IPO, M&A insights with Reece Walker, McCullough Robertson

Posted on March 20, 2024 in Business Strategy

🎉 After a short break, our hosts Jackson Barnes and Nigel Heyn are back! 🎙️ Join us as we kick off with an exciting exploration of Brisbane’s corporate success alongside Reece Walker from McCullough Robertson. Get ready to dive into strategic insights and navigate the dynamic business landscape of Brisbane with us! ✨💼

Explore the dynamic Brisbane business landscape through the insightful lens of Reece Walker! With expertise in corporate strategy and growth dynamics, Reece dives deep into the evolving M&A space. Technology’s pivotal role cannot be overstated, as Reece advises businesses to proactively assess their value and readiness for mergers or acquisitions. 📈 However, heed his caution against impulsive decisions!

Reece underscores the critical importance of data privacy and cybersecurity, advocating for their seamless integration into ethical business practices. 💻🔒 Corporate preparedness and external support are deemed indispensable, with Reece stressing proactive measures to mitigate risks. 🛡️

Reece paints a compelling picture of Brisbane’s burgeoning opportunities, emphasising its favourable business climate. 🏙️ Don’t let the chance slip away—heed Reece’s advice and capitalise on the city’s thriving environment! 🌟

#REDDPodcast #BrisbaneBusiness #CorporateSuccess #DataPrivacy #Cybersecurity #BusinessStrategy

00:00 – Opener
00:20 – Intro
00:52 – Reece’s Early Career and Passion for Law
02:43 – Diversification of Reece’s Skills and Interests
08:17 – Motivation and Leadership Philosophy
12:03 – Understanding IPOs and Preparations
15:53 – Benefits and Challenges of Going Public
20:15 – Key Questions for Companies Considering IPOs
23:11 – Timing and Preparation for IPOs
26:15 – Impact of Market Conditions on IPOs
33:31 – Importance of Cybersecurity in Business
40:05 – Mergers and Acquisitions Considerations
44:50 – Attributes for Successful Business Acquisitions
48:15 – Future Outlook for Corporate Environment in Queensland
50:43 – Closing Thoughts
51:35 – Outro


If you would like to discuss any of the topics discussed in this episode further with a REDD expert or if you would like to be a guest on the show, please get in touch either via our website, [email protected], or through any of the links below. https://redd.com.au




Hello and welcome to Redd’s Business and Technology podcast. I’m your host, Jackson Barnes, and I’m your co-host, Nigel Heyn. It’s been a while since we’ve been recording Nige, but this is a little break and we’re back into it with a big one. We’ll be sitting down today with Reece Walker, who’s a partner at McCullough Robertson, specialising in capital raising mergers and acquisitions and governance. Looking forward to getting some good insights out of you today. Reece, from your background mate, thanks for joining us.


Yeah, pleasure to be here. Thank you.


No problems, mate. Let’s start with your backstory. So why’d you get into law when you started at McCullough Robertson? And then we’ll evolve into all the other things you’re doing now as well.


Yeah, thank you. Look, it’s been a 30 year journey for me, so 20 years actually with McCullough Robertson, so a bit unusual I think in the current world to be in the one profession for that length of time and also be with the one employer and as a partner for that length of time as well. So yeah, getting into the law, something that I was always interested in and had a grandfather who was a practitioner as well. Very different sort of law back then, but it was really actually when I got into practising , got to see the corporate side of practising in law and got to meet a lot of interesting clients and people through that that are really focused on corporate law early in the career and that’s what I’ve stuck with ever since.


Okay, so that’s where you get the most value at is just learning about how businesses work and operate on the corporate side. Is that why you are passionate about law way back?


Absolutely. I think it’s really, corporate law is really a toolkit to get to know people who know clients and that’s what’s made it a really interesting journey and why I’m still excited about doing it and also being able to use those skills in other arenas. So whether that’s contributing as a director on not-for-profit boards also have a bit of an interest in the startup space, particularly in the tech area as well. So get to explore those interests but also use those skills for a broader range of things just beyond the day job as


Well. Yeah, awesome mate. Let’s unpack that a little bit for the audience. People listening on your background, not to run through the whole thing, but maybe what else you’ve done in the last 20 years along the way in terms of the startups, I believe you’re a director of St. Aiden’s and so on. I didn’t want to give you a massive intro, but maybe if you want to unpack that for us, it’d be good.


