A seismic shift is underway in the world of small business sales.
Ragu Rajakumar, founder and CEO of Eden Exchange, believes the industry's time for transformation has come. Speaking to 10Minute IT Jams, he described his company's ambition to "create an empowered community through our technology of buyers, dealmakers, partners and sellers to enable a successful business transaction".
Founded in Australia, Eden Exchange has built a centralised platform designed to streamline every step of buying and selling a business, from franchise cafes to multi-million dollar companies. "We're aiming to connect and revolutionise the way businesses are bought and sold," Rajakumar said.
He explained how Eden Exchange emerged from personal frustration. "The founding team here...had a difficult time, myself included, selling an initial business I ran," he said. With backgrounds in corporate markets and capital raising, they were struck by the lack of well-matched connections between "highly qualified, high-intent business sellers" and equally serious buyers. This gap inspired the creation of Eden Exchange's "comprehensive support structure".
Timing, Rajakumar added, has proven fortuitous. "There's millions of baby boomers who've reached retirement age and there's a tremendous transfer of wealth going on to the market," he explained. In Australia alone, he said the estimate is around $6.75 trillion in assets expected to pass to the next generation. The resulting surge in business sales, he argued, "necessitates an innovative solution for the market and requires innovative entrepreneurs".
But Australia is not alone. There is, he said, a "demographic shift going on right now". Throughout the Western world, and particularly in the US, an unprecedented "transformation of wealth in the history of human history" is underway, driving demand for platforms that can handle such scale efficiently.
Eden Exchange, he explained, acts as "a connectivity platform that enables this transaction anywhere from listing a business, creating an inquiry, qualifying that buyer or seller and using technology as well as a network and resource to facilitate the transaction". The company's technology is now going global.
Recent innovations focus on making complex deals simple. Among them is a "virtual deal room" within the platform, providing a secure, centralised space for buyers and sellers – and their advisors – to collaborate and manage negotiations. "We're trying to essentially democratise the transaction process, which has always been almost guarded by some key stakeholders," he explained.
Historically, specialist advisors, business brokers and high-net-worth individuals have dominated business transactions, often leaving smaller sellers with fewer options and less transparency. Rajakumar said Eden Exchange's mission is to provide "some democratization in that small buying transaction sector".
His team has also rolled out secure document-sharing, digital signing for agreements and contracts, and "deal flow management" to track progress from lead generation right through to deal completion. He claims the platform allows even the owner of a small café to access professional-standard tools: "What our system provides is the ability for them to access the same sorts of service, technology and interactions as you would get as if you were dealing with one of those major accounting firms or merger or acquisition firms."
A key driver of Eden Exchange's rapid growth, he said, has been demographic change – especially in Australia and New Zealand. "We can't take credit for everything. A lot of it has been the demographic trends pushing us hard," he said. With the average business seller on the platform aged 58, and the average buyer about 43, there is a clear generational handover in progress.
Internet-based solutions to business sale and purchase were further accelerated by the pandemic. "The ability for sellers to sign a non-disclosure agreement, sign a contract, go online, do an inspection, access an online platform, make an inquiry, access financing, get evaluation would not have been at this level of uptake have we done it a few years ago," Rajakumar said.
The migration story is another driver. In Australia, he notes, "about 75% of the business sellers on the market are quote unquote second, third generation locals, while you've got more than equivalent buyers who are coming from first generation migrants or even migrants themselves who are looking to establish themselves".
Yet for all its opportunities, business transactions remain fragmented and "probably a couple of maybe 5 to 10 years behind the real estate world" in technology adoption. "Our challenge, yet our opportunity, is to take this sprawling group of ecosystem participants and bring them onto one system where all of them are profiting, reducing their time to a transaction," Rajakumar said.
As Eden Exchange turns its sights further afield, global expansion is top of mind – but not without hurdles. Its three key priorities are global infrastructure, localisation and compliance.
"We're ensuring that we've got a global infrastructure and we're investing in a robust and secure global IT infrastructure that can support the company's expansion into various markets," Rajakumar said. This includes cloud services and secure network architecture for seamless communication across continents.
Localisation is essential. "The commercial aspect of tailing transactions towards different markets is where we're spending a lot of considerable time," he explained, highlighting that selling a business in New York is vastly different from Tokyo or Auckland. "There's a localisation and multilingual capability they're putting in as well," Rajakumar said, adding that technology solutions for language and compliance are being put into place.
Data security and regulatory compliance are also paramount. "In the tech industry there's different compliance aspects – if you're in Europe or you're using general European principles or in America and whatnot as well," said Rajakumar. Eden Exchange is "really prioritising data security, compliance, international regulations to protect sensitive data and maintain the trust of customers and partners worldwide".
The company is selective in which technological trends to pursue – for instance, virtual or augmented reality and the metaverse have not delivered practical value for the business sale process yet, he said. Instead, Eden Exchange is investing in artificial intelligence where it aids the platform's core function: "customis[ing] a transaction based on a location".
Achieving "critical mass" locally has fuelled expansion. "We've got fantastic critical mass in Australia, New Zealand. We're getting pushed by our clients to start moving to other markets," Rajakumar explained, revealing imminent launches in Dubai and London. "It's all based on the simplicity of delighting that user – making sure that user experience is palatable and makes sense to them."
Despite the complexities, Rajakumar is optimistic about the future. "Our challenge, yet our opportunity, is to take this sprawling group of ecosystem participants and bring them onto one system where all of them are profiting, reducing their time to a transaction, and we're in a position where we're facilitating that and having a transaction system that works where we can grow and scale it in a way that makes it customer-delighted and happy as well," he said.
