JPAbusiness managing director James Price presents a business transaction case study, focusing on the recent purchase of Denny's Silo and Engineering by Satake Australia. The buyer (Satake Australia), the seller (Bob Denny) and the advisor (JPAbusiness) all share their experience of the business sale process.

1. Three sides of the
business sale story
The buyer, the seller and the advisor

2. jpabusiness.com.au
+61
2
6360
0360
2
Table
of
Contents
Introduction
...........................................................................................................
3
Chapter
1:
The
seller
..............................................................................................
5
Chapter
2:
The
buyer
.............................................................................................
11
Chapter
3:
The
advisor
..........................................................................................
17
Disclaimer: The information contained in this eBook is general in nature and should not
be taken as personal, professional advice. Readers should make their own inquiries and
obtain independent advice before making any decisions or taking any action.

3. jpabusiness.com.au
+61
2
6360
0360
3
Introduction
Comments by James Price
JPAbusiness Pty Ltd
JPAbusiness case study: Satake – Denny’s Silo and Engineering
JPAbusiness was recently involved in a successful business sale
transaction, working on behalf of the purchaser.
The transaction involved the Australian arm of Japanese-owned multi-
national corporation Satake, and Denny’s Silo and Engineering, a very
successful, family-owned silo manufacturer from Allora, near Warwick in
Queensland.
Satake is a privately owned Japanese company with a long history – almost
120 years – of producing grain milling machinery. Today it is a global leader in
cereal, pulse, nut and plastics processing equipment and technology.
Satake operates in a number of countries, including Australia, where it is
managed by Craig Doorey.
Craig was looking at acquisition opportunities to expand the business in
Australia and had identified Denny’s Silo and Engineering in Allora.
He approached JPAbusiness to do a business valuation and help Satake
Australia negotiate an in-principle agreement with Denny’s, and undertake
a detailed due diligence for Satake on the Denny’s acquisition opportunity.
The entire process, from the time Craig contacted us until the sale was
completed on July 1, 2015, took about 17 months.

4. jpabusiness.com.au
+61
2
6360
0360
4
The transaction was a really interesting one in the sense that Denny’s is a
family-owned and run, regional Australian business of longstanding, and it has
been bought by a global player with a very strong corporate culture.
The coming together of these two businesses presents huge opportunities for
both, but also some interesting challenges.
We asked Bob Denny and Craig Doorey to share their thoughts on both the
challenges and opportunities offered by this transaction, and also their
experience of the sale process from both the seller’s and buyer’s points of
view.
In Chapter 3 I’ve included my own thoughts on the Satake-Denny’s
transaction, including:
• Secrets to Denny’s long-term success
• How the two companies can capitalise on the opportunities and
minimise the challenges going forward
• What lessons the transaction provides, from both a business
advisory and business selling point of view.

5. jpabusiness.com.au
+61
2
6360
0360
5
Chapter 1: The seller
Comments by Bob Denny
Denny’s Silo and Engineering
Please tell us a little of the Denny’s Silo and Engineering story
Bob – My parents Don and Marian started a machinery repairs business in
their back shed in 1956. It was called DL & MJ Denny. Dad had a great ability
to fix and build things and Mum was great with the books and had a wonderful
personality and enjoyed dealing with customers.
As the business grew Dad put a couple of fellows on, then in 1962 he and his
brother built the business’ first shed on the corner of Arnold and Darling
streets, Allora. At that stage it was mainly farm machinery repair work, and a
little bit of shed building.
I came along in 1965 as an
apprentice fitter and turner and not
long after that we decided to go into
manufacturing grain silos. We started
out just building the bottom part – the
cone – not the walls. Then we started
building bulk handling equipment like
mobile grain augurs and bulk bins for
the back of trucks, then bucket
elevators and drag chains.
In 1978 we decided to offer complete
new silos. We started off with 50
tonne silos, then 100, 150 and so on,
until we grew to where we are today –
building silos up to 5000 tonne. Denny’s robot welder in action.