Yeah, look, I think as with all of us early in your career, you’re focusing on sharpening the tools in terms of your technical skills and then as you go through, you explore different interests. Been lucky enough over time to do a few different courses, whether that’s through Mount Eliza, which is now Melbourne Business School, sort of exec education type stuff. Also, lucky enough, a few years ago to go over to Harvard and do their professional service firm leadership course, which is, that was just an amazing experience and again because of the sort of people that you get to meet, but the quality of the lecturers and that sort of thing as well. So yeah, once you’re on top of the technical side of things, I think being able to explore those sort of other skills around leadership and that sort of thing, that’s definitely kept it interesting.


So in more recent years with the firm, I spent six years on our executive and a couple of terms as chair of partners including during Covid, which was a bit of a wild ride. So that leadership side of things really fascinating. And then in terms of not-for-profit Directorships been privileged actually to do a few of those. So one of my clients, Senco International communities as their foundation, so I sat on that board for seven years and that was really interesting to look at some global philanthropic type initiatives more locally being involved with things like Startup Catalyst, which is great that sending younger entrepreneurs over to places like San Francisco to learn a bit more about their particular sector with technology. So that was great involvement in getting to work with people like Steve Baxter and Aaron Bby through that process and also contributed a little bit at that stage to the growth of the ecosystem, particularly here in Brisbane. But was


That the same thing that Peter Laurie was doing as well? He’s a guest on our show last year,


So Peter’s definitely been involved in Startup Catalyst. Some of their missions I think they call ’em rather than tours, but I think there is a bit of fun had along the way as well, which is good. But yeah, PET has certainly been involved in that and the broader ecosystem. So having that sort of long-term involvement with the likes of River City Labs and Startup Catalyst has been great on that. Not-for-profit side and then in more recent years also in the education space, being on the board of St. Aiden’s Girls school, which again, that’s just been a really interesting thing to learn a little bit about the education sector, which is just a whole different ball game and make a bit of a contribution there. I think the girls schools in particular probably haven’t had that same level of philanthropy and contribution historically is maybe some of the other schools.


So it’s been good to participate in fostering that sort of culture and also be able to contribute to some of the programmes that the school’s been running in terms of their future growth. And there’s a nice little intersection with all of this as well because you’re seeing in particular with girls’ education, trying to encourage more interest in the STEM sort of subjects and going on with the career there. And actually my oldest daughter graduated from school last year and has gone on to study science, so there’s a nice little bit of circularity with all of this and it keeps it interesting. And then on the startup side of things as well, wearing another hat have also had a bit of a portfolio just investing across a range of technology companies. So it gives you the ability to see that growth. Some of them have managed to go a fair way.


Do you want to name any of the successful ones?


Look, there’s probably a few in the portfolio that are pretty well known, like go one for example. Obviously just a small investment there, but there’s been others that have probably been less high profile but have still achieved successful exits and yeah, it’s just interesting to see the different themes there as well. I think particularly in the early days in Brisbane there was a lot of app-centric type entrepreneurialism. Now it’s very sophisticated, obviously looking at different themes, whether it be FinTech or ai, just to see actually the breadth of solutions I guess that people are looking to solve


Reece sounds like you’re a lifelong learner and giver. It sounds like you just, I dunno what drives you so much, but it seems like you’ve continued to learn and sit on boards and do other things when you probably didn’t need to comfortable sitting as a partner on the chair of Robertson’s prestigious law firm. So could tell this the conversation in a lot of ways, but maybe let’s start, what motivates you to continue charging on and yourself personally?


Yeah, that’s a really good question and I think it is that just we talk a lot about being interesting but also being interested. I mean there’s nothing like talking to people and learning more about them. It’s sort of or their business and it’s actually that opportunity to continue to do that. I think there’s obviously a lot of different discussion these days about the growth mindset and that sort of thing, but I think intrinsically that’s something that does drive me is to continue to get there and the technical side of the business, that becomes a little bit of repetition in some ways. But yeah, if you look at it in terms of expert by the name of Ken Blanchard, he talks a lot about leadership models, but one of the things he talks about in terms of your attitude is thinking about what you get to do rather than what you have to do.


And I think that’s really important. So sometimes if spread a bit thin or a bit weary or something, you can fall into the this is going to be hard yards or do I really have to do this? Or I’ve got to go and do another one of these. If you take that attitude, that’s going to be a very hard way of going about things. Whereas if you think stop and think, well, hey, how lucky am I? I get to these opportunities, come on a podcast with you guys, or whatever it might be. And that’s just a different experience in life and getting to meet good people. And also the team that I work with are absolutely fantastic as well. And that’s a real driver is to see them do well in their careers and help them come through and a big believer in lifting people up, if that makes sense, to help them achieve their aspirations as well. So that’s pretty exciting and that is something that isn’t a five minute thing, that’s something you see over years short, long term. There’s a lot of those that I’m only now starting to see a lot of that come to fruition. So yeah, that also keeps me motivated.


