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What the hell have we been doing!
2015 is our 30th anniversary of business with the same name, same culture, same leadership from the same premises. We have always been different, but some of our points of difference are now main stream;
- How often do you see professionals in funeral clobber these days, casual dress is increasingly the norm everywhere. Sure some may lament this informality
- Flexi time and focus on value rather than time charging is becoming increasingly prevalent,
- Work life balance is now top billing in many employment brands.
Some things we do and capabilities that we have do however remain fundamentally different;
- We still don’t hold back in telling our clients what we think. Most others still prefer to tell people what they want to hear for the simple commercial imperative that people pay more for advice that validates their own world view. We prefer commercial honesty no matter what.
- We are inflexible on matters of ethics, but have a different view of ethics to many. We have the confidence to trust our judgment on what is right and wrong, and when we get it wrong we don’t cover it up – we try to fix it or make good. Most tend to have some flexibility about what they are prepared to do if cash is involved, and when it goes wrong, try to cover it up. After 30 years in business, the reality is that there is no point, it always comes out eventually.
And while many boast that they are business advisors, the reality is that they are not. They are financial advisors and have limited focus and contribution. We are generalists with a holistic view of business.
The reason for this is experience and culture. Kevin Gilligan was both an accountant and a businessman. His business experience drove his advice and support of clients more than his accounting experience in corporates and elsewhere.
I too am involved in a number of businesses most built from the ground up, some quite substantial, and Greg Rathbun likewise.
In short, our culture is business and investment driven not accounting focused and we can truthfully say we have eaten the fruit and bitter pills of business as have our clients, and we know though doing it what works and doesn’t work in crisis and opportunity.
Some observations from experience:
- When starting something, focus on doing something useful or creating something.
- Understand why a customer would want it, what problem are you solving and what utility will they get from what you do.
- Don’t focus on the money – that will look after itself if you create something exceptional that is of value.
- Start lean; don’t create too early an overhead that has to be fed. Make sure you are able to stop without going broke if you have to. Don’t fall into the trap of activity for activity’s sake. Big is not always beautiful in fact it can become very ugly.
- Not everything works, so face failure honestly and adapt. When something doesn’t work, don’t panic! Understand why it hasn’t worked before you initiate change, but don’t become a possum or you will get flattened.
- Never forget the power in doing the unexpected and the opportunities of being a contrarian.
- Develop a core set of values or a culture – on principles be predictable.
- Don’t be afraid of having partners, it is very lonely when carrying a heavy pack, endurance comes from harnessing many in a shared purpose.
- Don’t run out of cash, trade to your capacity. If you want more capacity, get some partners or investors. More is better than a few as no one likes being the only sugar daddy and no one likes being vulnerable to only one party pricing the risk attached to the cash sought.
- Have a definition of success before you begin, when you have achieved it, reassess. Most people end up bitter, thinking that they have failed because they have not defined success.
- When recruiting a team try to get the best talent you can, don’t be afraid of them displacing you, encourage it.
- When you have a bad apple chuck it out of the barrel and don’t hesitate. The employment processes that at law we are obliged to follow are expensive. Ignore it and behave decently and decisively.
- This said, never forget that every bad apple is an apple that you consciously put in the barrel and thus take ownership of your mistake. Be fair, you both just made a mistake.
- The customer is always right – this is only a partial truth. Focus on clear communication and if the fit is wrong, dump the customer. Never forget the 80/20 rule; 80% of your profit comes from 20% of your customers and 80% of your aggravation comes from a different 20% of your customers.
- Happiness is the new buzz word, translated, this means people want to do stuff that interests them, excites them, that feels worthwhile and valuable and they want to be recognised for their contribution. A happy team makes a happy customer which makes a profitable business.
To recap the recipe for a profitable business:
- Believe in something have some core values
- Define success and celebrate it
- Focus on the joy of creation and be passionate about it
- Understand your value proposition – articulate it, deliver it, protect it
- Recruit well both team members and partners
- Remember to be happy
So our year in review:
It started tragically, with the death of Joanne Turner from Cancer at age 42. She was a huge loss to us and her clients, many of whom she had worked with for the 21 years she had been with us. I am proud of how our whole team handled what was a very difficult situation.
