TWS & WF Energy Controls: Jason Hew

Jason Hew went from reviewing 1,000 startups a year at Woolworths' venture arm to searching for a business with SMEVentures and buying two instrument transformer manufacturers, one in Sydney and one in Christchurch, in a single transaction. It was only the second search fund acquisition New Zealand had seen. This episode covers his operator-fit framework for knowing when a business is right for you, how he rebuilt a 20-year factory culture as an outsider, and what happened when his vendor walked out four weeks after settlement.

Chapters

• Early Life in Malaysia and Immigration to Australia (2:37)
• The Petrol Station and Grandad's Influence (5:09)
• Cadetship at HLB Man Judd and Early Career (7:34)
• Record Point and the Iron Mountain Deal (9:52)
• Scaling Woolworths Rewards (11:43)
• Employee Number One at W23 Ventures (14:45)
• Cash Rewards and the ANZ Exit (18:00)
• Why a Risk Averse Person Buys a Business (20:58)
• 15 Months of Search (22:25)
• Operator Fit vs Founder Problem Fit (24:30)
• The Acquisition: TWS and WF Energy Controls (28:19)
• The Cross-Border Complexity (31:43)
• First 18 Months as CEO (35:32)
• Vendor Exits at Week Four (38:13)
• The Brightest Moment (40:15)
• Advice for Searchers in the Grind (41:44)
• What Comes Next (42:44)

SOME ADVICE FROM JASON

"Can you actually see yourself doing this for a long period of time? And that equation becomes more important, not when things are going well, but when things are going bad. Can you see yourself struggling through this for a long period of time in this business, in this industry, in this location?"

"The ETA opportunity is real. And there's a deal out there for everyone who's doing this for genuine reasons. Don't be thrown away too much by criteria and business metrics. Really try and hone in on what you think will bring you joy and what will help you wake up in the morning on the right side of bed."

Transcript

[00:00:00] Jason: The hardest moment, I think through this first 18 months really has been the vendor. Of the business ending his transition agreement with us early. And so the plan coming in really was to have the vendor around for formally, I think it was six months, and then more informally 12 months.

[00:00:19] Jason: And, so the vendor stepped outta the business after about four or five weeks. And that was scary. We, this is a. A specialist electrical engineering business. The vendor has been in, this managing director role for 30 plus years, knows what he's talking about, knows all the people, knows all the opportunities, and was my lifeline.

Intro

[00:00:43] Jake: Today we're speaking with Jason Hugh, and I've been privileged enough to have a front row seat to Jason's journey from the very beginning, before the deal, during the search, and through the first 18 months of ownership.

[00:00:57] Jake: So I've been looking forward to recording this interview [00:01:00] for quite a long time. Welcome to the Search Fund podcast. Today Jason takes us from his grandfather's petrol station in rural Malaysia. His first lesson in what business ownership can do for a family and a community to acquiring TWS energy controls in New Zealand and WF energy controls in Australia, making it the first multinational search fund acquisition in either of these countries.

[00:01:28] Jake: If you've ever struggled to know when a business is right for you, you need to hear Jason's operator fit framework. We also get into his thesis on why instrument transformers sit in the middle of the biggest infrastructure wave Australia and New Zealand will see in 50 years, and how he rebuilt a 20 year culture in a factory that made things he knew almost nothing about.

[00:01:53] Jake: Let's get into it.

[00:01:54] --

[00:01:54] Jake: Jason, thank you so much for joining the show. Really excited. This is [00:02:00] a long overdue. You have a great story to tell and I'm sure our listeners will learn a lot.

[00:02:07] Jason: No, happy to be here. Been a long time listener. So yeah, happy to share my story and hopefully, yeah, I was, take something out.

[00:02:13] Jake: Jason, I've been fortunate enough to have a front row seat to your journey from the start of your search fund expedition. But most of our listeners haven't. So take us right back. I'd like to start from the very beginning. Talk to me about your childhood. Paint a picture of early Jason and the people around you.

[00:02:37] Jason: Yeah. My background is Chinese Malaysian. I I was born in Malaysia and spent most of my early life, so up till about eight years old predominantly in Malaysia, but also a bit in Singapore. I my dad was a civil engineer specialized in building bridges and in road infrastructure, and my mom was a piano teacher. So quite a bit of a contrast. But yeah, I was the eldest of [00:03:00] three boys. And yeah, growing up in Malaysia had pretty fond memories, actually just playing on the streets attending school. So I went to a pretty traditional, Chinese Malaysian school. Quite a strict schooling environment where, corporate punishment was a pretty normal form of discipline and that sort of thing.