Well, it’s a testament to your ethos of giving back for a mutual friend that new IPOed his business back in 2015. Usually you hear these stories where people, they get involved, they make a lot of money together and move on, but you’ve continued that journey and he’s referred so many different organisations and especially in tech space, you are regarded as, I wouldn’t say the godfather of the tech IPO, but you are literally highly regarded because I think you’ve got that passion, you really love what you do, you invest in the people and you’re there for the journey. It’s all about giving and the more you give, the more you get so massive credit to you, so many other people. I know that it is very transactional, whereas you are very relationship focused first and foremost.


Thank you. That’s incredibly kind and humbling and it is actually those sort of relationships and seeing people being able to do those things and see those companies come to life through the listing process. And it’s interesting, a lot of those people that do that, again, they could probably write off into the sunset, but invariably you find that they look for new challenges, new opportunities and other ways to give back as well.


So let’s start, I’m keen to unpack and get some of the value that you’ve probably gone through all your kind of career so far. There’s probably a much different direction we could go in with this, but let’s start with the IPO side and then I’ll have a nice couple more questions, but maybe at a first level I explain what IPO owing is and why would you do it?


Look, an IPO or an initial public offer is that’s the shorthand description effectively for taking public and listing on a stock exchange. So that might be on the Australian stock exchange, may also be on other overseas exchanges probably we tend to find most companies their Australian-based A SX represents a good opportunity because of the liquidity. It’s a sort of well-defined framework and process that there’s a lot of experts that can help companies get there, but


Even the tech ones don’t question, should we go on the NASDAQ or something instead?


Look, it’s a really good discussion to have. I think the realisation though that if you are small to cap raising a typical IPO for say a Brisbane based tech company, it might be raising 20, 25 million in that first raising maybe sort of 50. You look at things like NASDAQ or the NYOC, you’re talking about raisings, which are potentially hundreds of millions and quite often they’ll have gone through a more lengthy sort of venture capital sort of process. So in many ways some of those IPOs are actually really liquidity events for the VC and private equity funds. Whereas here it can be a good opportunity at a reasonably early stage to get that initial hit of capital. But the other advantage is once you’re listed, it’s actually reasonably easy to go back to the market. So you’re talking days and weeks for something like a secondary capital raising, whereas an IPO process is sort of going to be a three to six month process and something that you probably should have actually started planning towards years in advance.


So once you’re there, it’s a relatively easy process. So it’s that future access and liquidity, but there’s also I think a recognition that comes with being listed a bit of credibility if you will, that I think helps certain listed companies and particularly with technology companies, it can help sort of give that visibility that there is a board in place and there’s an organisation, there’s something tangible, which sometimes with technology companies it can be a little bit less easy to identify. Obviously there’s manufacturing companies or construction companies, you can actually go and really see the physical asset. Whereas with a tech company, unless you’re an expert in information technology, then you’re perhaps not going to understand the asset. So actually a listing provides a format where you’ve got the credibility of a public company structure, you’ve got directors that are experienced, you’ve got independent directors, audit requirements and that sort of thing. So it helps from that credibility perspective as well.


I got a lot of questions. Me ni, do you want to take over ask couple? Yeah,


Well probably on that vein, very slight, you’ve dealt with a lot of, we’ve got mutual friends that you’ve helped iPod and still listed today or have done transactions. If someone is considering, we do get a lot of business owners watching and listen to this podcast, what should they be thinking three years or 12 months out if they do see that potentially what we could do is do an IPO, raise some capital, do some other acquisitions, whatever they want to do to grow. With all of your experience, what advice could you give to those business owners in getting ready to do the IPO process?


The first point I’d make is none of those IPOs are overnight successes. It’s quite funny when you’re inside the process and then you see sort of an article come out after the IPO and they talk about


Startup launched


And startup launched and invariably there’s actually been years of work that have gone into getting the company to a suitable stage. So there’s obviously some technical criteria about what size of raising and the number of shareholders you need to achieve through the process. But even before that, there’s things around is the company suitable to go public? Are you going to achieve what you want out of the process? So there are actually downsides to being listed. Obviously it’s more public environment, there’s costs associated with the ongoing listing may mean that you’re arguably less nimble on a few things or you’re having to make decisions for more short-term reasons, those sorts of things. So you’ve got to make a balanced assessment of whether that’s the right way to go at different times. There might be private equity options or trade sale options. So you need someone that’s sort of agnostic about which of those pathways to go through to give the advice because some advisors will say you must do this or you must do that because that’s what happens to be their bread and butter is going with that pathway.


