business Owner, your business is worth 1.5. And they come to me and go, Sally, can you my business for 1.5? I'm like, probably not. So where did you get that number from? And then we have to unpack it. So a lot of the time, business owners have put blood, sweat and tears. know, their business is their baby and they see it through their lens. But when I'm looking at it through my lens of numbers, it's a different business.
So yeah, I understand why they have a higher perception of what it's worth. A lot of that is their accountant though, talking to them. ⁓ And they will have barbecue advisors as well. What did you sell for? What did you sell for? What was your profit multiple? So they'll talk to each other and they'll get unrealistic expectations as well. The other thing is non-specialist brokers ⁓ don't have the data that I have.
And they will go, ⁓ well, I sold a manufacturing business for, you know, five times. So maybe it's worth five times, doctor. So this is another reason why it's important to find a specialist broker in your industry, whatever that industry is.
Sam Penny (24:17)
And then what about ego? How does ego come into all of this then?
Sally Stuart (24:20)
Hmm.
⁓ Good question. ⁓
Some people are very good business people ⁓ and some people are excellent clinicians, but generally they're not the same person. So a lot of the times I'm dealing with great clinicians that have no idea what their business is worth and they have no idea what they get paid. Their accountant tells them or their wife takes it, but they don't know. So a lot of the time in GP space, different egos to dental space, different egos to specialist space.
which is quite interesting. ⁓ Solo practitioners that have non-recurring income and think their business is worth a fortune. Again, maybe that's ego. So if you think a specialist, so a hernia doctor, very, very niche, right? But they're consulting in rooms and then they're operating out of a hospital. They see people once they fix them, they may never see them again. So there's no recurring income.
What's their plant and equipment? They probably don't own it because they're operating out of a hospital. The hospital owns it. And they might have some software and a phone. So they want one and half million dollars for that, please, Sally. I'm like, well, I can't support that because if a new doctor with the right skills comes out and wants to set up a business, they can go for hundred fifty thousand and fit out of space. They put a website, there's ten grand.
Sam Penny (25:51)
Mm.
Sally Stuart (25:55)
and they'll start getting referrals. They'll do leaflet drops to the local GPs and they've got a business. So.
Sam Penny (26:01)
Yeah, and the
barrier to entry is so low on that.
Sally Stuart (26:04)
The barrier entry is very high because you've got to do your six years medical degree and then you've got another four to six years of specialist training. So to get into that field, it's high. But to get into a, I see what you're saying, to get into a clinic, it's low. Yeah.
Sam Penny (26:20)
Yeah,
so let's now shift gears and talk about what actually sells a business. What do you see? ⁓ What do you see in deals that fly off the shelf?
Sally Stuart (26:32)
⁓ Location wise, so a lot of what I sell is to overseas trained doctors. So majority of my buyers, I would say, are overseas trained doctors. ⁓ They're very motivated and very entrepreneurial. ⁓ Quite more so than I would say Australian trained doctors. But for Australian trained doctors to staff the clinics that they buy, they will often go back to their homeland and they will want to bring their colleagues out.
⁓ And that might be, say, from Bangladesh, Pakistan, India, Sri Lanka or Iran. So in order to do that, we need to find clinics where those people can get Medicare provided and prescribing numbers granted. Now, these are the regional clinics that are outside Sydney Metro. So anyone trying to get into Sydney Metro as a minimum has to have this specialist qualification. And if they're from overseas, they need to have completed 10 years.
in a regional or remote location, or they get a scaling discount and knock it over in five if they go really, really regional and really, really remote. if it's a... This is a lot of jargon, I apologise. But if it's a DPA MMM2 and above, so that means if it is deemed to be under-doctored in an area that is not metropolitan, is outside the metropolitan, it's going to be a lot more desirable than a
non-DPA, so an over-doctored clinic, think St Leonard's or ⁓ Eastern suburbs, northern beaches. So think where doctors like to live, that's where they like to work. So if you're outside that area, even as far as if you go west to the Blue Mountains, if you go south to Wollongong, if you go north to the Central Coast, it's still maybe only an hour and a half away, but that might be far enough away to get DPA or triple M2.