6. jpabusiness.com.au +61
2
6360
0360
6
We now have our own trucks and cranes, and three site crews that spend
most of their time building silos or grain complexes off-site. Most of our
customers are in Queensland and NSW, but we’ve been to Victoria, Western
Australia and South Australia.
I took over the business in the 1990s and Dad kept working until he was 86.
My wife Marion and my four children have all worked in the business at
different times, as have my sons-in-law and my brother.
These days my son Michael is in charge of the silo shop, my son Greg looks
after the robots and the machine shop, and my daughter Joanne works in the
business three days a week.
The Denny family with representatives of the Satake Corporation:
(front) Greg and Michael Denny, (centre) Yoshiyuki Katsura – Satake
Corporation Department Manager – Overseas Management Department
International, Yoshiyuki Fujimoto – Satake Corporation – Head of
Operational Audit Office, Bob Denny, (back) Joanne and Marion Denny.
Photo kindly supplied by the Allora Advertiser

7. jpabusiness.com.au +61
2
6360
0360
7
Why has the business been so successful?
Bob – Quality of the workmanship, design of the equipment, attention to detail
and the personal touch with the customers. I’ve got customers I’ve had for 40
years.
What was your reaction when Satake approached you about a
potential purchase of Denny’s Silos?
Bob – I remember I got a call from Andy Mullins at Satake. We’re good mates
and have done a bit of work together over the years. He asked ‘would you be
interested in selling the business?’ I just thought ‘wow’ – it really shocked me.
I had thought about selling in the past, but I never got around to putting it on
the market or trying to sell it. I may have done it in a few years’ time – who
knows?
I told Andy: ‘I’m not going to give it away, but I might sell it for the right money.
I’ll have to discuss it with my family and see what they think.’
I did want to keep it for the boys, but it’s growing all the time and was getting
hard to handle. It required more people to run it and I was on the road more
and more. I didn’t want my boys on the road as much as I was because they
have young families.
I remember my dad saying to me 20 years ago: ‘Why don’t you sell it?’
What were some of the attributes that appealed to you about the
Satake opportunity?
Bob – I was comfortable with selling to them – I don’t think I could have found
better people to buy it.
Some people had made offers to me in the past but I wasn’t very comfortable
selling to them because I didn’t know where it would end up. The last thing I
want is to see the company fold up.

8. jpabusiness.com.au
+61
2
6360
0360
8
When Satake came along, I thought ‘I’ve worked with them, I understand how
they operate, and I think with their backing it could become even better’.
There is potential to expand into exports, but I know they will still look after our
long-term clients.
What do you see as the major challenges of bringing the
businesses together?
Bob – The language barrier with the Japanese managers overseas and the
two different business cultures. I’m not sure if the cultural difference is
Japanese versus Australian, or just city versus country.
We’ve been very successful running the business the way we always have,
but Satake want to manage it their way.
Their way will probably be better because everything I did came out of my
head. I made decisions on the run, we rarely had meetings and I led the
charge. Now it’s going to be spread out over a lot more people which will
make things better and more professional.
I’m not saying the way I did it was wrong, but in hindsight it will be easier their
way: more communication and spreading the load. I’m adapting pretty well to
it.
I think the first few months will be the hardest as we have to put down on
paper things that we’ve always known but have never written down.
For example, I’ve done all the pricing over the years. I know what silos cost to
build, I know the labour requirements involved, but now we have to put all that
on paper so they can do spread sheets and so on. We never worked with
spread sheets.
We’re also quite informal, whereas they like to cross their t’s and dot their i’s.
For example, the silo business is on 40 acres of land which was sold with the
business. I made a handshake deal with a local farmer to share-farm that land
for me. I trusted him and never bothered checking that I was being paid the
right amount. Now he has to sign a contract with Satake.