Over the last twelve months, we have recruited four new team members; Amy Tomes, Humphry Hart, Jone Puamau and Kay Hyland. All are exceptional contributors bringing new thinking and experience to an existing team of great people. Two more start in the new year.
Some successes that we have driven or supported:
We were asked during the year to assist in three acrimonious disputes between shareholders. In each case, each party had entrenched positions and fundamental differences on strategy and exit terms. Strategy was irreconcilable. In two of the cases and after three months of posturing and conditioning, transactions were concluded. The largest being a company with a value of over $50m the smaller being a more distressed opportunity.
The latter resulted in an engagement from the other side, which we also resolved in reasonably quick order. His comment was, in having had to confront a business crippling problem, that he had not found in the last three years, lawyers or accountants anywhere that could do what we did.
The last of these three will eventually settle too, however the entertainment value has almost been reward enough. There is a book in it!
On our property side we have succeeded in raising $2.7m for a housing project of 16 houses in Papakura, and are likewise well advanced with a similar raise for 25 houses in Pukekohe. We also assisted in a $17m mezz raise to acquire a prime Auckland tower. Our Flat bush financed development of townhouses is now sold out and the mezz facility will be paid out with the full anticipated return in February, on time on budget. An exceptional development.
On the venture capital front we have assisted with or raised $8m spread over seven projects. Of these, at the date of writing this, there has been one that has not delivered value, i.e. the investment is in part lost. Two have failed to create more value than the money expended, and four are moving ahead at varying paces.
Also during the year we completed three expert witness engagements on commercial matters. One went to trial and our client succeeded, two settled. One case was a plaintiff action and two we were running defence! No surprises that the settled engagements were the defence cases.
This year, with an established team that just does tax opinion tax dispute work, and international tax, we have successfully launched the offering of this capacity to other accountants.
What was our plan?
Three years ago we set ourselves the objective of being Auckland’s best boutique wealth services and business enabling firm.
With the strong penetration lead by Yi Ping into the Asian community, in one capacity or another we represent a significant number of new New Zealanders from China.
We are on task with Richard leading a specialist tax practise, Michael, Joshna and I are driving the exotic services business, and Marion ensures that our clients’ core needs are well executed by an exceptional team.
Staff Snippet: Joshna Mistry
There have been numerous valuation engagements during the 2015 year which have kept me busy. The purpose of the valuations ranged from business loss claims due to compulsory acquisition, relationship property negotiations, shareholder disputes and other shareholder transactions. Industries ranged from hospitality, automotive retail, specialist trade/construction, niche equipment hire in the entertainment industry, residential property sector and high end technology play.
Staff Snippet: Michael Vukcevic
In Summing up the VAS team approach, this quote says it all,
“Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.” – Winston Churchill
In our support of our clients, and their endeavours to pull sturdy wagons, we have been engaged in Strategy and Governance roles, helping our clients execute on their business plans. We have done this in a number of ways, however, our hallmark of honest and direct observation and opinion has been present. We have undertaken a number of Strategic planning and Review engagements including for a well-established new media company needing to work out a strategy for the years ahead, including decisions about employee share schemes, succession planning and business direction.
As a team we have developed Information Memorandum’s and capital raising strategies across a broad range of sectors including diary, tourism and technology. Gilligan Sheppard also teamed up to launch Lift-Off, a crowd funding platform. Our commitment to help growing businesses, has seen us work with a new and unique “business incubator” launching in 2016 – watch this space for the arrival of more thoroughbreds not donkeys.
As a number of our clients have recently realised, or are in the process of realising significant capital from their endeavours, we have developed a Gilligan Sheppard Family Office approach to help family’s manage and plan for the future with their wealth. We have also been increasingly asked to help our clients execute on merger and acquisition plans. This year so far we have managed two sell side and one buy side mandate, (the first sell side engagement resulted in a very happy vendor who exited his business after 20+ years, selling to an Australian company. The second sell side mandate is in progress and we expect a result in the new year.) We were also asked to assist a client in acquiring a media asset from a large multi-national media company, and during the Due Diligence it became clear that buying the asset would not have ended well for all concerned, so we advised our client not to proceed at any price.
I sincerely hope that you are continuing to enjoy your engagement with us, and look forward to next year being a year of assisting you to achieve your ambitions.