27/06/2014 - 15:01

Rising Stars winners have choices

27/06/2014 - 15:01

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If the many different winners of the Rising Stars award have anything in common it is that all won the ability to choose their future – whether that be a trade sale, an ASX float or organic growth.

Rising Stars winners have choices
Ned Montarello's business Thinksmart was a Rising Stars winner in 2006 before its ASX listing.

If the many different winners of the Rising Stars award have anything in common it is that all won the ability to choose their future – whether that be a trade sale, an ASX float or organic growth.

I remember interviewing the inaugural Rising Stars winner in 2003.

It was Gatecrasher Advertising, which had been established by Tony Scampoli, Adam Barker and Lori Canalini just two years earlier.

The team has changed a lot over the years but Tony Scampoli is still there, as managing director of what is now Perth’s seventh largest advertising agency – a position helped by last year’s merger with Bowtell Clarke & Yole.

There aren’t many Rising Stars that have grown by acquisition.

Quite the opposite; many have come to the attention of bigger competitors and become takeover targets.

That’s a nice position for a business owner to be in – to have that choice between continuing to run a successful business or linking up with a ‘big brother’.

The 2006 joint winner, Australian Mine Services, accepted a takeover from Leighton Contractors, while 2011 winner Velocious, a subsea engineering firm, accepted a takeover offer from Scotland’s Proserv.

The motivation for accepting a takeover can be highly varied, but taking a big payout and then lying on a beach is usually not one of them.

More likely it’s a desire to create another start-up, rather than running an established business.

Or it can be the recognition that the business, and its people, will have better prospects if they are part of a larger organisation with a wider reach and deeper pockets.

That was certainly the case for Harley Dale’s consulting firm Outback Ecology, which is now part of MWH Global.

Business finance provider Benchmark Debtor Finance, fast food chain CHOOKS, IT firm L7 Solutions, scaffolding firm Blackadder, and industrial coatings business TCC have all featured in the Rising Stars awards, and later accepted takeover offers from bigger firms.

Five winners have opted for a stock market listing, usually for two reasons – to raise growth capital, and to provide a mechanism for the founders to cash-out some of their equity.

This group comprises IT firm Empired (2004 winner), engineering contractor Calibre Group (2005 winner), consumer finance group Thinksmart (joint 2006 winner), Ocean to Outback Contracting, now part of listed company OTOC, and Plan B Financial Services (subsequently bought by IOOF).

Other Rising Stars winners have attracted support from private equity investors, often as a stepping-stone to bigger things.

The most notable example was last year’s winner, Geraldton-based Bhagwan Marine.

It gained backing from Catalyst Investment Managers, which gave Bhagwan the ability to expand its operations in the north-west, expand its vessel fleet and buy Darwin-based Workboats Northern Australia.

Training and labour hire firm Skill Hire and Croissant Express both attracted backing from Perth investment group Banksia Capital.

For all the Rising Stars winners that have listed on the stock market or completed a private equity deal, there are many others quietly pursuing organic growth.

Some, like footwear manufacturer Steel Blue and automotive retailer DVG Automotive Group, have become household names through their mass media advertising campaigns.

Others, including boat builder Strategic Marine (2008 winner) and Hagstrom Drilling (2012 winner) will never be household names, but that’s okay.

They are part of the wonderfully diverse collection of companies that have featured in the Rising Stars awards over the past decade.

Having looked back to past winners, it will be fascinating to watch the future development of this year’s batch of Rising Stars winners, including the number one ranked Rising Star, Executive Risk Solutions.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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