[00:03:16] Jason: But, but yeah, look, it was a different time and place and yeah, as I look back, I really did have good memories rather than bad of growing up in, in that country. And and yeah, my mom and dad like most Chinese Malaysians were pretty acutely aware, of the educational opportunities for kids in that country and like many other families around this time and still do today when I was, yeah, eight, nine, immigrated to Australia. And that's why I went to high school and and to university. 

[00:03:44] Jake: You mentioned your dad, and I know you've spoken about him before he was a hard worker and made sacrifices to provide. Can you tell us a little bit more about him?

[00:03:58] Jason: Yeah, look, Mo [00:04:00] moving from a country like Malaysia to Australia sounds simple, but really isn't. A lot of his formal qualifications as an engineer wasn't and experience wasn't really recognized. So like many immigrants through the nineties and two thousands moving from. Countries like Malaysia to Australia and New Zealand and the US and that sort of thing. Immigrants often have to start right at the bottom despite their qualifications and experiences. So he did things like drive forklifts, and took long-term projects in other countries like India and and, all in the. In the spirit of trying to deliver a new life for the family.

[00:04:36] Jason: And and yeah, look it's hard work and stress and financial insecurity and all those things, but I think again, like many immigrants, he was successful and mom as well in, in giving us that new life.

[00:04:48] Jason: And and yeah, look I have again, fond memories of Malaysia, but also very fond memories of us of growing up in Australia.

[00:04:54] Jason: So I had a very. Happy upbringing, off the back of those sacrifices. Growing up in the [00:05:00] early two thousands in, suburbia and Australia was basically the golden years of Australian life. And this was yeah. I had a good time of.

[00:05:09] Jake: Your grandfather also had some of that entrepreneurial DNA that maybe eventually passed down to you. Tell us how that manifested and what you learned from him.

[00:05:22] Jason: Yep. So my grandfather on my mom's side he just turned 90 a couple of weeks ago. He owned a the local town petrol station in Malaysia. And, there was only one petrol station which meant that he knew everyone around town. And I spent many of my early years in that petrol station mostly paying, Tetris and Pac-Man and the computer. But but in and around my granddad operating that, that small business and, impacted me in a way of, seeing the the influence and impact an individual person and a small business can have on a small community. And also, the benefits of how [00:06:00] small business ownership actually I guess afforded him and his family.

[00:06:04] Jason: Both financial outcomes as well as community reputation and influence. And and look that's obviously, from where I sit today, it's had a long lasting impact on me.

[00:06:14] Jake: We will come back to this later in the conversation, but spoiler alert, you're now owner and CEO of a couple of companies looking back on. Your parents' story and your grandfather's story and perhaps other members of your family who who worked hard to provide does have you reflected on that and do you see things through a lens that's any different from a couple years ago?

[00:06:40] Jason: Yeah, most definitely. I think as you, particularly through my, twenties and thirties moving up through, and we can talk about that a bit later, but through my corporate career, I, I felt my soul getting a bit sidetracked, I guess from where life began for me, in a different country.

[00:06:57] Jason: And I think as I matured and as I progressed through my [00:07:00] career, there was always that longing, to go back to, what it once was. And and the search and small business ownership journey was the per perfect, vehicle for me to get there.

[00:07:11] Jake: Let's fast forward a bit and get to your career again fairly early because I think it's interesting to. To see the roots. Your first real job was actually a cadet ship during university, I believe at HLB Man Judd, an advisory firm. Refresh my memory, was that to help pay for university or was that primarily for working experience?

[00:07:34] Jake: And then tell us about that experience and what you learned from it.

[00:07:40] Jason: Yeah. It was for both really. Through high school, I like, like many didn't really know. What career path I wanted to head down. My best subjects were art in ancient history out of all things. And I saw this cadetship opportunity. So this is an arrangement [00:08:00] whereby. You effectively work full-time. So four days a week, four and a half days a week whilst studying university for, a day, a week and and have your, degree effectively paid for by that employer. HLB was a mid-tier accounting firm in Sydney, Australia. And I worked as an auditor for four days a week throughout my university degree. And look for me, that experience really was a steep learning curve, in terms of understanding. Businesses and in its most simplest form, which is, financial auditing but also I guess the acumen of a career in business at a pretty young age. Just after 18. So for me, getting that exposure, understanding kind of the financial architecture of businesses starting to meet and develop my networks in the business community in Australia. Yeah, it was a fast track program to be able to do that. And the key takeaway, I guess from what I learned was yeah the importance I guess of sound [00:09:00] sustainable financials in a business.

