Meet Dean Demeyer from Finn Business Sales Tasmania
Five years ago, Dean DeMeyer was looking for a gap in the professional services industry. Bsale sat down with Dean and talked about his career as an accountant into becoming a business broker.
Accounting Background
DeMeyer started his accounting career in 1983 at Price Waterhouse in Brisbane. He spent thirty years working in public practice, built and sold a business, and did a bit of executive coaching and consulting work along the way. It was a discussion with his current business partner that led to his move into business brokerage.
“We were looking for where there was a gap in the professional services industry and we both came to the conclusion that there were no professional business brokers in Tasmania. So I started looking around for an appropriate group to join, because we needed the marketing skills -- we were accountants -- and Finn was the best fit.”
Joining Finn Business Brokers
In 2015, DeMeyer joined Finn Group, bringing his business partner Chris across two-and-a-half years ago.
When he claims there was an absence of brokers in Tasmania, he doesn’t exactly mean that there was nobody buying or selling businesses in the state.
“There were plenty of brokers,” he clarifies, “but none at a professional level.”
The market was flooded with what DeMeyer calls “real estate agent guys” with a low percentage of sales success. Most real estate agents he speaks to in Tasmania would prefer to steer clear of selling businesses, citing the difficulty level involved.
“Our opinion is that business broking is more of a commercial services offering, rather than a real estate offering,” DeMeyer continues. “What we used to see, from an accountant’s perspective with our clients, we would hand over financial records to real estate guys and then not really know what happened after that. And with only one in five businesses selling, we didn’t think that was a really good success rate.”
DeMeyer did a bit of homework and discovered that, on top of this low strike rate, 50 per cent of sales contracts would fall over after a deal had been agreed upon. The gap in the market he was searching for was now widening.
“We thought that’s where we can add some benefit, because we understand landlords, lawyers, buyers, sellers, banks, franchisers - through our commercial accounting background.”
He knew that in order to succeed in this market, the old model just wouldn’t cut it.
“Quite frankly if we were selling one in five [businesses], we wouldn’t have started because we wouldn’t be making any money at that rate.”
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How COVID affected Business Sales in Tasmania
Like most, DeMeyer’s business was impacted by COVID-19. However, it wasn’t necessarily a negative.
“In terms of the buyers, everything stopped for the month of April,” DeMeyer reveals, “but May was our second biggest month of the year for buyer enquiries.”
He reasons this is because potential buyers were forced to take an extended break from work, and this downtime prompted thoughts of career changes.
“Our biggest month of the year is always January, and that’s because people have holidays over Christmas,” he explains.
“COVID was sorta similar to that, in that people were at home. So they started looking around, and maybe they were looking for some job security, so they thought, ‘Well, let’s see what businesses are on the market’.
Unfortunately, the reverse was true for potential sellers, who showed trepidation about entering the market during a period when everyone was tightening their belts.
“In terms of the sellers there was a bit of a mindset: ‘Nobody’s going to buy during COVID so i’m not going to put my business on the market.’”
Thankfully this has changed, with DeMeyer now “flat out” with both buyers and sellers.
The business also pivoted slightly during this uncertain time, taking advantage of the smaller market in Tasmania to pursue an additional line of business.
“A lot of the brokers down here tend to do real estate sales as well, either commercial or residential. We took a different route.”
Business Broking vs Real Estate
Demeyer didn’t want to dabble in real estate, as he feared this would become an immovable part of his business.
“We didn’t want to do that. You get drawn into selling real estate because every property sells, it’s just a matter of price. So, given our background, we started doing mergers and acquisitions, because there’s not a big enough market in Tasmania for a [purely] mergers and acquisitions business.”
To offset the extra work, Finn has tasked Tony Brown at Divest Merge Acquire in Queensland to handle the administration, while he and the team take care of the client work in Tasmania. The business relationship between DeMeyer and Brown goes back some 15 years.
When it comes to the types of businesses that sell best, either during an uncertain market, or as evergreen operations, DeMeyer explains that it’s less about being in a particular industry, and more about the numbers.
“Selling businesses is all about return on investment, so the ones that sell are the ones that have got a good, sustainable return on investment for a buyer.”
It makes sense. “They are very difficult to sell if they’re not making any money,” he continues. “There’s certain industries like service industries and caravan parks and those sort of things -- anything that the grey nomads are attracted to, generally, are appealing -- but the sale price will always come back to ‘what’s the return on investment?’”
What does it take to seal the deal?
Demeyer notes that a rigid system is in place to make sure such deals are good value for both parties.
“90 per cent of people will go to an accountant and/or a bank,” he explains. “The bank is essentially another accountant. So there’s a lot of accountants looking at numbers, and they’re helping people make decisions based on that. So, where a buyer may have an emotional connection to buying a business, eventually an accountant will look at it, and give them the logical side of that.”
And if common sense fails?
“We have two primary objectives and they are both completely independent of each other. To get the best possible price for the seller, and, after we’ve done that, to get it sold as quickly as possible. We don’t really work for the buyers [in that regard].
“Where we start working with the buyers is after there is an agreement. Then we start helping the buyers, by guiding them through the settlement process. The first part of it is a sales and marketing exercise - the second part is pretty much project management.”
It’s this two-pronged approach to brokering, coupled with a deep understanding of every aspect involved in selling businesses, that sets DeMeyer and his team apart from the other operators in his market.
“That is what makes us different to all the other brokers - that commercial background. That’s our competitive advantage.”
Tags: tasmania hobart buying a business business broker
