When the owners of automotive supply company Forch were looking for investors to grow they enlisted the help of longtime advisors Insight. The end result was the multi-million sale of the company and Terry Childs and Peter Burgess couldn’t be happier.
Friends since their teens, they founded Forch Australia, which sells auto parts and consumables, 14 years ago, after having successful careers in other industries.
“We got to the point where we needed to invest more money to grow the business,” said Mr Childs of the Perth-based company. “Things were growing too quickly and the business needed funding to take it to the next level.”
“It was also important to us that we support our staff and not have too many changes,” said Mr Burgess, who manages logistics. “It was important for us to make sure there was stability for our staff, almost all of whom have been with us for a long time.”
West Leederville’s Insight Advisory Group already had an almost decade-long relationship with Forch and became a key player in the search for investors. Over 18 months they vetted and negotiated with potential investors on behalf of Forch, but it became clear that a majority sale would be a better move.
One of Insight’s principal, Mathieu Paul, was the lead on the deal, utilising contacts to find a company which would both be willing to invest and appreciated the value of Forch and all that Mr Childs and Mr Burgess had built. While searching for the right investors, Insight also used the opportunity to help Forch strengthen and clean-up systems and processes in areas like HR, OHS and created value-add opportunities such as obtaining licences which would make the sale more appealing.
“Initially we weren’t encouraging them to sell the business but were working with them to grow the business,” said Mr Paul. “But things moved very quickly and in a very short period of time we went from looking for investors to negotiating to sell and closing the deal.”
Mr Paul said Insight’s in-depth knowledge of Forch as a business helped them find a buyer who understood the company’s niche and unique value proposition. A key was also understanding that behind the company were “two human beings with families”.
“We had to put ourselves in their shoes because this money would be a game changer for them,” he said.
“I think where we had the greatest impact around this sale, was that we wanted to understand everything that was going on in the business. The more we knew, the more we could articulate the value of the company, find the best match and secure the best price. It’s a mix of experience, gut feeling and understanding strengths and weaknesses of the business.”
They sold 80 per cent of Forch to MaxiPARTS Limited, a truck and trailer parts company with stores all over Australia. As part of the $9.7 million deal, Mr Childs and Mr Burgess remained directors – responsible for the day-to-day operations of Forch – and each retained a 10 per cent ownership in the business. The deal also gave MaxiPARTS an option to acquire the remaining 20 per cent of shares in two to five years.
“We were glad we didn’t have to get involved in the negotiations ourselves,” said Mr Childs. “I don’t think we would have gotten anywhere near the price that Insight did.” He says Mr Paul and his team made it easy to ask questions and get answers and went a long way to helping them not ever feel overwhelmed.
While the pair are ostensibly doing the same work, the scale and complexity has changed. Forch now runs two warehouses on the east coast, rather than having the Gnangara warehouse as the central distribution point. They are managing a bigger team, but both agree the synergy between the companies has made it a great match.
“We’re doing the same things we were doing six months ago,” said Mr Burgess, “but now we’ve got more support and knowledge available to us. Now MaxiPARTS do all the big things like wages and IT, so we benefit from that.”
With all the Forch staff staying on, Mr Childs and Mr Burgess said it has only strengthened their company culture. They have always considered it like family and are now able to introduce their new teammates to the way they do business.
Mr Paul said the original owners choosing to stay on in the business also helped command a higher sale price because the pair showed they were still committed to the business and its growth.
The Forch directors look forward to the growth and sophistication they hope will come as a result of the investment from MaxiPARTS.
