Give Me 57 Minutes and I'll Teach You Everything About Search Fund Deal Structuring | Japan Mehta
Deals Down UnderShow Notes
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Connect with Japan Mehta here: https://www.linkedin.com/in/mehtajapan/Japan Mehta took an unconventional route into business ownership. Born in India to two teachers and set on entrepreneurship since he was a teenager, he trained as an engineer — a Bachelor's in Mechanical Engineering and a Master's in Mechanical & Aerospace Engineering in the US — and spent two decades across semiconductors, aerospace, medical devices, construction, oil & gas and now digital infrastructure. He met Pete Seligman a decade ago when Pete hired him to turn around a founder-led business — a job that made him a restructure COO and lit the fire to run something himself. In 2020, mid-COVID, he found a struggling business that needed help, raised the capital, and by mid-2021 was sitting in the CEO seat of what is now Ticketless Parking. Only afterwards did he realise he'd effectively run a self-funded search the whole time. Today it's had the biggest revenue year in its history, and Japan is back in the "searcher seat" hunting bolt-ons — while mentoring and investing in the next wave of searchers. This episode is a genuinely useful clinic on the part that scares most first-time buyers: the money. Japan breaks down how the searcher typically ends up with 20–25% equity (and how vesting works), why he argues a funded search beats going it alone even if you can self-fund, and — using a hypothetical $30M deal — how surprisingly little cash actually has to change hands once you stack equity, debt, vendor notes and earnouts. He's candid about diversifying your equity partners so you don't hand control (and your upside) to one big investor.
IN THIS EPISODE: - The engineer-to-CEO path — and the accidental self-funded search - How the searcher ends up with 20–25% equity (and how it vests) - What "exit" really means (it's not just selling) - Why a funded search beats going it alone — even if you can self-fund - How to buy a $30M business without $30M in cash - Diversifying equity partners so you don't lose control - What investors actually want: ~15–20% IRR - How long raising the money really takes (3–6 months) - The $400k phantom loan hiding in the books - "Back the jockey, not the horse" — what investors bet onTIMESTAMPS: 0:00 - An unconventional path: engineer to CEO 3:59 - Finding a struggling business mid-COVID 8:33 - Ticketless Parking vs Duncan: what the business does 10:59 - The searcher's equity: how 20–25% actually works 13:34 - What "exit" really means (it's not just selling) 16:14 - Funded vs self-funded search: the real trade-off 18:00 - Why a funded search is about practice, not just money 26:21 - Do you still need outside investors once you're funded? 27:18 - How to buy a $30M business without $30M in cash 30:33 - Who these investors actually are 33:35 - Racing the clock: raising funds while in due diligence 39:15 - Sale-ready books vs skeletons in the closet 42:27 - What investors want: the IRR rule of thumb 44:22 - "Back the jockey" — what a good searcher looks like 49:09 - How advisors and non-exec directors get paid 52:44 - Where Japan is now: CEO, investor, mentorDeals Down Under is the podcast about buying, selling, and growing businesses in Australia and New Zealand. Subscribe wherever you listen to podcasts.
More from Deals Down Under
Join our Australian Acquisition Entrepreneurs Facebook community here: https://www.facebook.com/groups/dealsdownunder If you have bought a business, and are open to sharing your story on the show, please email: [email protected] Connect with Jason Andrew here: https://www.linkedin.com/in/jason-andrew/ Email: [email protected] Jason Andrew is a Chartered accountant, co-owner of SBO Financial (an outsourced finance firm with around 35 accountants), and Managing Director of Arbor Permanent Owners, a holding company that buys private businesses to keep them for the long term. In 2024, Arbor bought East West Engineering, a 45-year-old manufacturer on Sydney's Northern Beaches. Arbor isn't a search fund and it isn't private equity. Investors hold ordinary shares and expect to wait 10 years or more for liquidity. Jason's team takes no management fee, only a salary and a 20% carry on realised returns. With no Australian playbook to copy, Jason explains how they built that structure from scratch. He's also blunt about what didn't work: why he killed an accounting-firm roll-up after three weeks of calls, why family offices wanted to treat him like private equity, and why investors committed nothing until there was a deal on the table. If you want to buy your way to the next level in Australia, this is the capital-raising conversation you've been missing.
