A family affair
When two brothers took over their Adelaide-based family business they sought NAB's help to transition and expand the organisation nationally. Rachel Sullivan reports.
Established in 1990 with a focus on industrial recruitment, Extrastaff Recruitment has since expanded to cover a broad range of industries and staffing levels. Today, the company turns over $20 million each year and more than 40 employees work in its core Adelaide and Melbourne offices and recently established Sydney franchise office.
Brothers Declan, 34, and Piers Rowan, 32, had been a part of the business from its inception, and could see the potential for further growth when their parents retired. But in order to buy their parents out, rebrand and grow the business in a new direction, the Rowans needed help.
"With more than 4,000 recruitment companies across Australia we knew we had to actively decide whether we wanted to grow or remain small," says Declan. "The industry is categorised by large companies with many small branches working at the local level. Their performance can be pretty erratic, however, so when we decided we wanted to grow we opted for a franchise model because the branch manager is usually the owner of the business and has a vested interest
in its success."
The right advice
While franchising carries many advantages, implementing a new business model at the same time as buying out their parents and transitioning the business caused some headaches. "That was when we asked NAB for help," he says.
David Stowe, Senior Business Banking Manager at the Adelaide Business Banking Centre says: "Extrastaff and the Rowans had been NAB clients for more than 10 years, so we were very familiar with their business. Extrastaff's balance sheet was typical of the industry: its predominant assets were debtors and the office infrastructure.
"Although they both had a lot of experience, neither Declan nor Piers had much equity in the company, so when they approached us with a proposal for how they wanted to rationalise the business and change its direction, we took a long term view," he says. "We restructured their personal finances to help them buy out their parents while providing a more tax-effective debt structure that would help expand the business and give the brothers a direct personal benefit." Stowe says NAB also advised on insurance and structuring the business.
A flexible approach
Piers Rowan says: "The bank was not only able to suggest financing alternatives we hadn't considered, they were very flexible in their approach. One of the most valuable aspects of our relationship with NAB is they have an interest in seeing our business succeed."
Prior to actually purchasing the company in February this year, the brothers managed the company during the 18-month transition process, which included a complete overhaul of internal processes and infrastructure, the establishment of an online recruitment site, and the legal side of writing and preparing the franchise agreements and other documentation."
According to Stowe, Extrastaff's revamped approach is already paying dividends, with one franchised office already established in Sydney, and other expressions of interest on the table.
"Staff morale is also up, says Declan, "We have big performance improvements across the board, translating into more sales."