Deals in Australia

January 28, 2022

by a searcher in San Francisco, CA, USA

Looking for feedback from Australia based searchers here. I'm an American looking at deals in Australia and I'm hearing an interesting response from a business owner.

1. He is claiming that buyers are responsible for funding the working capital in Australia and sellers do not have to pay for or deduct the working capital from purchase price.
2. He is wanting to have only###-###-#### days of exclusivity for due diligence and says that is the standard in Australia.

The above two seem pretty extreme from a US based perspective, hence checking with any Australia based members of this forum. Are these the norm down under?

Reply by a searcher
from Queensland University of Technology in Brisbane QLD, Australia

Hi I live in Australia and I'm doing acquisitions in the tech services sector. Both of these are false and are completely up for negotiation. For example my current deal has a 12 week exclusive period and the seller is providing 1M working capital. None of these terms are unusual in the Australian market. I'm not sure about reducing working capital from the purchase price, however it would be a matter for negotiation - there are no hard or fast rules and anyone who tells you otherwise would be lying to you. Hope this helps - thanks

Reply by a searcher
from La Trobe University in Melbourne VIC, Australia

Hi there, I'm an Australian based searcher and have assessed countless opportunities over the past 12 months, and that certainly doesn't line up with my experience of the Australian M&A ecosystem. Perhaps on small (say <$1m EV) asset sales that might be reasonable. But I haven't come across an opportunity yet that doesn't include working cap.
Re exclusivity, 75-90 would be fairly common###-###-#### days is quite ambitious to execute within. None of the debt providers I've spoken with so far could execute that quickly.

+2 more replies.

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