[00:09:01] Jason: And that's continue to be proven true, I guess throughout my career later on as well.

[00:09:06] Jake: You had a bit of a commute to that. Cadetship, if I remember correctly 

[00:09:12] Jason: more of a commute to my university. So I went to the University of New South Wales, which was in eastern suburbs of Sydney. So that's a, an hour bus ride plus an hour on the train and then a bit of a walk. So yeah, it was a long journey.

[00:09:29] Jake: this was before or after working at the pizza joint, was the pizza joint in high school. Got it. Yeah. Okay. All right. From HLB, you moved on to a couple of other advisory firms, PWC, working in m and a, and then a boutique firm record point which you had some where you had some unique opportunities.

[00:09:52] Jake: Talk to us about the iron Mountain deal.

[00:09:57] Jason: I spent a few years working at Record Point [00:10:00] under Michael Furman, who's a recurring character in my life. So record Point is a mid-market advisory firm based out of, again, Sydney, Australia. And there worked on a whole range of different types of m and a transactions, public, private IPOs, et cetera, et cetera.

[00:10:16] Jason: And yeah, across industries, large, small and all geographies. And one deal that we that I was tasked on was, the sale of the carved out Iron Mountain Australia operation. And as some of your listeners may know the whole records management industry really is deeply rooted in in search fund law, and and yeah at the time we ended up selling that business to an ETA operator out of the us. His name is Dennis Barnett. And, the acquisition was backed by a firm called Housatonic Partners, which is owned by Will Thorndike. And, full circle deal where, and later on through my search, will, would end up backing my search through to TCER. Michael [00:11:00] would also back up back my search personally as well. Yeah, it was a complex deal, from a. Carve out perspective sale to an international private equity firm. But but it's, yeah, it's had a long lasting impact, throughout my career, again, because of the networks and connections I had.

[00:11:15] Jake: Is will aware of that connection. I wonder if he'll listen to this episode.

[00:11:18] Jason: Yes, he is,

[00:11:19] Jake: Oh, he is aware. Okay, good. Fantastic. And yeah, you had quite a bit of ownership. During what, how old were you at that point? Yeah. Big deal. We won't revisit where I was at 24 years old. You then moved to Wellworths which is for our listeners elsewhere in the world, a large supermarket chain in Australia.

[00:11:43] Jake: And you helped scale the Willie's ex rewards team. Tell that story.

[00:11:50] Jason: Yeah, so I was hired into Woolworths to join their rewards team. So that's their loyalty program in a role that is a commercial role. Sitting in sort of the intersection of, big [00:12:00] data analytics and direct marketing and it was a, yeah, commercial strategic role. And at that point in time was effectively a large scale up business unit within the Woolworths group.

[00:12:12] Jason: So you had. Parallels, to the Qantas loyalty program, which is, for an airline group their most valuable asset actually. And yeah, look, we, it was a scale up business within the group. The team grew two or three x during my time there, ended up being, over 200 people. And I reported towards the end of my tenure there directly to the managing director of that division. Yeah, so Woolworth's group the key thing I took away from that role really was learning on how big corporations operate and in particular. How to influence the various stakeholders within the big business and how to motivate and navigate those relationships within the big corporation. And yeah, it was a first exposure to that. And also at the same time, you are learning about the inertia of big corporations, [00:13:00] which

[00:13:00] Jason: will later result in me, wanting to pivot down to the small business route.

[00:13:04] Jake: Yeah. So this is also in addition to that exposure where we start to see glimmers of. Jason, the future operator less advising and more supporting the scaling of an operating team. So you mentioned that you learned about the inner workings of a corporate and some inertia associated there with, what else did you learn about yourself? Did you, was this a point at which your eyes started to open to additional career paths for yourself, or did that come later?

[00:13:37] Jason: Yeah. No, to it definitely did and effect. Effectively, by the end of my tenure there, I was working as, I guess the strategic right hand person for the managing director. And saw what it took really to operate and scale up albeit a business unit, effectively a business within the business. In terms of, hiring a quality team building a culture [00:14:00] of high performance. And then managing and operating that, for a for a period of time. So really exposed me, I guess to what, what real leadership looks like in a large scale environment. And yeah, you're right.

[00:14:11] Jason: That, that sort of reinforc in my mind, of what it takes, I guess to, to operate a successful business, which will yeah, which will later influence me to pursue that route for myself as well.

[00:14:21] Jake: In 2019, you became employee number one at W 23, which is. Woolworths venture arm, newly formed venture arm. And in that role you reviewed up to a thousand startups a year. Quite different from your previous role at Woolworths, probably even substantially different from your earlier advisory roles.