So needing to gather information I think early and make an informed decision. And then there’s things that you can work towards in terms of obviously making sure you’ve got the right governance structure in place. So you probably start looking to build out a board that’s going to be suitable. You’d look to make sure that you’ve got all the discipline that you need around your contracts and financials and that sort of thing. So there’s some requirements around having audited financials. So obviously you can’t start doing that five minutes before the listing. So there’s a bit of a pathway there that you can build up. Look, there’s certainly plenty of guides around that sort of step out some of those key things that you should be doing on that journey, but I think there’s almost as much a philosophical consideration about it as much as there is a technical consideration.


And when in doubt, call Reese Walker, McCulloch Robinson.


Yeah, look pleased to have the chat always and the stock exchange themselves. They’ve got a great business development team that they can talk through from their perspective the advantages that they see that they would offer. And I think to the question earlier about offshore exchanges, I think the A SX actually is one of the global leaders in terms of secondary capital raising. So I think the assessment has to be not just day one but year one, year 10, all of that sort of thing. And there is opportunity later on to look at things like a dual listing as well. But yeah, get advice and always look at what angle that may be coming from and you really got to make a decision that’s right for the company and the founder as well. And there’s also a bit of an adjustment, particularly with founders, they’ve got to be comfortable with the fact that there’s the control over the company will inevitably change as a result of the process. So you wanting to make sure that the benefits outweigh that feeling of a bit of a loss of control.


If I can unpack that, get you to summarise with all yours experience of helping companies go public. Three questions you would ask early in the piece around when they’re considering maybe they call you first off or like, Hey, we’re thinking about potentially listing. What are the three questions you would ask them to consider first?


Yeah, I think the first one is who is going to help on this process? So get the right advisors, and that’s going to be a mix of obviously legal, accounting, broking, so who is the team? And then secondly, internally you still got a business to run. So how are you going to manage that process? Is it through shared responsibility or someone in particular taking charge or have you got someone that you can bring in that will bring a bit of experience who’s gone through the process before? So there’s sort of the external resourcing and then there’s the internal resourcing. And then I think the third thing is really that go no go decision. So you really do need to have a real list of the pros and cons and really understand what each of those mean. So particularly say for early stage technology, life sciences companies, some of the mining exploration companies where there’s intangible assets, there’ll be quite often some fairly hefty mandated escrow requirements. So restrictions on being able to sell shares for a period of time after listing. And that’s quite often not well understood. So founders might think, well, I’ll go on IPO and I’ll be sitting on paper worth, yay many millions of dollars.


They can’t do anything,


Can’t do anything with it. And that might also mean that you’ve got to ride some up and down waves during that time and there is a risk that maybe the down wave is at the time that the share has come out of escrow. So it may be if the immediate requirement is around an exit event, having a discussion about how you can structure a sell down component to the IPO, but if not understanding what the downside might be to being listed as much as the upside. And again, it’s just having that objective discussion. I think IPOs are a great way to bring additional value and you look at obviously the premium that comes with being listed from being a liquid stock and having that demand. So it can be a really great avenue, but you’ve also got to make an eyes open assessment. So yeah, so I think in summary, external team, internal team and a serious weighing up are the advantages and disadvantages before you press the go button.


That’s good advice. Have you got any stories you can share around what a good IPO looks like and then maybe a story, it don’t have to name an individual, maybe a bad one after that?


Yeah, look, I think there’s always a lot of discussion around IPO windows and I think my sense is that the IPOs that have worked best have been because they’re a good company, their right to get listed irrespective of where the window is at sometimes I think if you’re relying on general market sentiment, then what does that say about the strength of the company individually? That being said, I mean you’ve got to be pragmatic. It might be that you need to delay or defer a little bit until you do get the right wave. And we’ve seen that over last 18 to 24 months. It’s actually been pretty quiet on the IPO front, although we are seeing actually a bit more activity now. So we’ve got a lot of kickoff processes happening now with a view to potentially those windows reemerging, but trying to start a process sort of late in the piece and saying, well, we’re going to get it done in 10 to 12 weeks.


