Stephen Welsh says one of the best pieces of business advice he received when he and his partner Karen established their wasabi production business was to prepare for the day they would no longer be the owners.
That day is now around the corner, with the Welshs agreeing to sell their award-winning business, Shima Wasabi, to listed food company, TasFoods.
TasFoods informed the market of the acquisition yesterday, with chairman Rob Woolley saying in a statement to the Australian Securities Exchange the purchase of Shima Wasabi is the next step in TasFoods’ plans to develop and acquire “premium branded food products and businesses primarily sourced from Tasmania”.
TasFoods will pay approximately $2.75 million for all shares in Shima Wasabi and the transaction is expected by the completed by the end of June.
Welsh told SmartCompany this morning he will remain general manager of the business following the sale. Up until now, Karen Welsh has worked outside of the family business while also doing plenty of unpaid work for the company, however Welsh says this is likely to change after the sale goes through.
Welsh says he will oversee a planned expansion of the business under the new ownership structure, which will involve a rapid expansion of the Shima Wasabi four-person team as the business taps into increasing demand for its products from across the country.
Based in northwest Tasmania, Shima Wasabi supplies its fresh wasabi products to more than 100 Australian eateries, while its freeze-dried products are stocked primarily by retailers in Tasmania.
“We’ve had a lot of interest from interstate and part of the move with TasFoods is to build a broader base,” Welsh says.
A chance meeting and a decision to grow
Welsh says the decision to sell Shima Wasabi was essentially a decision to grow the size of the company he and Karen started 15 years ago.
He describes commencing production of wasabi products in the early 2000s as something that “ticked all the boxes”: he came from a background in the agriculture industry, he always wanted to own his business and both the federal and Tasmanian governments had identified wasabi as a niche crop with significant growth potential.
The business was a string of awards to its name, including being crowned Tasmanian Micro Business, Tasmanian Regional Business of the Year and Australian Micro Business of the Year in the 2012 Telstra Business Awards.
But to continue growing, Welsh says it became clear that external investment was needed.
“It got to the point about 12 months ago that we realised to get the business where it was looking it could go – the market interest was huge and continuing to grow – we couldn’t put the capital together to expand at that rate,” he says.
“The decision was to continue as we were growing slowly but surely, or bring on investors and partners.”
Welsh says he and Karen “threw around some options” but a chance conversation with TasFoods that revealed the company was interested in further acquisitions put a potential sale in motion.
“We were keen to see the business, and the benefits of the business, stay in Tassie,” he says.
“We had interest from other states, particularly in Victoria, but we wanted to continue to employ Tasmanians and grow the economy in this state.
“TasFoods are really passionate about Tasmanian brands … it became a really logical decision.”
Find the right buyer
Reflecting on the advice he received from his accountant when setting up the business, Welsh says selling Shima Wasabi was “always a possible pathway”, but it was only recently that it became a possibility.
Nevertheless, having the right structures in place to make an exit made the process less painful than if it was a forced decision.
“We were always trying to build something as an asset for ourselves in the long-term so if we needed to divest or partly divest, we could,” he says.
While Welsh says it is essential to focus on the financial aspects of selling a business, his advice to other business owners is to put energy into finding the right person or company to sell to.
“The whole process was made a lot easier by finding the right people to deal with,” he says.
“Dollars are always important but it really came down to the fact TasFoods are the right sort of people with the right focus.
“They were open, cordial and friendly and that made it so much easier to go over the nitty-gritty and fine detail.
“Focus on the financial aspects but look at the other aspects with as much importance,” he adds.