9. jpabusiness.com.au
+61
2
6360
0360
9
Also, all our key staff are now on contracts, which we never had. I’ve got staff
who have worked for me for 40 years. They’re like me – they grew up with the
business and as long I looked after them they were happy to stay.
Satake engaged JPAbusiness to conduct a business valuation on
your business, facilitate the negotiation process and conduct
detailed due diligence. From a seller’s point of view, what was the
experience of dealing with a business broker like?
Bob – I’ve been to big business meetings with engineers telling me how to do
the job, but I had never experienced anything like that [detailed information
request] at all.
It was a bit of a culture shock for me. I probably found it a bit intrusive in the
first couple of days, but then I just knuckled down and did it.
I was very impressed with James, though. He was very professional and very
honest. He was very straight with me.
The hardest thing was getting me in one place and keeping me there so
someone could get all this information out of my head and onto paper.
The secret to this business’s success is me being on the road, generating the
work, visiting with customers. If I’m off the road things aren’t good, so it was
very difficult while that due diligence was going on.
Ann Harragon, our office manager, would be trying to get me on the phone to
answer questions and the phone would drop out – there’s often not very good
service where I travel. Ann did a great job of keeping the information flowing.

10. jpabusiness.com.au
+61
2
6360
0360
10
How did you go about preparing and presenting the information
required by JPAbusiness to conduct the valuation and due
diligence? How important is it to have well prepared information in
a business sale transaction process?
Bob – We weren’t looking to sell so we weren’t prepared at all. That’s
probably why it took so long from when they first phoned me to when the sale
was completed – 17 months.
It would be so much quicker if you had all those details available.
In your opinion, what were the main factors that made the
transaction successful?
Bob – James, Craig and I were on the same page. It just flowed along and I
flowed along with it. We never had an issue between us and communicated
openly.
It wasn’t so easy with the Japanese management because our business
styles are so different – Australians are so informal, whereas the Japanese
style is very formal.
They were very honourable in their dealings with us, though.
Where to from here?
Bob – I’m going to stay for two years – that’s what my contract says – but I
wouldn’t mind doing a few more. I don’t really want to retire, I’d go stark raving
mad after doing this all my life. I have about 12 months work ahead of us,
possibly more, and a lot of quotes pending.
Satake is talking about expansion of the business overseas but there is a lot
of design and logistical work to be done first. We’ve sent a few silos overseas
in the past, but they have been smaller ones. Satake is talking about sending
a bigger silo overseas and we have to allow for redesign so we can fit them
into containers.

11. jpabusiness.com.au
+61
2
6360
0360
11
Chapter 2: The buyer
Comments by Craig Doorey
Satake Australia
What are Satake’s core functions in Australia?
Craig – We’re unique compared to other Satake businesses around the world
because of Australia’s relatively small market.
Satake generally engineers machinery for flour milling, colour sorting and rice
processing. In Australia we do those things, plus we’ve diversified into feed
milling, seed cleaning and materials handling.
We manufacture equipment here, plus we also bring it in from other Satake
groups and other companies around the world and distribute it.
A screenshot from the Satake Australia website, showing just
some of the industries the business is involved with.

12. jpabusiness.com.au
+61
2
6360
0360
12
We have an engineering and drawing office and workshop facilities. We sell a
whole range of equipment from a small spare part to a multi-million facility
involving grain storage, handling and processing.
What prompted you to approach Denny’s Silos about purchasing
the business?
Craig – Almost two years ago our parent company in Japan asked us to
expand our business. In researching opportunities we looked at pursuing a
business that complemented ours.
On larger jobs we typically provide the middle part of a job – the processing
and possibly the handling equipment – while a silo business does the front
and back end of the job, providing storage for raw materials and end product.
What were some of the attributes that appealed to you about
Denny’s?
Craig – We had worked with them on numerous jobs in the last five years or
so and a couple of those were quite significant.
We got to see their storage and handling gear close up and it was extremely
robust. In fact I had often looked at their equipment and thought ‘I wish we
could build gear like that’.
We had dealt with other silo companies around Australia and we considered
Denny’s as number two or three in the industry. The larger companies were
too big for us to manage. We wanted something of a similar size to us that we
could develop and grow together.
They also have a loyal customer base, which is both an opportunity and a
challenge. Denny’s is a family owned business that has been operating for
nearly 60 years and customers may see us as ‘outsiders’ from Japan, even
though there are no Japanese staff working in Satake Australia.