I think the way that things work these days, particularly with technology companies, you’ve got to do a suitability application upfront that takes time. You’ve then got to make sure that you’ve done all the usual prospectus processes, due diligence, et cetera, and then there’s time required at the back end of the process as well for roadshows and book builds and those sorts of things. So once you plot all of that out, three months is a very tight process. Invariably it tends to be a bit longer than that by the time that you work things through. And quite often there’ll be things that are identified during due diligence. They’re not necessarily weaknesses, but there are opportunities to deal with things in a particular way that actually probably enhance the value proposition overall. So it might be that the contracting matrix that the company was using isn’t particularly good or that the model that the company’s been using doesn’t really provide a lot of comfort around recurring revenue which the market would like to see. So if you can actually tackle some of those challenges during the pre-listing period, that’s actually going to reap rewards later on. So kind of having that openness to taking the feedback as you’re going through the process, even though it might not necessarily hitting sort of timelines that might’ve been in people’s minds because quite often they’re busy planning the completion party and


Trying to the business. Little detour question, Reese, when the tech stock crash happened or whatever the last 12, eight months ago, did you have companies here in Brisbane or in Australia that were getting ready to essentially list and then went, well, hang on, everything crashed, paused, don’t do anything. Did you experience any of that yourself? Yeah,


Look, there was definitely a lot of that. I think though there had been quite a good run before, so the ones that probably were ready to go had gone through, so there probably weren’t a lot that were deep in the process. I know from talking to people at the psych exchange that there were some IPOs that were pulled not just in tech, and you can actually see there’s an upcoming floats list on the A SX webpage that can be quite informative. And I think when we started entering into that period, the queue went from sort of maybe 30 companies down to sort of a dozen. And if you looked at those dozen, I think the majority of them were small cap mining exploration companies, which Australia’s always going to have mining and resources bent to a lot of those smaller cap IPOs and they might still come through regardless of what’s happening in the broader economy. But


Yeah, sorry, these were a little bit, but back to where we were going was example of a good IPO that you’ve kind of gone through and then maybe a bad one.


I’ve been privileged to be involved in a lot of really good IPOs over that journey and all the ones


Don’t have been good ones. They haven’t got any bad, yeah, they’re all good.


Yeah, I guess it’s a question of how you define success as well. I mean for my thinking, it’s not just get to listing party and ring the bell, it’s actually what happens then beyond that it it’s sort of a start of a journey in many ways as well. If you look at some of the great Queensland success stories and particularly in tech and telco world, companies like Over the Wire obviously really proud to have been involved in their journey. Listing went well, they went on, did acquisitions build up, and then obviously had a great transaction with Aussie broadband. So that was a great journey to be a part of and probably captures that sort of spirit that I was talking about of taking sort of something at a certain stage and being able to build it up, raise money that’s then used to help grow.


It creates employment opportunities and you actually then see from that within the local ecosystem that people involved with the company, not just the senior management, but there’s then a recycling of that talent and that capital in the local ecosystem. So something like Over the wire is a notable example, but it’d been privileged to be involved with some other great Queensland names. IPOI think was one of the larger ones. I think it was the third largest in the year that it floated. So being involved in success stories like that, and that’s obviously a great Queensland success story more broadly. So yeah, I guess in terms of the flip side of the coin, I probably, I wouldn’t name names, but I don’t think,


Well, what does a bad unsuccessful IPO look like?


Yeah, look, I don’t know that.


Or is there, there’s no such thing. Yeah,


I was about to say it’s probably a bit bold to say there’s no such thing, but you have to have such rigour around the process that you’ve got to make sure that companies are right to go. And that’s from the legal perspective, the accounting perspective, the brokers have got to be happy they do roadshows and book builds and that sort of thing. So the company itself is well positioned. I guess probably the only downside you see sometimes these days is because there can be a period of time between the lodgement of the prospectus, the close of the raise, and then ultimately the listing day itself. If you have a bit of a market blip in the meantime, it may be that the opening price isn’t shooting up the way that people might take. And I guess the other side of that too, from the company’s perspective, if it does shoot through the roof on day one, it might mean that you’re underpriced it as well. So you want a feeling, I guess that there’s a little bit in it for everyone. So the company’s got the capital that they want at a suitable price. The early investors have got enough uplift that they think it was a good deal, and then the people who participate in the IPO obviously need to get some reward out of their investment as well. So it’s sort of a balancing all round, it goes towards that success. So yeah, it’s pretty rare that day one you would call something unsuccessful.


Maybe it’s a failure of getting there or the market corrects either direction significantly.


Yeah, absolutely. But I think you’ve got to have that long-term view. I think there is a propensity once people list, and particularly if there’s staff that have got shares as well, that people become obsessed with the share price on a daily basis. But you’ve got to step back from that. And I think one of the things that we’re seeing, obviously in the world at the moment, there’s a lot of noise, a lot of macro events. You’ve obviously got what’s happening in Ukraine, you’ve got the Middle East, you’ve got geopolitical tensions in Asia Pacific, you’ve got US elections coming up, that sort of thing. But if you actually step back from that and you talk about, say, listed company environment, Dow Jones 10 years ago was 12,000 points, I think it’s now 39,000. NASDAQ was 4,000 points, it’s now 16,000. So the benefits of being part of a listed environment, and that’s just in a 10 year period. So if you can look beyond that day-to-day noise and look beyond the share price, the closing price every day remembering to run a company, that’s what makes for a successful longer term journey, I think.