Now, that means you can recruit and retain doctors that are restricted by 19A and or 19AB, the Health Act. But until you go a little bit more regional, none of those doctors can get a provider number. They won't get paid to work. So if it is the right triple ⁓ if it is DPA, then it can be more attractive if it's not overpriced.
Sam Penny (28:55)
So what I think.
Sally Stuart (28:57)
And it's
still a reasonable driving distance to a metro because the wives still have to be able to buy handbags.
Sam Penny (29:02)
Fair enough. So are you finding that those medical practices that are within say 200 kilometres of a metro area are just really easy to sell compared to the very remote and also the ones right in town?
Sally Stuart (29:15)
Easy to sell.
Correct. Yeah. Yeah. So it's close enough to be drivable. You can still come up to go out for lunch or for a weekend, but you can recruit people from overseas with ease. You can recruit full stop with ease because doctor recruitment is really difficult. At the moment it has been since COVID. A lot of our overseas trained doctors went home and a lot of them didn't come back because they went home to nurse their families and make sure their families were okay.
Sam Penny (29:46)
So then where are most buyers coming from that you see in your industry?
Sally Stuart (29:50)
⁓ subcontinent.
Sam Penny (29:53)
And how do you attract buyers?
Sally Stuart (29:56)
No, I'm like the milk and bread in the supermarket, they find me. So I am advertised like next week I start facilitating a GP startup summit with Practice Success Collective. So I'll be facilitating that online summit. We'll probably have over thousand doctors and that's five nights after work, Monday, Tuesday, Wednesday, next week and Monday, Tuesday, following week. Then I've got a week break and then I'm facilitating an online summit for imaging. So
Sam Penny (30:00)
Ha ha ha ha ha!
Sally Stuart (30:26)
⁓ cardiologists, sonographers, radiographers. ⁓ I go to conferences, I speak at events. people ask me and for the first year I was doing this, Sam, I said yes to everything. I was like the yes man, the movie. So people know me, they refer me to others. I do a lot of social media. Every two times a week I'm posting.
I do summits, do presentations, I write ebooks. So I try to be as obvious as I can so it's easier for them to find me.
Sam Penny (31:04)
So what I hear is that I'm lucky to have you. ⁓ Now this is, think what you touch on there, Sally, is a very important part of a broker's role in selling a business is that they're a magnet for buyers and also a magnet ⁓ for businesses to sell. And trying to sell, and we see it all the time.
Sally Stuart (31:07)
Yes, thank you.
Sam Penny (31:31)
people think that they can go and sell their own car, can go and sell their own house, they can go and sell their own business, but really ending up with a pretty crappy job.
How do you see the broker's role then in being that magnet in being that, you know, like you said, the meat in the sandwich.
Sally Stuart (31:51)
It's good to have an intermediary. ⁓ So I say to my vendors, you can yell, you can pick up the phone, you can yell, you can express your frustration to me, but you don't have that conversation with your buyer because you need to potentially work together. You need to walk up and down the same hallway, sit in the same tea room, meet each other's eyes. And if you can't continue to work together, then what is the point? This sale is not going to go anywhere. So I say to people, I'm
your intermediate, I'm your arm's length transactor. So I'm always the bad cop and the vendors always get to be the good cop. So they have to work together. So if that outgoing doctor makes a commitment to stay for two or three or five years, they need to maintain that relationship. So yeah, it's very psychological selling ⁓ and it's important to know who needs to say what when.
⁓ And that's one of the important reasons why you engage a broker. But like I mentioned earlier, they need to keep focusing on running their business, not trying to sell their business. So that's what they engage me for as a third party.
Sam Penny (32:58)
Now, when a business comes to you, obviously this is the point here that we've been talking about, but there's a huge amount of the sales process that happens before you even engage a broker. How important is the preparation and the timing in selling a business?