13. jpabusiness.com.au
+61
2
6360
0360
13
How do you plan to marry the different cultures of a small,
regionally-based family business and a multinational corporation?
Craig – Denny’s has a regional, family culture which is a little difficult to marry
with a corporate culture, and even trickier once you add the Japanese
element.
I’ve been with Satake 20 years and I enjoy the cultural differences but I admit
it is a challenge sometimes, because Japanese people and Australian people
simply have different approaches to business – the Japanese style is more
formal.
Denny’s is very much a family business, and it’s also a country business. It’s
been successfully run their way for many years so it’s going to be a challenge
for them to adapt to a more corporate business style.
Yoshiyuki Fujimoto – Satake Corporation – Head of Operational
Audit Office, and Yoshiyuki Katsura – Satake Corporation
Department Manager – Overseas Management Department
International, celebrating the transaction with Bob Denny.

14. jpabusiness.com.au
+61
2
6360
0360
14
What do you see as the major challenges of bringing the
businesses together?
Craig – Assuring customers that they’re still dealing with an Australian
company, is one.
We’re also trying to slow down the process of change to make it easier for the
Denny’s staff and take the pressure off them. We don't want to lose staff
because we’ve pushed too hard. They can’t change overnight from a family
business to a large corporation.
We’ve also taken over while Denny’s is experiencing a boom in demand and
are working to capacity. We can’t let our sales staff rush out and start selling
hard, because Denny’s has no capacity to make what we could sell.
We’re having to slow down and stabilise the situation.
What do you see as the major opportunities of bringing the
businesses together?
Craig – I see huge opportunities over the next five to 10 years as we will be
able to offer the complete grain storage, handling and processing package to
customers.
In the past when a client asked us to quote on providing the whole package
for a greenfield site, we would provide the middle part and we would have to
go to silo companies to provide the front and back ends of the job.
When the silo companies quoted, we would then add a certain amount for
contingencies to protect ourselves, plus a margin, and we would end up
pricing ourselves out of the job.
We have also been up against international companies that are entering the
Australian market with imported product and beating us on price.
Now we can offer the complete package, which features very strong
equipment built in Australia for Australian industry. We can offer a competitive
package to the client and utilise both Denny’s and Satake’s resources and
grow both businesses.

15. jpabusiness.com.au
+61
2
6360
0360
15
There will also be export opportunities. We’ve slowed down that development
because we don’t want to push Denny’s too hard, but in the next three to five
years I see exports progressing.
Satake Australia services New Zealand and the Pacific Islands, so we want to
get Denny’s supplying into those areas and then grow it out to Asia. We want
to grow but it has to be one step at a time.
Why did you engage JPAbusiness to help with the business
purchase process?
Craig – I looked at a few consultants on the internet and invited three to
provide quotes and meet with me.
James came across as the one with the most understanding of our industry.
He’s from the country and has worked in our industry. The others didn’t give
us confidence that they understood what we did, or what we were trying to
buy, but James did.
I’m glad we did choose him because Denny’s were also happy with him. He
was working for Satake as our consultant, but he also had to engage with
Denny’s as well and he did that successfully.
What specific services did you need JPAbusiness to perform and
what value did this add?
Craig – JPAbusiness provided initial due diligence, then detailed due
diligence once we got a Heads of Agreement. They took care of the detailed
due diligence work up to the legal and tax sections, when Japan took over
because they wanted Japanese-speaking consultants for that last part.
I would have been happy for James and the JPAbusiness team to do the lot
and I think it would have worked out well if they did. I had never been involved
in buying a business before, but James made the process easy – he walked
us through it.

