The short answer
Steve Grace shares how unclear shareholder agreements and earn-out conflicts derailed his recruitment business exits, and why founders need to resolve these questions long before any sale conversation begins.
Key takeaways
- How Steve’s first foray into selling a business validated his young entrepreneurial mind, and why this lack of experience blinded him to a broker that claimed to be representing both sides.
- The standard methodology used when valuing recruitment companies.
- The importance of having a shareholder's agreement.
- How Steve ended up in business with an industry friend, and how the duo tried to navigate their challenges.
- Why Steve and his partner met with 4 potential buyers, and how they ended up completing the deal with their chosen acquirer.
Listen to the podcast
48 minAbout this episode
Have you ever thought about going into business with a good friend? Steve Grace did, and he doesn’t recommend it. For as many times as we’ve heard a partnership success story, Steve’s experience proves that there’s always an exception to the rule.
In this episode, we’ll cover how Steve first got into business, and how he ended up partnering with a good colleague and friend. Having previously sold a company for a seven times multiple, and with shared backgrounds in recruitment and complementary leadership skills, Steve’s partnership seemed like a success. With over 25 employees, a great cash flow model, and enough profitability to consider exiting, Steve and I reflected on the exact moment where everything would (unknowingly) go wrong.
Another two years, a friendship breakdown, and barely enough communication to properly exit or sell, Steve’s advice about getting out before a full-blown breakdown needs to be heard by every entrepreneur.
If you’re thinking about going into business with one or more friends, family members, even shareholders, I cannot stress enough the importance of listening to Steve’s story. Discussing the necessary agreements, negotiations, and brokers to have in place, this episode is full of lessons hard learned during the exit process. From the importance of hiring independent valuers to the criticalness of updating a buy-out agreement, I encourage you to tune into Steve’s reflections on starting a business and scaling to sell, no matter how messy it becomes.
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About Steve Grace
Having successfully built and sold two profitable businesses from the ground up, Steve Grace knows a thing (or a thousand) about what makes a business successful.
Steve’s new venture, The Nudge Group, was born from a genuine desire to help businesses grow from start-ups to unicorns. After months of research and testing different methodologies, Steve has developed a new and original recruitment model that gives early stage and rapid growth businesses direct access to top-tier talent and specialist expertise without the traditional price tag.
Steve is also the Founder and Host of the Give It A Nudge podcast. Talking to founders, CEOs and investors on the show, Steve enables them to tell their unique stories. The Nudge Group’s mission is centred around your story: understanding it, showcasing it, and finding talent aligned to it, to achieve long-term goals for everyone.
Connect with Steve Grace
About the show
Buy Grow Sell is hosted by Simon Bedard, founder and managing director of Exit Advisory Group, a boutique mergers and acquisitions advisory firm that helps Australian business owners value, prepare for and navigate a sale. Every conversation draws on real deals and the patterns behind them.