[00:14:45] Jake: And you built your thesis around the founder problem fit, which we'll come back to later. But actually, why don't you walk us through that concept now and then we'll revisit later.

[00:14:57] Jason: Sure. So the the. Managing director was [00:15:00] reporting to at Woolly's ex awards program, Ingrid, she was tasked by the Woolworths board to set up a corporate venture arm. And the whole idea was to expose Woolworths, to the innovation and innovative concepts, of the startup landscape of both Australia but also around the world. And so we were given effectively a blank sheet of paper to. Come up with a corporate venture concept that we think would work. And that's evolved over time even recently. And and yeah, look from there we effectively built that venture technically a fund now. Everything from forming the investment thesis through to, fundraising internally. And , building a pipeline of potential investments to make and then through to, execution due diligence, sitting on the board, et cetera, et cetera. In my time we, we probably did 10 to 15 investments in the two years that I was there. And really for me it was that real first exposure to real [00:16:00] entrepreneurship. In terms of yeah, spending my day, meeting five to eight founders a day, people who are looking to really build products and services that, that, that are out there to change the world. And that was both inspiring as well as extremely motivating. And although I loved my time in venture in terms of, getting to be. cheerleader, on the sidelines of investing and backing these founders. But it really did inspire me to, always want to be on the other side of the table. Like I, I had before at a bigger scale environment but at a smaller but more fast moving environment as well, so for me that was, yeah the first exposure to entrepreneurship. And yeah, quite oftentimes sitting sitting across the table I always thought, the grass was, the grass always looked in on that

[00:16:42] Jason: side. But no, it was a great role and yeah, really enjoyed my time there as well.

[00:16:46] Jake: So this is interesting because when you said it was my first exposure to entrepreneurship, I actually thought you were gonna talk about being employee number one and building that business almost from the ground. And that zero to one [00:17:00] journey, albeit within the. Umbrella of a well-resourced corporate.

[00:17:06] Jake: And was that people often talk about entrepreneurship as a form of entrepreneurship. Did you feel like an entrepreneur during that time building Woolies Venture?

[00:17:18] Jason: Not so much. Not so much to be honest. Yeah, you're right in that it is a well resourced. A well-resourced large corporate, and so that comes with a range of benefits but also. Top down influence on, what the broader Woolworths executive team and board were looking for.

[00:17:35] Jason: And we were given some freedoms in terms of, the structure and how we think the fund interacted with a strategically with the Woolworths group. But but it wasn't the complete freedom that, our counterparts, IE the founders that we were meeting

[00:17:47] Jason: every day had in terms of. Being attracted and being drawn to the big, the biggest problems around the world

[00:17:54] Jason: And and building a solution for that.

[00:17:57] Jake: After that experience, you [00:18:00] joined Cashrewards as GM of strategy initially. Then the CEO resigned, I believe. What happened next and how did that experience help shape what would come in your life thereafter?

[00:18:17] Jason: Yeah, so I joined Cash Rewards, which was a cashback platform here in Australia, one of the leading ones. And a good friend of mine, his name is Bernard Wilson, and he was actually my original manager. That hired me into Woolworths a few years back. So he was appointed CEO of that company. And this was, the heyday of kind of post, the post COVID serp era where we were just pushing hard to create a unicorn business in a very quick manner.

[00:18:48] Jason: So it's a, it's a. Proper scale up high growth journey. And yeah, so I joined, I guess as Bernie sort of right hand person. Official title changed a bunch of times, but yeah, it was it covered anything [00:19:00] commercial or strategic within that company. And with that, what I experienced really and what the things I learned was, what it took to grow. In a real scalable way a fi, a fast growing business which is quite different to my experience, again at Woolworths group where that's in under the, the confines of a big corporate. And this was one where, you had to deal with the and triage, in terms of building the product that suits the market that needs to be funded by investors and how to balance that, that holy trinity at all times in a very hot market and very competitive market. It was, I was there for two and a bit years, but it was, it was a lifetime of learnings and and after Bernie resigned we had a new CEO in charge. And yeah, I continued my role, being a, being the right hands sounding person from a commercial and strategic perspective. But yeah we did take the business to an exit. It was acquired by ANZ bank, which is one of the big four banks here in Australia. And [00:20:00] which I think, for the investors and for. For the employees at that time was a really good outcome. But but yeah, look the cash rewards, I think now under, under ends, its new leadership as of late 2025 has decided to shutter the business, which is a massive shame because cash reward is, the economics were good. And there was a quite a charitable angle, to their business where a lot of the cash back is actually given to the Starlight Children's Foundation as

[00:20:25] Jason: well. So anyway but yeah, that's that is business, sometimes.

