AUTHOR

Image of Andy Graham, National Executive at RSM Brisbane, specializing in Business Advisory, Cloud and Digital, Strategic Outsourcing, Succession and Estate Planning, Accounting and Tax, Agribusiness, Family Law, and Property and Construction sectors
Andy Graham
National Executive

Early learning centres positioned for growth early

Growth for a small company is rarely linear, incremental and smooth – often, growth comes from grasping opportunities as they arise. In many cases, these opportunities have to be bedded down before the next potential growth spurt reveals itself – and that absorption can itself be difficult and distracting.

That was the case for Brisbane-based early-learning-centre company Story House Early Learning, which started with six centres back in 2017. However, they then acquired/opened an additional 17 centres over the next 15 months – further growth has since taken its numbers to approximately 40 centres, across Queensland, Victoria and NSW.

“We took on a quite aggressive acquisition phase, but with that rate of consolidation, there wasn’t much being done from a business-as-usual, day-to-day tax compliance side,” says Story House’s chief financial officer, Tony Finn.

“Once we came through that first major growth phase, the current management came on-board with a focus firstly on stabilising the ship.”

Part of this process was a recognition that the company needed further funding and investment to achieve its growth plans.

“We realised that our structure was not investor-friendly, and it needed to be,” says Finn. “When we started working with RSM, that was a major part of the brief.”

Story House had a discretionary trust at the peak of its structure, owning shares in companies underneath it. While this structure can work to protect company founders, it is not conducive to receiving inward investment.

asset_32.png“Story House had a structural barrier that wasn’t allowing them to grow, and that was that no-one could really have invested in the company as it was structured,” says Andy Graham, Partner at RSM in Brisbane.

“In order to help Story House towards achieving their growth plans, we needed to get them into an investment-friendly structure so investors could put their money in, and have an actual equity stake. We consolidated the group such that the investors could invest at a certain level without having to worry about the discretionary trust above it.”

A crucial part of the work was “doing a lot of legacy clean-up”, says Finn. “We worked closely with RSM to get the business compliant from a GST perspective, and we put together a GST-consolidated group, to simplify the BAS process and the GST across the group. Then we interposed a new holding entity, generated from an investor perspective, and RSM was crucial to the tax perspective around that.”

With the right structure and compliance in place, Finn is confident that Story House is positioned for growth – and RSM has an ongoing role.

“RSM is embedded as a business partner that understands and supports our growth trajectory and growth expectations, and is coming on that journey with us,” Finn says.