Sally Stuart (33:15)
Some people ring me when they're broken. won't sell it. I want to sell. want to sell now. I want to sell before Christmas or Easter or whatever is coming up next. I'm like, well, that's fantastic. But I may not be the right broker to help you to do that because it's not going to happen overnight. Some people put thought into it. Some people engage in exit strategists to help them to make three good years of profit before they sell. Most people.
are exhausted, they have a relationship breakdown either at home or in the workplace. Somebody is totally and permanently incapacitated or somebody passes by unexpectedly. So most people come to me when there's pain and their back is to the wall. A lot of people don't listen to their wives when the other person says, Sell when you are at the crest of the wave, don't wait till you smash on the beach. So I don't have a lot of
Emotionally, physically well people come to me. I have a lot of broken people come to me. I have got a well, in inverted commas, a well person come to me at the moment. I said, why are you selling? He said, my wife and I have done well out of property. We want to take it a little bit more easy now. We don't want to be in charge of everything. We don't want to be the go to people for every question that's raised. We don't want to have to do accreditation. We're happy to work. We love medicine. We just don't want to be managing it and living it.
When is the husband and wife ownership? There's no off button because you're still talking about it in bed. You're talking about it at the dining room table. You're talking about it in the kitchen. It totally absorbs your own world, your world. But a lot of the time people come without that preparation period, especially if it's a small business and family run business. And they haven't had the foresight to step back and go, do you know what? It's 2025. In 2028, I want to sell.
And I want to engage in exit strategists for those three years to make sure that my business is pumped up. And if it's a company sale, we need to get it ready because we need to remove all the private vehicles that we're actually putting through. We need to restructure the home loan which we put through the business. So some people do that, but I wouldn't say it's a majority of my vendors. No, the majority of my vendors come to me when there's a pain point.
Sam Penny (35:39)
I work with ⁓ many business owners and my mantra is always create a business that's sale ready. Firstly, you never know when opportunity knocks, but secondly, a business that is sale ready is so much easier to run. And if you get to this point, like you say, Sally, where you lose energy or you have a health crisis or all these kinds of things, you are effectively ready to go.
Sally Stuart (36:03)
Yeah.
Sam Penny (36:05)
Now, if
someone is wanting to go to the market in say 12, 24 months, what are the three things, five things that you think they should really focus on?
Sally Stuart (36:15)
Focus on filling up your rooms. So focus on recruitment. Doctor recruitment is hard. Be the punisher. Talk to everyone, every barbecue you go to. Social media. Have a website that's... at your business as if a potential doctor would look at your business. Would you want to work in your business? Do you have a LinkedIn profile that's full of typos? Is your website clever? Is it interactive? Do you have online bookings? Is it modern looking?
Is it something that you spend one thousand dollars on creating or ten thousand? Do you have an ongoing social presence whereby you are telling people about the culture of your clinic? Are you adding value to everyone that looks at your website because you've got a whole lot of information, skin cancer? ⁓
dementia, are you adding value by adding knowledge? Are you doing videos so they can actually see you and talk to you and get a feeling for what you're like? Recruitment is the number one. You need to have people in there now, but people coming because building your business is like a finely balanced knife edge. You need to build up your doctor numbers so you can build up your patient numbers, so you can build up your doctor numbers, so you can build up your patient numbers.
So it all happens at the same time. It's ⁓ difficult to manage well, but the people that can fill up their consulting rooms and at the same time increase their patients or better utilise the patient base that they have by data mining their current patients. So in your life, Sam, how many messages would you have said you've got from your GP and said, Sam,
It's time you come and say, we haven't seen you for six months. What about you get your over 50s check done? What about if you get your over ⁓ high blood pressure check done? What about if you get your diabetes check done? Do you get that? There we go. So they're not data mining. They're not using their own patients to bring in additional.
Sam Penny (38:17)
I never have.
But Domino's sends me
a text message almost every day.
Sally Stuart (38:27)
Yeah, yeah, they're
better at marketing. So a lot of doctors think with the build it and they will come concept, but you've already got patients coming in, but why not get them coming in more? You've got the same patients.