[00:20:29] Jake: So then we come to the search fund part of the journey. You described, you've described yourself in the past as fundamentally risk averse, and yet you left a corporate career or at least a well-funded scale up career to buy and run a small business, likely in an industry with which you're largely unfamiliar.

[00:20:58] Jake: How do you [00:21:00] reconcile those two things? What was that? Internal dialogue you had with yourself.

[00:21:08] Jason: I dunno if I've done it well. And I still struggle with that today, to be honest, but, look, it's, it was at that point of my life I had spent, a few years advising on deals a few years investing in companies and a few years operating in a business. So I had the right level of experience and on, on each side to understand, what it took. So for me, pursuing the search path seemed the logical outcome. And also from, I guess from a personal perspective, it was at a time in my life where I had, relatively young kids. So they're not school age. And so the idea of, taking a bit of a risk, potentially having to move to a different geography that was the time to do it if ever. And I was confident as well that, when if things [00:22:00] didn't go out go to plan that I could always come back to the corporate world at any point in time as well. So I guess laying that all out it wasn't in my head the riskiest thing to do. And especially if you pursue the ETA path through a traditional search fund or with an accelerator where again, that risk is mitigated by the support you get from your investors or from the accelerator as well.

[00:22:25] Jake: Your search was about 15 months all in. Take us inside that period. What did the day-to-day actually look like?

[00:22:38] Jason: Yeah, so this is quite often quoted as, a period of grind for people where. You are spending days reaching out to many business owners, you're hearing a lot of nos. You're seeing a lot of things, and it's a, yeah, it, it is a bit of a grind, but for me it just, it was directly co directly similar to my [00:23:00] experience in venture capital, where again, meeting founders every day, learning about different businesses and different business models every day. And and also, most things that you see. A deal won't come into fruition. So yeah, my day was spent, speaking to pretty similar five to five to eight business owners a day. And through my roughly a year of search learning and perfecting my pitch in terms of why myself as the acquirer and owner of the business makes sense to to, to the business owner and getting yes to, getting to a yes or no as quickly as I can. I enjoyed actually the search experience. I didn't find it to be a grind. I loved learning about different businesses. I loved learning about the hidden niches, I guess in the Australian small business community. And I, yeah, thoroughly enjoyed actually just talking to business owners and understanding their. Their journey historically and where they want to take the business and problems that they're having and that sort of thing. And off the back of that I think we put out [00:24:00] five offers through my first 12 months. All of which got knocked back or beaten until we landed on the one we landed on.

[00:24:10] Jake: Earlier in your career when you're, when you were looking at early stage ventures, you were thinking about finding that founder problem fit, finding the right founder for the right problem. By contrast, when you started looking at businesses to buy where the founder is walking out the door and you were considering yourself as the replacement, how did that how did that framework break?

[00:24:36] Jason: Yeah. All stems down to can I see myself operating this business for, the required period of time. So five, five plus years. So it, the equation shift really shifted really from founder problem fit or found the business fit to I guess myself, Jason and business fit. And that was. [00:25:00] Quite early on something I had to work on because as a sitting in as a venture investor you are pulled and are attracted by high quality businesses and opportunities on a risk adjusted basis. But Jason, as an operator that's a different lens on which you have to overlay at the top. So quite often through the search, I had to rely on. My intuition, but also a lot of guidance from my investor group and reminders that like, Hey, this is good business, but can you actually see yourself doing this for a long period of time? And and not and again, that equation becomes more important, not when things are going well, but when things are going bad. Can you see yourself struggling through this for a long period of time in this business, in this industry, in this location? And if not, it doesn't really matter what the business fundamentals or performance is. So yeah that's, that was a, an important lesson I guess, that I had to learn through that search process.

[00:25:59] Jake: and what were those [00:26:00] criteria like that, that you would help? Determine fit? Were they, did they have to do with the end product or service, or did they have to do with the business model or the people or the value creation levers? What did you think about most?

[00:26:14] Jason: Yeah, it was combination of all of the above. I think for me the most important threshold really was on the right industry. Joining an industry where there's tailwinds to make my life as a first time CEO and operator, easier. And also given the likelihood that I was gonna be acquiring an industry that I had no experience in having the right level of team support and management layer that can at least help me mitigate against, my lack of knowledge in the early years. So I was highly focused on, on, on ensuring that, yeah, that the business that we did pick, was, had tailwinds and had the, had a decent middle layer in place. And yeah, look I had my experience, doing deals or operating within a high growth environment, I was [00:27:00] confident that, I'll be able to figure out some sort of value creation plan that where I can figure out, how I can best lend my experience to. But yeah, largely it was a, yeah, industry and the people and team focus.

