Personal finance and KiwiSaver columnist at the NZ Herald

Success: Linking businesses Kiwi-style

Franchise system helps broker to expand beyond New Zealand.

Aaron Toresen's ultimate ambition is to head the world's largest business brokerage. Photo / Greg Bowker
Aaron Toresen's ultimate ambition is to head the world's largest business brokerage. Photo / Greg Bowker

Aaron Toresen reckons he is converting the world to selling businesses the Kiwi way, one country at a time.

The 41-year-old head of business broking firm Link Business Systems has already ticked off Australia and South Africa on his expansion plans, and recently inked a deal to take the company's brand to the US.

Expansion into America came through a partnership with an established player and 30-year-industry veteran, Ron Hottes of Business Team in Los Angeles, who was impressed with the slick systems Link could offer.

Hottes will convert his network of nine offices to Link, with an ultimate goal of having 200 Link branches in the US.

Franchising deals in Hong Kong, Singapore and Britain are in the pipeline, and Toresen says the $30 million company's network of 200 brokers could hit 600 in five years.

It's a plan that has been a decade in the making, and began when Toresen took a stake in the company, which at that point had been matchmaking business owners and buyers for eight years.

He could see an opportunity to create a significant business in an industry that hadn't moved with the times.

Toresen says around the world the traditional business broker is an older man, happily running a one- or two-person operation without much in the way of technology or innovation.

"Our vision was to really drag business broking kicking and screaming into the mainstream and one of the best ways we saw to grow was through franchising." Franchising is a cost-effective method of growing a business that reduces the complexity of managing people across various countries and environments, says Toresen.

"And you end up with really motivated, highly engaged business owners as opposed to managers or employees."

Toresen says the component parts of the business broking process are similar to a house sale - working for commission on behalf of the seller, marketing the business, putting together the buyer and seller, then negotiating the deal - and business brokers in most countries are covered by the same legislation as estate agents.

Business broking has been around for a long time, but Toresen says the industry suffers from a lack of awareness, and many business owners will approach their lawyer or accountant to assist with a business sale.

He says his first job was to create awareness among potential clients and improve the professionalism and quality of the broking experience.

"Our intention very early on was to be the best and to worry about being bigger later." That meant analysing every aspect of the broking process and benchmarking it against other industries.

Improving IT, training, marketing and sales systems also meant paying the costs up front, but the goal was to create a scaleable business platform that would still be the best of its type when the company had grown to hundreds of offices, he says.

Link began growing the business with its first franchise in Christchurch in 2006, but the brakes went on when the Global Financial Crisis hit in 2008.

Toresen says the broking business was squeezed on two fronts.

Businesses were struggling and any owners looking to get out were holding on until it was a better time to sell.

"Some of them just simply weren't saleable." On the other side, potential buyers couldn't borrow money, he says.

" ... so we had the worst of both worlds - we had very little available stock and very few people who could buy them in any event." It was a very tough four years until 2011, Toresen admits, but he says the business structures put in place helped them survive in the lean times, while creating some opportunities for growth.

He says the franchise model meant individual business owners were motivated to fight for every dollar, but more important was the focus on good governance and the guidance of a board of directors.

"I think that where a lot of New Zealand companies are weak is they don't have a good board; they don't really believe or haven't got around to setting up a board or don't feel that they are large enough to justify it."

Toresen says the New Zealand model is to have a chief executive who is also the managing director, handles human relations and everything in between, but it is very unusual for anyone to have all the skills needed to grow a business to any scale.

"That's where creating a board is really useful and keeps you on track so I've found that to be a great part of our success." The downturn also provided some openings for Link to grow its footprint, adding 20 new franchises to the five it had before the economic slowdown.

"Although it was a tough time to do business, it was a good time to grow and to bring on new franchisees because they were looking for answers and solutions to the challenges they were faced with." The market has since bounced back and Toresen says Link, the fastest growing business brokerage in the world, sits in third place, size-wise, globally.

"Our ultimate ambition is to be the largest business brokerage internationally."

- NZ Herald

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