Australian business Jobfit Health Group found itself in an enviable position in late 2012 when 20 international companies put their hat in the ring to buy into it.
After a presentation process, six businesses went through to due diligence. Finally a prime candidate was found, and a deal was signed last week with Singapore-based medical powerhouse, Fullerton Healthcare.
Jobfit Heath Group, which has 24 locations nationally and 250 staff, can now tap into the power of Fullerton Healthcare’s network of 1600 medical clinics and 600 hospitals across Asia.
Jobfit is now in a position to embark on a strong acquisition strategy, with five businesses already in its sight, and it intends to expand into a raft of healthcare categories it has not been part of since launching in 1996.
It is also targeting an annual turnover of $100 million in three years, up from its current approximate turnover of $40 million.
The Australian provider of healthcare services was co-owned by managing director Steven Harvey and Dr Christopher Kelly. Kelly was interested in moving towards retirement, while Harvey was happy to stay on or sell – whatever offer proved best.
With Fullerton as a major shareholder, Kelly can exit, while Harvey can remain integral to the business without selling any shares.
But how did an Australian company with no international presence suddenly become the apple of investor’s eyes? Harvey offers his key advice on how it was done.
1. Get professional help
Harvey says the first step was to get professional advice on sales, mergers and succession planning. He says the pair approached accounting firm Deloitte to guide them through the process, and embarked on it with a very open mind about the outcome.
“Deloitte took us through what would be their standard process and we did an information memorandum that was sent to around 70 different companies appropriate to Jobfit all around the world,” Harvey says.
He advises a key thing is to be prepared for is an enormous workload.
“A due diligence of this size doubles your workload – no one comes in and says I will do your normal job while you do due diligence,” he says.
“Once we were well into due diligence, the workload was enormous, we were asked so many questions…we had about 500 questions to answer from lawyers and accountants.”
2. Be thoroughly prepared
Harvey explains that they were advised to go through every inch of their business with a fine-tooth comb, brushing up on anything not up to scratch.
“Deloitte spent a lot of time with us and I think that the preparation was very, very helpful. We went through the business in terms of what we did, who we did it for, what had been the key strength of the business, and having a really close analysis of the financial trajectory,” Harvey says.
The approach was to have the company in perfect order, so it would meet the expectations of high-level buyers.
“We spent six months just housekeeping to make sure everything is pristine. Our balance sheet hadn’t looked so good, we cleaned up debts, we ensured every policy and procedure was compliant, and that every contract for every employee was compliant to the relevant act.”
3. Sell your future
Prospective buyers may be interested in your past, but they’re more interested in what your future can offer them, Harvey says.
“You’ve got to be able to create a story to convince a buyer that there is a massive future that can be pursued because people aren’t buying what you did five years ago – they are buying what you’re going to do five years in the future,” he says.
“We spent a lot of time looking at opportunities in the business and looking at how those opportunities could be realised by a future owner, and to also explain why we hadn’t pursued them currently. We spent more time creating the vision which was a surprise to us.”
Deloitte suggested creating a “revenue bridge” which was a map of where the business was sitting, and how it could get to a key revenue target in five years.
4. Keep objective
Building a business from scratch means most owners are very connected to the company, so a due diligence process can be confronting. Harvey explains that it is easy to feel “personal about it” when an interested party questions proceedings or criticises things, but he says it is vital to be objective.
“A buyer is ultimately trying to buy your business at much lower prices than you think it is worth, so they are looking for reasons to say that it is not valued at what you want it to be valued at.
“The greatest challenge is to go through with an objective mind, and realise that the people looking to buy your business are not necessarily attacking your business, in fact they want to own it, they already like your business, so it is just a process of negotiation to go through.”
Harvey says it is like selling a house – the buyer wants the cheapest price, while you want the highest price, but in the end you’ll hopefully strike a balance.
5. The sale is just the beginning
When the deal with Fullerton Healthcare was signed, Harvey says there was a small celebration. But now the process of integrating with such a major company needs to happen.
He says Fullerton Healthcare are keen to tap into the knowledge of Australian medical industry provided by Jobfit, while Jobfit is looking forward to the opportunities for its staff and fulfilling its acquisition plans.
“A good example is that we are a major provider of physiotherapy services and they are very keen to develop our physiotherapy service model in Singapore,” he says.
Harvey is looking forward to diversifying the business, but knows there is a big road ahead. Jobfit also has expansion to New Zealand in sight.
To make it work, systems and processes will need to be aligned between the two businesses, and recognition of different national legislations are required.
“Our front of house will maintain our independence, while back of house such as finance and payroll can operate at a common level across the group. We will move to some common documentation,” he says.
After the hard work of the sale, and with new challenges ahead, Harvey is very positive about the future.
“We’ve moved from an Australian-owned strong and steady business to an international company, owned by an international company with strong ambitions to grow.”
Melinda is a business writer and editor and helps companies to bring their brand stories to life through her small business, Oliver Content. Melinda was previously the content manager for KPMG Australia, an editor of SmartCompany, and spent many years as a journalist.
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