[00:27:13] Jake: All right, so let's make the abstract concrete here and talk about the actual acquisition. That you completed. And even before that, you you took us through some of the filters that. You are applying to opportunities and industries during your search. Often people are a little bit perplexed by why the failure rate is so high or why it takes so long to buy business given the number of potential targets there are out there.

[00:27:39] Jake: But it's, the simple answer is there just so many filters through which every opportunity has to fit. You made five offers and only got one across the line, and that's after having hundreds of conversations with willing. Willing, potential sellers. And you described your biggest fear at one point as being one of [00:28:00] analysis paralysis.

[00:28:01] Jake: But you did ultimately buy a company. Talk us through the actual moment that you decided to pull the trigger. What did the data look like at the time that you made that decision, and how did you determine that was enough?

[00:28:19] Jason: Yeah, so the company and yeah, the introduction. Into the company we acquired. So we acquired TWS and WF Energy Controls. It is two, two separate businesses that do the very same thing. And we bought off one vendor and basically both businesses, one's in Sydney Australia, one's in Christchurch, New Zealand, were manufacturers of instrument transformers which are measurement transformers specifically for the end use cases of metering. As well as protection. And we operate largely, our products fit in the middle, of the electrical value chain. So think at a [00:29:00] substation level or a large industrial site level, more so than, let's say at the point of generation or at distribution. So the the meter in your house as an example. And so both businesses have been around for many decades servicing the largest utilities across both and metering providers across both countries. And what was attractive to us, and I talked about industry sort of being the big driver I guess in terms of the criteria of my search. It was an industry where we had thought that the tailwinds there, there were many tailwinds. And because we operated in the middle of the value chain, it really didn't matter what the trends were, for example, in terms of source of generation. Nor did it matter. The distribution point of the electrical value chain as well.

[00:29:45] Jason: So whether it's ev charging or a AI or data centers being built, or urbanization, all of those trends lead to an increase in electricity demand. And so long as you need electricity, you're gonna need to measure it [00:30:00] accurately, both for protection and medium purposes. Means that our products are required. And our thesis coming in really was that this was a quite a small, I guess you could call almost like a cottage industry that has been, like I said, been around for a long time. But all of these recent tailwinds are driving demand, a tsunami of demand that this industry has ne has never seen. And unlike other industries where you talk about growth of, a growth period of 3, 4, 5 years for us, we saw this as a growth period of of demand of, 30, 40, 50 years given the nature and the current, status of both the Australian and New Zealand electrical grids. And and for us when we saw this deal, it took us some time to figure out where the products fit within the market. And once we got comfort that, yeah, we did sit in the middle of it all. And also we understood the defensibility and the market protections of why this industry exists and how we're [00:31:00] not, at risk of having to compete against, let's say cheap imports. We knew that we had struck goal, in terms of the type of product or service that we were looking for in, in the search. And from that point on end, it was, more of a verification process, to understand the other important search criteria. Is it a growing business? Is there any customer concentration? Is it a reoccurring or re is it a recurring or reoccurring heavy business model? Our margin strong is the team strong, et cetera, et cetera. And for the business required, the more that we learned the more that the, those, all those criteria seemed to be proven true. And and yeah, look, once we got through basically commercial dd I was certain that, this was a business that, that I thought was absolutely fantastic and perfect fit for the search model.

[00:31:50] Jake: The international nature of what you bought is. Interesting and worth a moment to pause on. Searchers periodically come across opportunities with international exposure. Either they [00:32:00] have multiple entities in diff different jurisdictions, or most of their customer base is in a different country.

[00:32:05] Jake: And the com the inherent complexity of that is, is often the barrier to an ETA entrepreneur. Closing on those acquisitions what enabled and. And the, your situation is arguably compounded the complexity of your situation is arguably compounded by the fact that this was only the second search fund acquisition in New Zealand, and there's lack of pattern and infrastructure and network there.

[00:32:29] Jake: Was it as complicated as one might imagine? And to the extent it wasn't, you got it done. What earned your comfort that this was a feasible opportunity?