Sam Penny (38:41)
⁓
Something that you mentioned just before, which ⁓ I really want to highlight is the core values of the business, because the core values are really a significant part of the intellectual property in the way that you deal with customers, in the way that you present yourself, in the way that you deal with staff, the way you hire and fire by.
Sally Stuart (39:09)
Yeah.
Sam Penny (39:09)
How often do you see businesses that might be doing marketing, that might be out there, but just really seem quite lost because they're lacking a clear understanding of their core values?
Sally Stuart (39:23)
Hmm. So I had a conversation last month with a practice owner. He rang me and said. I've got to get out, I've got to my business. I can't sign on for another 10 years. The rent is so high, they keep putting it up, the supermarket, this, that, the other. Like, OK, tell me about your business. So he had a practice manager that he was giving carte blanche to run his clinic without checking on what the practice manager was doing. And in the end, the practice manager was doing nothing.
And several, I would say three times in 11 years, I've heard horror stories of where the practice manager is thieving and robbing the practice owner blind because the practice owner doesn't know. Jahari's windows, don't know what they don't know because they've never studied to be a practice manager. So they recruit someone in thinking that they're going to be a practice manager because they've got the piece of paper or the previous job in their CV.
But they may not do any reference checks or they're only going to give them the phone number of their friend who they used to work for, not the previous place where they got booted out and they didn't put it on their CV. So I think not having ongoing check ins with your key people in your team. Like when was the last time you had a 15 minute consult with your nurse? When was the last time you had a 15 minute consult with your practice manager?
Do you have it on a regular recurring basis? So because they think they're so busy themselves, they can't schedule their time in case meeting with their nurse or their practice manager means that they're missing out on a patient consult for $37. Like it's just this different mentality whereby they think every minute of their day has to go into patient care. No, you should be developing your team. You should be
creating that culture, you should be nurturing the ones that are supporting you. There's so many other more important things to do than patient consults. At the end of the day, if you can recruit additional doctors that will take a lot of that pressure off you.
Sam Penny (41:26)
Yeah.
Yeah. And yeah, like what you're saying, so the, the staff communications doesn't take much to do a five minute daily check-in with the team. And it really starts to build the rhythm of the organisation. It brings everything in line, your strategic alignment, but also the cultural alignment as well. And then starting to understand your core values and being able to live your core values, starting with the team.
from something as simple as a five minute morning huddle.
Sally Stuart (42:05)
Yeah, 100%. And I always say culture is like a waterfall. It comes from the top down. So if you are not portraying the values that you want to be working with and for, then you have to think, why would my staff stay? Why would the other doctors stay? Why would I stay if I had a principal that was like I am? Sometimes it's hard to put that mirror up.
Sam Penny (42:29)
It certainly is. Now, someone who's thinking of selling, what is one piece of advice you'd give them?
Sally Stuart (42:35)
One piece of advice, if they're selling, check your lease. When is your lease up?
Sam Penny (42:41)
It's obviously very significant in your industry and constantly comes up.
Sally Stuart (42:46)
In any
industry, if you're leasing and you've got no decent lease, you've really got not a lot to sell. Check your leasing, check your subleasing. Like I'm dealing with a guy today. I said this pathology lease has expired. A and B, the money's not going to the business that we're selling. So why don't we create a new lease, current lease and indicate that the money will go to the business that we're selling as opposed to your family trust?
So I guess it's check your lease, check your website. Websites are full of old information. And the first thing people are going to go and do is look at their website. So you used to walk past the doctor's front door and look in. No, you don't do that. Now you go and look at their website. Who's there? What service offerings do they have? Leases, ⁓ up to date websites.
Google reviews as well.
read about the place that you're thinking of going or selling first online and people will say to me, Sally, is that receptionist still there? Look at the terrible Google reviews she's still got. I'm like, well, actually that was the wife. So I didn't sell that clinic.