Yeah, I think that was Jeff Bezos thing where he, he got interviewed and they were like, oh, well the price has gone down. I know there’s three quarters down, this is eight years ago. And he was like, no, I don’t care. The business is solid, so don’t care at all. But not everyone looks at it like that. I could imagine I was going to pivot into the m and a space, but nij, where did you want to take the next question?


Look, maybe circling back to what you said about fundamentally good businesses recently, obviously the Australian Institute of Company directors have given some guidelines around cyber and personally identified data. What you just said there before about the rigour that the A SX and IPO process does, obviously that’s actually really, really good because it validates that you actually have a genuine business. But we do see time and time again, a lot of, I think because to your point, it’s intangible. So what tech does, it’s quite intangible, but can you talk to the guidelines, what you’re seeing in this space? I guess it’s what we do and we get frustrated that a lot of leaders, hence the reason why we do this podcast, they don’t take cyber as seriously as we feel they should.


Yeah, look, that’s a really good question and observation. I think that cyber and I think there’s a number of issues that are correlated as well. I think data privacy also becomes part of the broader ESG and community and licence to operate ethical discussion as much as a practical one as well. But if you draw down on the practicalities, I think the boards probably five years ago, three years ago, maybe even a year or two ago before, we had obviously some pretty big examples with Optus and Medibank and the government’s reaction to those. I think the visibility that I had even listed company boards quite often it would be something that maybe someone within the organisation was trying to drive a little bit of attention to. Maybe the chief technology officer or maybe the company secretary boards were quite often saying, look, yeah, we’ll get a presentation on that.


Then that was about it. I think now just about all boards and directors are cognizant of those examples and they’re actively referencing things like the A ICD guidance and ASIC guidance and coming to their management teams and then coming to external advisors, and I hope and expect organisations like your own to get the advice that they do need. What does that actually look like? Well, I think in the past there was really no questioning, I guess first of all, so what sort of data do we have? Do we understand that? Do we understand why we’re keeping it? What are our legal obligations around that? So actually just that fundamental understanding then sort of understanding cyber posture and even actually learning the language and knowing the right things to ask is important for a lot of the directors following that ASIC and A ICD guidance, I think that’s given a lot of people a toolkit to be able to ask the questions.


I think then drilling down on things like incident response, business continuity planning. So I think organisations either didn’t have a plan or it was in the bottom drawer. You now actually see them moving to doing simulated exercises about how would we respond, who are we going to go to? Then I think the other thing that’s really important is actually looking at the expert support that you’ve got. So again, it used to just be really a bit of an outsourced and an assumption that things were okay because the chief technology officer or the chief information officer had some engagement with somebody and the


Board or you had two IT guys internally and they’re all sweet. Yeah,


That’s right. We’ve spent more IT on it than we ever have because we’ve got two guys instead of one or whatever it might be. Now, I think there’s been a realisation that not all external providers are created equally and moving beyond the superficial pitch documents. So if someone actually says that they’re providing 24 7 monitoring and response capability, are they actually really? So you’re dealing with a partner that genuinely has that demonstrated experience. How have they helped with incident response in the past? So you’re actually getting directors asking those questions, not outsourcing it any longer.


Yeah, no great advice because it’s very hard to compare apples with apples or you mentioned before about that 24 7 response. We see that time and time again that providers, because I guess there has been no cyber guidelines up until now. We’ve actually got something tangible to work towards. So yeah, look, we get frustrated because there’s time and time again, people just don’t understand it’s a foreign language. But yeah, I think the reality is that technology is oxygen and all of the businesses that you list, if they don’t have a fundamentally strong business model, they don’t have a very good team and they don’t have the data, the information, the governance and cyber in place, they actually have a lot to


Lose. It’s quite confusing as well. It must be really hard for business owners and people to sit on boards to digest that because when you say 24 7 and someone just throws a shiny glossy at you, is that just the agent looking at the storage on servers and things 24 7, is it just an antivirus tool running or is it actually a security operation team running 24 7 looking for suspicious activity? Right. There’s a big gap between that. People just look at the same kind of words for all three versions of that. So it’s a very hard place to decipher and yeah, I think it’s interesting around that business continuity conversation because that’s something we are hearing. I feel like having a disaster recovery plan was the IT standard 10 years ago where now it’s really not good enough. You need a business continuity plan, cyber response plan, cyber insurance and a bucket of other things in place. So when things do get through, you can respond and it doesn’t actually cripple the business.