[00:32:43] Jason: Yeah, so I guess there's a couple of different lens that you can look this, look at this through. So I guess first from a. From a deal lens, it was an extra layer of complexity in terms of executing a transaction, I guess across two countries. And so we had a very strong legal [00:33:00] team and also financial and other advisory teams as well to support the transaction. We explored, did we need effectively two share sale agreements? Did we have to run effectively two separate DD processes, et cetera, et cetera. So I guess from an execution point that was an extra layer of risk and understanding of, again, different, legal environments. However it, it wasn't as complex I think as we, we had thought. And, if you were to do a. A dual jurisdictional deal. Australia and New Zealand are probably as close of a, as close of a country of two countries that you can get to, to get that done. And and yeah even our legal team legal vision. They operate across both countries so having a one single legal team advising across, across both jurisdictions, yeah that, that proved super invaluable. And yeah, look the deal was a little bit more complicated than maybe a single geography deal. But it was never that [00:34:00] far down the difficulty path that, we thought it was unfeasible or required an extra. A few months of time or whatever it is operationally that's a, that the second lens, which you can look at this through, and that was of some concern to some investors and of myself as well, what would the day-to-day look like in terms of being able to lead a business effectively across two locations. But again, it is, if you take a step back, if there is. Two countries in which you have to operate a business from

[00:34:30] Jason: effectively like Australia, New Zealand, re and particularly where it's sitting in Christchurch, that's a three hour flight. Which in the bigger scale things, you know and a two hour time difference it's not that bad. There, there are many searches across Europe or the US which operate across multiple states that are Yeah, much further than three hours. So yeah. And, and yeah, so I think from an operational perspective, it was a consideration and I'm living that reality now. But yeah, it hasn't been too much of a trouble for me.[00:35:00] 

[00:35:03] Jake: Some of your team that you inherited has been building transformers for decades, as you mentioned, like wf, if I was founded, I think in 1910 as Warr and Frankie. I don't know what TWF originally stood for but also has a legacy. You're now about 18 months in , come from a quite a different world.

[00:35:32] Jake: How have you gone from newbie to now credibly leading the strategy and operations of this combined group?

[00:35:44] Jason: Yeah. The first six months of post acquisition. The key thing I was looking to do really was to build trust with the team and and also I guess to embed my. Leadership style as well as the [00:36:00] vision, I guess myself and our investors have for the business into the culture and the team and and its operations. So look it does take some time to do that and unfortunately there's no shortcut to build trust. Just being in the trenches and taking time. So for those, first, let's call it the first six to 12 months I really just tried to immerse myself in everything. Whether it's, spending lots of time on the factory floor, whether it's sitting in a room with engineers trying to solve engineering problems, whether it's. At one stage, even just reviewing every single payment, going out of the

[00:36:38] Jason: business, understand the cash flow properly. It was a a pretty fullsome period I guess, of trying to embed myself in, in, into everything. And, it was never the intention was never to do that forever. And it's not sustainable to do that forever, but. It served, I guess the dual purpose of, building trust and embedding myself in the team, but also ramping [00:37:00] up my knowledge of how this business actually operates and then, being able to figure out where the holes are, what the problems are and and how to solve them.

[00:37:09] Jake: And you're 18 months in, so a lot more than zero months in, but still fairly early on in the operating journey. Where are you today relative to the beginning on that spectrum of. F fully in the weeds learning ground up to f fully a capital allocating strategic CEO. What does your week look like at month 18?

[00:37:35] Jason: Yeah, so I'm probably spending my time doing a bit of both. So I would say 50 50. The biggest strategic lever I've learned to pull in the last six to 12 months. Really has been hiring the right people in particular leadership to to best leverage their experience to solve the problems that I've identified in my first 18 months. And what's that? What that's [00:38:00] afforded me really is, that, that extra time to then focus on. Growth opportunities and growth initiatives rather than just, I guess the day-to-day tackling and swashbuckling around the factory for all.

[00:38:13] Jake: Take me to your hardest moment in the first six to 12 months you're fairly fresh as a CEO and you're maybe a little bit scared. What happened and what did you learn about yourself from how you handled it?

[00:38:31] Jason: The hardest moment, I think through this first 18 months really has been the vendor. Of the business ending his transition agreement with us early. And so the plan coming in really was to have the vendor around for formally, I think it was six months, and then more informally 12 months. But it became pretty apparent after a few weeks that him being around was starting to compromise, I guess my leadership a little bit. And there were a couple of moments, which we can [00:39:00] talk offline about 

[00:39:00] Jason: Where, that was pushed, right to the edge and it was not gonna work.

[00:39:04] Jason: And, so the vendor Yes. Stepped outta the business after, I think, yeah, about four or five weeks. And that was scary. We, this is a. A specialist electrical engineering business. The vendor has been in, this managing director role for 30 plus years, knows what he's talking about, knows all the people, knows all the opportunities, and was my lifeline, in coaching me as much as he can for at least a six month period and quite quickly.