16. jpabusiness.com.au
+61
2
6360
0360
16
For example, at the start I was doing lots of research and coming up with
questions for James, and he was answering them before I could even ask
them. He would say ‘you have hired me to help you, so don’t worry about that
– I’ll do it’. It took a lot of the worry out of it and that’s what you pay for.
As a manager I’m slowly learning that you can’t do it all yourself and there are
points where you need to get consultants in.
Why is it important to have support in the business sale
negotiation process?
Craig – James could ask questions I would have felt uncomfortable asking.
This meant if Bob or any of the Denny’s team weren’t happy about the
question they were unhappy with the consultant, not necessarily with me and
Satake.
In your opinion, what were the main factors that made the
transaction successful?
Craig – The whole process was easy, yet very professional, and I think that’s
because we got the initial due diligence right. We were able to tick off all the
boxes that indicated Denny’s was the right business to buy and we answered
all the questions Japan had.
The initial due diligence period took a long time – eight months before Japan
gave us the go-ahead – but that initial period was the most important.
Once we entered the detailed due diligence period the answers were already
ticked off. It was just a matter of going back through the information and
making sure the ticks were correct.
Denny’s didn't have the information at hand, or formal reporting structures in
place, so that made it difficult and time-consuming but James just pressed on.
He was very polite and very professional in the way he gathered the
information – he doesn’t come out with a big stick – but he just kept pressing
on until the information was provided.

17. jpabusiness.com.au
+61
2
6360
0360
17
Chapter 3: The advisor
Comments by James Price
JPAbusiness Pty Ltd
What do you see as the secrets to Denny’s long-term success?
James – There has been plenty of research on what happens in multi-
generational businesses and we all know they tend to go through peaks and
troughs, but it was clear to me in looking at Denny’s that part of their long-
term success was due to their established brand.
The brand was well established due to two things:
• Denny’s longevity in the market, and
• how the Denny’s brand was represented in the market.
The reality is that throughout the business’ 60 years of operations, the
Denny’s brand was always represented by a family that cared about service
and cared about the quality of the product it was delivering.
Because Denny’s started out small and had to compete with larger players as
it grew over time, it always had to ensure three things were at the forefront
of its business dealings:
• Customer focus – always providing the highest standards of customer
service;
• Quality – only providing top quality products;
• After-sales service – standing behind its products.
That focus on service and quality is often found in family businesses because,
quite simply, family structures have to be very attuned to their customer base
to survive. (This service focus can be hard to replicate in a corporate
environment – not impossible, but hard.)

18. jpabusiness.com.au
+61
2
6360
0360
18
The Denny’s point of difference
Denny’s focus on service and quality represented their point of difference.
This point of difference is the reason the business survived and thrived for
decades and, frankly, why Satake was interested. It was the ‘x’ factor
beyond simple dollars, size, or financial results on a page.
‘X’ factor can also be described as ‘goodwill’ and Satake paid for goodwill
associated with Denny’s.
Just as a big brand like Satake can open doors across the globe for a Denny’s,
Denny’s in its own small way can open doors for Satake with its goodwill/point
of difference: a service culture and ethic of delivering to its clients’ needs and
the ability to repeat that service across six decades.
How would you advise the two companies to capitalise on the
opportunities and minimise the challenges going forward?
James – Critical for this ‘partnership’ to achieve maximum success is for the
two companies to recognise what both are good at and keep that at the
forefront of their minds.
Believe it or not, there are some cultural similarities between a global
organisation like Satake and a regional, family-owned business like Denny’s.
Based on our due diligence analysis, I would say these are the two
businesses’ cultural similarities:
• Patience
• Loyalty
• Service ethic
• Market focus
• Innovation
The section above, discussing Denny’s long-term success, highlights what
Denny’s are good at, i.e. customer focus, quality and after-sales service.

19. jpabusiness.com.au
+61
2
6360
0360
19
I’m sure Satake will nurture that carefully to ensure Denny’s doesn’t lose its
customer and service ethic. In fact, by joining with Satake, Denny’s should
enhance its ability to offer that service ethic more widely to the market.
On the other side, Satake will bring the following:
• Business monitoring and reporting rigour
• Governance
• Consistent processes
• Capital for growth and expansion
• An opening to a global opportunity in terms of product sales and
leveraging complementary opportunities.
The stars have lined up for these two players – it’s now a matter of making the
most of their common ground and leveraging each other’s strengths.
Denny’s
strengths
• Customer
focused
• Top quality
products
• After-sales
service
Shared
strengths
• Patience
• Loyalty
• Service ethic
• Market focus
• Innovation
Satake
strengths
• Business
monitoring and
reporting rigour
• Governance
• Consistent
processes
• Capital for
growth and
expansion
• An opening to
a global
opportunity