Absolutely. And I think all businesses are realising that. So I think previously maybe a lot of the technology focused businesses had it higher up the radar, but you’re now seeing companies have that epiphany that basically if you’ve got a workforce that’s got phones or computers on their desks, well you’re potentially at risk and there’s not too many businesses that operate without phones and laptops and those sort of


Things. It’s funny, it’s really evolved from, it used to be probably your business was valued more if you had a bucket load of information, a big marketing list and all the stuff around clients where now it’s like proper data retention. It’s probably probably a risk and probably a negative thing from a valuation perspective if you’ve got personal information that comes with it’s security compliance and a duty of care with that as well and PCI compliance and so on. So it’s almost kind of like a negative thing to have more data these days. Anyway, I want to pivot into the m and a space a little bit and get your shared knowledge in the time we’ve got with you, Reese. Maybe Rob, I wanted to start, when should a business consider merging with another one or acquiring a smaller business? Let’s assume they’re a private business for now. When should you consider going down that path?


Look, we tend to see in Brisbane and Queensland quite often a lot of the companies are actually selling or target entities because they’ve grown to a certain stage and then the next step for them is some sort of trade sale. Or quite often you’ll have people come and knock on their door and that’s quite interesting because a lot of the time companies aren’t actually prepared for that. So I’d say you need to always have in the back of your mind, are you really match fit? So there’s some companies of a certain size that will sort of maintain almost perpetual data rooms so that if there is an opportunity that they can react to it quickly. But having an understanding of your own value is important as well. So I’ve seen in particularly one recent example, a regional business that quite a successful business, they got a unsolicited term sheet to buy this business that was effectively a mum and dad type operation but had got to a stage, the turnover was in the multimillion category.


The term sheet, as I said, was superficially attractive and it was only actually when we took a look at it for them and in conjunction with a financial advisor as well that because of all the ins and outs and again things like earnouts and that sort of thing would’ve actually been sort of quite disastrous for them if they’d sort of signed on the spot. So I think always being prepared, always having a sense of your own value is important for any business. And then on the buy side, obviously there’s opportunities to grow through acquisition and then it’s been an interesting environment with interest rates the last little while. Obviously that sort of hampered some people’s ability or the costs of acquisition, but we’re definitely seeing consistent activity. So there’s always going to be the haves and the have nots and there’s been, whilst there hasn’t, other than perhaps say the building sector been a lot of formal insolvencies, there’s certainly been some businesses that did struggle through Covid or to come out the other side of it relative to some of their peers.


So the other thing that we are seeing is the us a lot of activity coming out of well North America, so US and Canada as well, looking for Australian companies, for Australian companies. And I think that’s to my point before there’s a lot of noise in the broader world about the macroeconomic events, but the US there was a number of those acquirers that sort of weren’t terribly expansive during covid, which is understandable. They’re definitely now in the market and looking and rolling up and doing a lot of integration and obviously the exchange rate helps those buyers at the moment as well. And also I think particularly in the tech and sort of what I call a new economy space, so technology, life sciences, innovative sort of type entities, Australia’s always going to have a very strong wrong innovation capability. It then sort of probably doesn’t do so well on the global relativity scale in terms of commercialisation and actually coming through to market.


And we are a small market as well. So sometimes companies in that space do need to be looking at the options there. Sometimes it may not be a complete sale, it might be a partial interest or partnering or licencing. So again, you’ve got to have a sense of your value, what’s going to maximise that and get the right advice as to how to structure that. So if you’re not quite ready to give away the farm so to speak, maybe there’s other ways that you can still harness some of those benefits but still keep a bit of value to come down the line.


So similarly to we did earlier, if you are, let’s focus on the buying the acquiring side. So say someone a business and you’re advising them and they’re considering acquiring other entities, what questions or attributes should that business have in your experience in a good position to start acquiring other businesses?


I think they’ve got to have, firstly the existing business optimised. There’s sometimes I think propensity to look at growth or look at an acquisition as the solution to a strategy, which may be sort of the wrong way around. So having your own house in order and then also having an understanding of what your funding capability is for that. So if it’s debt funded, having good relationship with the bank, knowing what your capacity is, there’s no point in running around looking at targets if you can’t actually execute on it or looking at equity back sort of means of doing the deal. So understanding those capabilities, but then also what’s your deal team? Is it supported by external advice? Is it that you’ve got someone internally who’s got experience doing that sort of work and that’s their job to identify those opportunities and then actually run through the process? It’s quite hard I think sometimes to do it without the right mix of support, but I do think, again, it comes back to this, why do you want to acquire? So you’ve got to be able to answer that question before you jump straight into the how.