[00:39:31] Jason: Yeah within four or five weeks I've lost that lifeline. And also damage was done. We tried to I had to repair. So look that, that, that was. That was a scary time. And then and there was a lot of unknowns as to, what life for the business will look like when I guess this stole war has, who's been a constant presence for the last 30, 30 years is out of the business completely. This is where. And tying back to early in the conversation ensuring that we've done the adequate [00:40:00] diligence on, on that management layer and understanding, the strengths and as well as weaknesses of that management layer. Yeah, really relied on them to help me get up the learning curve quickly and to mitigate, I guess against the vendor disappearing from the business. 

[00:40:15] Jake: By contrast, what's been the brightest moment of the past 18 months, a moment where you felt, okay, things are headed in the right direction.

[00:40:27] Jason: Yeah. Yeah. The and this was probably a week or two ago where I had someone from the management team a one-on-one come up to me and say, I came in this morning and we had a laugh, and I thought to myself, I really enjoy coming into work. Something's changed and there's a lot of new faces and that sort of thing, but I, yeah I'm really happy here and hearing that from someone who has been in the business, I think 20 plus years and I know. Has seen the ups and downs, of [00:41:00] the business and the culture and that sort of thing. But to hear that, they're the happiest they felt at work and like the people around them that's for me, early proof and a long way to go. But early proof in terms of, the culture and the team that I want to build. Starting to take shape and being recognized by someone who's not me. So yeah, like I said, it's a, it's, it is a long way to go, but moments like that sort of make the whole journey, yeah, worth it.

[00:41:29] Jake: 15 months of searching, then you bought two companies at once. For the person who's listening to this episode right now, who's in month 10 or 11. Staring at a pipeline that keeps getting cold. What were you doing wrong in those earlier days of the search that you see clearly? Only now?

[00:41:53] Jason: The ETA opportunity is real. And there's a deal out there for everyone, I think who's, doing this for [00:42:00] genuine reasons. So I think the message really is, don't give up and you will find your way to get involved. And, that might take a few different forms, whether it's different models of search or ETA or whatever it is. But but just be patient. Keep the pipeline moving and yeah, that there is that one deal for you. And again, don't be thrown away too much by criteria and business metrics and, business models and what's attractive to third party. But really try and hone in on. What you think will bring you joy and what will help you wake up in the morning, on the right side of bed. So yeah, look it's patience. It's hard, but it's a rewarding space. So I definitely keep out it.

[00:42:44] Jake: Give us a preview of the months and years to come.

[00:42:48] Jake: What do you see as the opportunity for this business that you've now owned for the last 18 months?

[00:42:54] Jason: Yeah so we came in with a thesis that there's a tsunami of demand for our products. And in the first [00:43:00] 18 months that's proven true. So we think there's a generational opportunity really to. To build a business off scale to service that demand. And we are gonna have a red hot quack crack and a big swing at at creating that that, that big company in this space. So I think yeah, there's a lot of tightening up that we need to do with the existing business that we have. But yeah, we'll be pulling all the growth leaders in the next 12 to 18 months.

[00:43:27] Jake: Jason, I'll say it again. I've had the pleasure of having a front row seat to your work throughout this journey. You've bought a great business, you've putting together a great team, and there's a wonderful opportunity ahead of you. And most importantly I think you're one of the most talented entrepreneurs that I've had the pleasure of working with.

[00:43:46] Jake: Thank you so much for sharing. Your story and your insights with us today. We'll eagerly do another in a couple years and see how it's going.

[00:43:59] Jason: Thanks, Jake. [00:44:00] Love your work. And it's it's been a fun ride and we'll keep going.

[00:44:05] 

Outro

[00:44:18] Jake: Jason described himself early in our conversation as a fundamentally risk averse person, and then he went and bought two companies in two countries in an industry he'd never worked in, and his vendor was gone by week four. I don't think Jason's risk averse at all, actually. I think he's just very good at doing the math on what real risk is.

[00:44:43] Jake: Maybe that's the thing worth sitting on after this one. Until next time.

The information in this podcast is for general informational and educational purposes only and does not constitute financial, legal, tax, or professional advice. Views expressed by guests are their own and do not necessarily reflect those of SMEVentures or the hosts. We may have financial interests, investment relationships, or business partnerships with some guests or their companies. Before making any acquisition or business decisions, seek advice from qualified professionals familiar with your specific circumstances.