Sam Penny (43:56)
I
wonder why. All right, Sally, let's move on to the lightning round. This is really the broker truth bombs. Okay, now I want, I hope so. I hope so because the pressure's on you now. ⁓ I want the first thing that comes to your mind for every single one of these. What's the worst reason you've seen for selling a business?
Sally Stuart (44:08)
Gosh, should I be scared?
Okay, I'm ready.
Can I come back to that?
Sam Penny (44:26)
Sure, we can come back to that one. All right then, the most underrated asset in a business.
Sally Stuart (44:33)
people.
Sam Penny (44:33)
Dealbreaker Red Flag.
Sally Stuart (44:34)
lying on a profit statement.
Sam Penny (44:37)
Most overpriced industry right now. Cross the board.
Sally Stuart (44:41)
⁓ In my space, I can only talk, don't know, but whatever everyone else is doing, but probably NDIS.
Sam Penny (44:46)
And what about the most undervalued?
Sally Stuart (44:48)
don't know.
the equipment in a medical centre sale. So a lot of it is fully depreciated for tax purposes and in a dental sale. But because the accounts over the last few years have had the instant asset tax write off up to I think it was 150,000. So on a P &L sheet, there's zero value in a lot of the documents that I read. Whereas if you had to go out
and replace that equipment and buy it new, it will cost you hundreds of thousands of dollars. Yet because of the current tax rules and the instant asset tax write off on paper, that expensive equipment is worth zero. So I think that's frustrating for buyers and sellers because the tax implications are diametrically opposed for each party. So in often we see a silent apportionment on the
of sale because we can't get agreement about what the value is on the plant equipment.
Sam Penny (45:47)
All right, the best time to sell is... ⁓ With who? Sally Stuart, of course. All right, I'm coming back to that first one. The worst reason you've seen for selling a business.
Sally Stuart (45:50)
Now, always. There we go.
⁓ I think probably partnership breakdown.
But it depends. I had a bad one. ⁓ If there's a partnership document ⁓ that's been created by a lawyer and is valid, oftentimes they have a partnership breakdown, but the partner that they've broken down with has got the ultimate say on who they can sell to. So that other person can absolutely kibosh your deal and can absolutely kibosh the sale of that business.
And even if you don't, if you have a partnership breakdown, you don't have a partnership agreement in place. You've got nowhere to go and you've got yourself to blame. So I had one recently up on the coast, business and building, two husband and wife couples. They created the document, but no one followed through. No one signed it. So at the end of the day, when their relationships fell apart on the business perspective, one sabotaged the other. There's nothing they could do about it.
I think that's a terrible reason to have to sell a business and then not be able to sell a business because your partner is white anting you. I just think in a caring industry, in my space, in the health space, sabotaging your partner, it's just a low dog act.
Sam Penny (47:17)
Yeah, yeah. Now the last question in the lightning round, what is, and do you have one, what's your personal motto when it comes to brokering deals?
Sally Stuart (47:28)
So my elevated pitch perhaps, I am a dream facilitator. I help dreams come true for doctors, dentists, allied health, aged care and NDS business owners. So one of my first question is, what's your goal? How can I help you achieve your goal? So I love doing what I do if I help people to achieve their goals.
Sam Penny (47:48)
Fantastic.
Sally Stuart (47:50)
That's my goal.
Sam Penny (47:52)
All right. So there you have it straight from the broker's mouth. What really moves the needle in a sale isn't just the numbers, it's the trust, it's the systems, it's the preparation. And sometimes, honestly, just getting out of your own way. So if you're thinking about selling, take this as your wake up call, start getting ready now. Now, Sally, where can people find out more about you?
or reach out if they're thinking about listing their business.
Sally Stuart (48:23)
So I'm on LinkedIn, Sally Stuart, business broker. I'm working subcontracting my services to Link Business. So my email address is sally.stuart@linkbusiness.com.au or 0437082045. Thanks, Sam.
Sam Penny (48:43)
Thanks, Sally, and thanks for joining me on this episode of Built to Sell Built to Buy. I'm Sam Penny, and remember, be bold, be brave, and back yourself.