Is that the question you throw back to people when they ask you for advice on it? You start with the why do you want to acquire or merge with someone else? Yeah,


Look, I think it’s a lot of the questions that we ask at the start of the process is to help understand what the objectives are. And I think the benefit of being around for a while and having good client relationships is you can give frank advice that might be a nice idea, is it achievable or it’s achievable, but you’re going to need to tee up X, Y, and Z to make that work. But it is really important to have that relationship where you can actually ask those questions. And it actually, from an advisor perspective, it helps you to give the right advice knowing the context, I mean there’s more value that can be added by understanding those things and just jumping straight into filling out a document. And sometimes also in understanding those things, it may be that there’s a broader awareness of maybe some examples of exactly that type of company or industry where we’ve seen it work or not work for particular reasons. It may be that we are also aware of other opportunities or connections in the marketplace or other advisors that we know that specialise technology acquisitions or agribusiness acquisitions or whatever it might be. So it’s that benefit of being able to share that knowledge with your clients as well, which is important.


This could be a whole new m and a series with Reese Walker, so we can talk forever. Reese, I know we’re going to rerun in short time, but in terms of what you’re seeing in Queensland, Brisbane, the environment from a corporate point of view, where’s the future? What can you share?


So I’ve spent most of my professional career in Brisbane. I did have a stint in Sydney as well, but I think that last 10 years in Brisbane in particular, the ecosystem, if I can describe it as that particularly in tech has just come so far. And that’s been again because some of those success stories and then success begets success. So people talk about those stories, those people are back in the ecosystem, they’re deploying capital credit to some of the government and related agencies as well. So you’ve had things like advanced Queensland, you’ve had the Brisbane Economic Development Agency running a lot of different programmes. You’ve had River City Labs, a lot of different initiatives, all contributing. You’ve also seen people come back from overseas with expertise, particularly in things like life sciences. So Brisbane’s actually quite a livable city. So you’re seeing migration and people either returning from overseas or coming from overseas, you’re seeing people coming from other states as well.


So there’s a nice little mix of skills and capital that are there that probably weren’t quite there in the same way. And then of course you’ve got now the Olympics on the radar as well. And having been down in Sydney when the Sydney Olympics are on and in the lead up to that, I think people probably still don’t grasp actually what the scale of that is. I mean we obviously saw the Commonwealth Games, gold Coast was a successful event and it was great to get along to a couple of those things, but by comparison the Olympics, it’s just that next level up and also the audience that brings from around the world. So there’s a real slingshot event after that as well. So I think it’s a really great environment, but one of the things, and I think it’s something that we’ve spoken about before is the ethos within the business community I think really do the right thing by people and have the right relationships so it’s not just sort of transactional so to speak. It is sort of very relationship driven and I think that business culture here has really set things up for success going into the future.


Yeah. Awesome. I’m conscious of time. We’re gone a little bit over but maybe might wrap up there. Reese, thanks for coming in. You set a lot of value and I feel we might need to get you in for a part two or three on the A side and we didn’t really, there’s heaps of restaurant could have went in, but mate really appreciate everything you’ve shared today and hopefully you want to got a mega value out of it. If they want to reach out to you directly for all your team, for any advice around the m and a or IPO space, where should they go?


Yeah, look, just look me up on the website and my contact details are on there and always happy just to have a chat and whether there’s some suggestions or some advice or opportunities, always open to having a chat.


Reese, thank you mate. You’re super well connected and always super respected and look forward to, you’ve shared and helped me tremendously with Red and look forward to doing lots of things with you and your team into the future.


Thanks for the invitation guys.




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Nigel Heyn
Nigel Heyn
Founder & Executive Director
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Nigel Heyn is a passionate, business and technology centric entrepreneur. With a natural instinct drawn towards technology, Nigel, under the guidance of his father, successfully built his first desktop computer at the age of 8. This started a journey of research, innovation and technology exploration that continues today. Nigel has successfully built several companies, all underpinned by the desire to leverage technology smarts in order to positively influence business models and realise stakeholder dreams. Leveraging a vast network of global contacts established over many years, Nigel thrives on learning what best practices exist in order to provide digital excellence for his clients'​ successes. In order to achieve true success, Nigel understands the importance of building a team of the best talent available and thus welcomes the opportunity for those sharing similar dreams to reach out and be a part of the vision. In the words of Walt Disney, “If you can dream it, you can do it”!
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