If you have bought a business, and are open to sharing your story on the show, please email [email protected] If you want to sell your business, I'm buying. Please email [email protected] Connect with Paige Kohalmont here: https://www.linkedin.com/in/paige-kohalmont/ Paige Kohalmont had an operations career, an MBA, and no interest in starting a business from scratch. So in January 2022 she did something almost nobody in Australia was doing: she raised $500K from 18 investors and went searching for a business to buy and run herself. That's a search fund. Two months in, a broker called with a deal. It took until April 2023 to get the keys to Austral Herbs, a dried botanicals importer with 550+ products from around 30 countries. Along the way a big four bank changed its terms at the last minute, forcing a pivot to a non-bank lender, and Paige moved her young family to a tiny regional NSW town to run the business on site. Paige walks through the real mechanics: how 52 part-time interns screened 1,200+ businesses, how she staged due diligence to limit cash at risk, how the cap table works when not every investor funds the acquisition, and what happened after she took over. If the US playbook of SBA loans doesn't apply to you, this one is for you. IN THIS EPISODE: 52 interns screened 1,200+ businesses, yet the deal came from a broker Raising $500K from 18 investors before she'd picked an industry The staged due diligence that kept her cash at risk low When a big four bank changes the deal at the 11th hour Where $500K of search capital actually goes (it's not the search) Moving a toddler to a remote town to run a business with zero documented processes It took 18 B-doubles to move the stock From no KPIs to tracking 64 a week TIMESTAMPS: 0:00 - From her mum's business to an MBA and search funds 2:20 - Why she searched with no industry or location limits 4:08 - The "traditional" search fund criteria 6:03 - Talking to investors before you've decided to search 8:04 - 18 investors and the advisors she gathered along the way 9:50 - Building the HubSpot funnel and outreach system 11:41 - How 52 interns were recruited and managed 14:45 - 1,200 businesses contacted, but a broker found the deal 16:16 - Nobody understood search funds: convincing brokers and sellers 18:37 - February 2022 to April 2023: the long road to completion 20:27 - What Austral Herbs actually does 23:09 - Staging due diligence to limit cash at risk 27:18 - The cap table: investors who don't fund the acquisition 29:18 - Choosing advisors and keeping investors updated 31:37 - Where $500K of search capital actually goes 33:23 - Big four bank vs non-bank debt in Australia 37:11 - Moving the family to run the business on site 38:58 - Inheriting a business with no processes documented 42:07 - Relocating the business to the Central Coast 47:39 - Growth, systems and tracking 64 KPIs 51:23 - Systems-led vs sales-led growth 53:41 - What's next: more acquisitions and Green Storm Foods 55:53 - Where to find Paige Deals Down Under is the podcast about buying, selling, and growing businesses in Australia and New Zealand. Subscribe wherever you listen to podcasts.
If you have bought a business, and are open to sharing your story on the show, please email [email protected] If you want to sell your business, I'm buying. Please email [email protected] Connect with Dan Canham here: https://www.linkedin.com/in/dan1canham/ Dan Canham was made redundant three times in 20-odd years of corporate and consulting work. So in 2023 he backed himself and started Tomorrow Strategy Co. Then his first four clients finished their projects and moved on, and he had to rethink the whole model. His answer was to own the services his clients kept asking for. In two years Dan has acquired BWS Recruitment (a 30-year-old Melbourne recruiter), AT+M Marketing (a 41-year-old Tasmanian agency) and WellsGray Recruitment. He went from a consultancy turning over about $250K to a group at around $6M in revenue, with roughly 25 people across Sydney, Melbourne and Tasmania. He had no M&A background when he started. Dan doesn't dress it up. He walks through how each deal was structured, from deferred payments and seller finance to leveraging his home equity, how he runs businesses in other cities through general managers, and where it's been genuinely hard. He's still looking for more established Australian service businesses to buy. IN THIS EPISODE: The $250K consultancy that became a $6M-revenue group in two years No M&A background: the YouTube, books and trial by fire behind three deals Why he won a 41-year-old agency without being the highest bidder Leveraging home equity for a deal, and how the bank conversation went Seller finance: a third up front, the rest over three years Running Melbourne and Tasmanian businesses from Sydney, without being absent Why cross-selling across your own businesses is harder than it sounds The first 90 days after settlement: decision, decision, decision TIMESTAMPS: 0:00 - Three redundancies and starting Tomorrow Strategy Co 2:03 - Learning acquisitions with no M&A background 4:59 - Search criteria: 10-15+ year old service businesses 7:33 - Buying BWS Recruitment: deal structure and deferred payment 8:28 - Self-funding the first deal and setting up a holdco 9:41 - Hiring a general manager for a business in another city 12:50 - Running Melbourne from Sydney: is distance a problem? 13:56 - How the general managers are incentivised 14:47 - The first 90 days: decision overload 16:53 - The stabilisation year: don't change too much too fast 17:45 - Finding AT+M Marketing in Tasmania 20:56 - Marketing agency risk: retainers vs projects 23:02 - Structuring the deal: all up front, home equity 23:37 - How the bank conversation went 25:11 - Cross-selling across the group 27:12 - Buying WellsGray: seller finance over three years 29:22 - Managing three businesses at once 30:26 - What's next: more tuck-ins and an MSP 32:50 - The biggest challenges of the last two years 33:49 - Going from $250K to $6M in revenue 35:09 - How much growth is acquired vs organic 36:00 - Outside capital and ten more deals 37:57 - Where to find Dan Deals Down Under is the podcast about buying, selling, and growing businesses in Australia and New Zealand. Subscribe wherever you listen to podcasts.
If you have bought a business, and are open to sharing your story on the show, please email [email protected]
If you have bought a business, and are open to sharing your story on the show, please email [email protected]