20. jpabusiness.com.au
+61
2
6360
0360
20
What lessons does the Satake-Denny’s transaction provide from
both a business advisory and business selling point of view?
1. Get your business in order
There are a number of approaches to how you can manage information in
your business in terms of your operating performance, contracts, orders,
claims and so on.
A lot of business owners feel they know this stuff and don’t need to document
it. But you can develop simple processes of recording that will make a
business sale process much easier, much more efficient and may also have a
positive impact on your ultimate sale price.
It’s also good practice regardless of whether you eventually decide to
sell, because the information helps you quantify the value of your business
and the risks in the business.
In today’s highly competitive and volatile world you need to have your finger
on the pulse regarding what’s happening in your business.
2. If you’re thinking of selling your business, put yourself in a
potential buyer’s position
In Denny’s case they had their finger on the pulse of their business, but they
weren’t actively looking to sell so they weren’t looking at the business from a
buyer’s perspective.
Taking a buyer’s perspective means thinking:
• What is this business really about? What exactly does it do?
• What key pieces of information would a buyer need to see to be
able to assess this business in terms of business value and business
risk?
• How do I go about documenting that information so my business is
presented fairly, objectively, robustly, yet in its best possible
light?

21. jpabusiness.com.au
+61
2
6360
0360
21
3. Provide clear, concise, robust information about your business
We often say in our eBooks that when you’re trying to match a buyer with a
seller, a clear information exchange is critical.
As Bob said in Chapter 1: “We weren’t looking to sell so we weren’t prepared
at all… It would be so much quicker if you had all those details available.”
In this case, the reality was that a lot of the information Satake needed to
assess the opportunity was in Bob’s head.
And I’m sure that sometimes, as we sat around the boardroom table with Bob,
Craig and Bob’s accountants, asking questions on behalf of the purchaser,
Bob thought we should already know the answer. To Bob it was obvious
information because he lived it everyday and he knew the business inside out.
But, unfortunately for a seller, simply stating what you know about your
business is not enough to convince a purchaser that they’re willing to take on
the risk. That knowledge has to be verified and robustly supported by
documentation.
One example in the Denny’s case was the pipeline of work coming in.
Bob is a champion at business development. In fact, I have never seen
anyone in his industry like him – he is very sales focused and a great
relationship manager.
While Bob had amassed a considerable pipeline of orders, work in
progress, committed orders, future proposals and tenders, a lot of it wasn’t
widely documented in a consistent and detailed way.
Instead, we had to draw that information out in our due diligence work.
In Bob’s case, that lack of information upfront didn’t impact the value of
his business because Satake knew Bob wasn’t trying to hide anything.
One reason for that was Satake’s prior relationship with Denny’s – they
had worked with Bob before, knew how he operated and had great respect for
him. The other reason was the fact Bob was obviously making every effort to
provide the information freely, including giving us open access to his
external advisers and key staff.

22. jpabusiness.com.au
+61
2
6360
0360
22
4. Get help to facilitate the information-sharing process
Part of a valuation, due diligence and sales process is open communication
between the parties.
To Bob’s credit, he got his accountants involved very early on in the
process. From a pure financial and tax perspective, they were very useful in
terms of providing a transparent funnel of information.
Similarly, Satake engaged us to facilitate the open discussions. We could
do a lot remotely and via email, but ultimately face-to-face discussions were
very valuable in having that open line of communication between the parties.
In my view it’s absolutely critical in any transaction to:
• have face-to-face discussions, and
• involve advisors who can ask the hard questions on your behalf,
with the simple view of resolving a way forward and getting the
transaction over the line.
If you would like to learn more about the business advisory and broking
services offered by JPAbusiness, you can contact the team by visiting
www.jpabusiness.com.au/contact-jpabusiness