There is no question that private business owners are getting older - across all sectors. This trend has the potential to shape the world economy over the next 10 to 20 years, and it could go either way! Many of these owners have invested huge amounts of capital, time, energy and skill to get their business to where they are now. They are nearing the end of their careers and may want to see their legacy continue and thrive as well as extracting sufficient reward to enable them to enjoy a retirement that they deserve. So how will that happen? It feels like supply might exceed demand. Owners may need to find innovative ways to sell their businesses while buyers need to access finance and capital to grow these businesses. This presents an opportunity for all types of investors, from private investors, angel investors to family trusts and even institutional and super funds.
The owners will need to think through the best way to extract themselves. Options include a total sale and with the success of many of these businesses it is not easy to find an interested party who is then financially able to buy the entire business. This is where selldown into a proportionally owned structure can make a great deal of sense.
It provides for some very rewarding and interesting investment opportunities.
Syndex is solving this issue by providing a marketplace to offer such an opportunity, and then provide secondary market liquidity for investors. Finally, there is a place that parties can list or view these opportunities with ongoing price discovery for both buyers and sellers. And a way for the business to manage and liaise with shareholders and investors.
Among respondents to the New Zealand Private Equity and Venture Capital Monitor 2016, “weak secondary share market liquidity for small companies” was named as a key challenge for the sector. Syndex is providing the solution to this. Syndex will allow a ‘one source of truth’ for new investors, but also piece of mind for those already invested. They too can get out when they want.
This ability to compare data from similar industries or financial categories will start to bring some transparency into these businesses. Something that is typically hard to uncover.
Already Syndex has an example with an exciting listing from Phoebe Plains Ltd – this opportunity sees two original investors looking to exit given the business and ownership cycles. It would also apply new capital to growth opportunities and performance improvement that are evident and available over the next few years.
So we are genuinely charged here at Syndex, because while we solve many problems with the syndication and real asset category amongst the private economy – the bigger view is contributing to the growth of this sector. The private economy and SME’s are an important part of the landscape in most countries and if we can provide a vehicle to shift perspectives and enable businesses and investors to find common ground, it is exciting times.
But this is just one part of the puzzle. Getting a business in a state to sell is also like putting a house on the market; tidying, organising, decluttering, marketing and being reasonably strategic are all part of the build-up. Stay tuned for this blog next month.
Have a happy New Year, with safe travels. And may this be a time where all of you find a quiet moment to reflect, organise and plan the year ahead so you might realise some of your dreams… especially the investment ones. Check out our marketplace to do so, and please sign up here to our stay informed, or share with those you think might be interested.
Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.