Looking for something else?

Looking to buy a business? Learn how this M&A company is utilising the LLP model to do this?

If you ever considered buying a business and operating it as an LLP then this case study with our LLP client Wolfgang Capital can help you answer some questions about the process. Wolfgang Capital is an M&A investment company that focuses on operational profitability and cash flow by investing in SMEs and converting them into limited liability partnerships (LLP). By utilising the LLP model and looking beyond the traditional metrics like revenue or profit margins into areas such as customer ratings, employee retention rates, productivity, people and culture.

We recently caught up with Robert Felters at Wolfgang Capital to ask him a few questions about the world of M&A, his experience buying and operating multiple businesses and why they chose to operate their acquisitions as LLPs.


Rob, thank you for taking the time! Let’s start from the beginning. What is your experience with the M&A world and why did you set up Wolfgang Capital?

M&A is an interesting world to be in. At times it feels like you need to have a pain threshold that is not normal to a human being because emotionally, it can take a toll. There are lots of highs and lots of lows, there seems to be nothing really in the middle. You will often find large challenges but that can also be quite rewarding.

The reason we started Wolfgang Capital was because both my partner and I have come from corporate backgrounds and we knew that we wanted to build a company that prioritises long term decisions.

What I mean by this is when a person is looking to sell their business, they may sell it to private equity (PE) or someone similar, but often these corporations have procedures in place that are focused on maximising the value for their shareholders right now. On the contrary, we don’t have to jump through bureaucratic hopes and are able to go in and make decisions that we believe are the right decisions for the business or the team going forward, even if they may not reflect positively on the P&L in the short run. Private equity isn’t as flexible.

You mention highs and lows, what are some of your major pain points when buying businesses?

A pain point is the emotional value people have for a business. Trying to manage people’s expectations while making them understand the reason behind our valuation or structure, and why it may differ from what they’ve been told can be difficult. It can be hard to agree on a value because most business owners are emotionally attached to their business.

It can also be difficult if a business owner remains on a retained contract for six to twelve months because all of a sudden they went from the owner to an employee. They often report to us that it is an adjustment for them to be able to switch their mindset from an entrepreneur or a business owner to a staff member, and kind of take a back seat.

It’s always tricky approaching these sorts of things. Of course, we want to work with them to have a smooth, orderly handover, however, sometimes you’ll talk about how there’s a more efficient and profitable way of doing business, but they don’t always want to listen. It’s not surprising though, ultimately you’ve been working a certain way for 20 years, why change from the status quo? This can sometimes present a pain point.

In these situations, what are the pros of keeping the business owner for six or twelve months?

The pros of keeping a business owner outweigh the cons. With the business owner you get continuity of relationships with suppliers, customers, staff and with them around you get a kind of understanding of the day to day process of the business.

No business is exactly the same, everyone has their own way of strategising or doing something in a particular way. So if the business owner just hands over the keys and walks out the door, you can lose this knowledge and skill set, which presents a massive risk for the business.

It is important to set out the terms of the handover pre-deal so you know what business expects and cover all the bases to avoid getting caught out post-deal.

What would be your advice for someone looking to buy a business?

For somebody who’s like us, who is from a fairly corporate background looking to exit the rat race to buy a business to facilitate a lifestyle change, it can be done but be prepared to get the rug pulled from under you. You will be dealing with multiple businesses, multiple structures and people’s livelihoods, so you need to be able to spin many plates. Additionally, you have to be able to look at the big picture and always be aware of the things that are going on in the peripherals.

Being able to look at the big picture while not letting go of the small details would be one of the main things. People will often over analyse the issue to the point where they naturally don’t solve the problem because their focus is too narrow. You can’t always dive into the details, instead you need to find people that you can rely upon for guidance and trust your own judgement.

With that said, although I feel like I’ve aged 10 years since starting, I am quite optimistic. I’ll look at a business and go, okay, this is fantastic, where do I sign? Then issues will probably crop up and we’ll go, right, how do we deal with this? We kind of found that businesses are really just obstacles in front of you that you’ve got to overcome so it’s just problem solving, one issue at a time.


You are quite unique in being an investment company that prefers to come in and set up quite an autonomous business structure, namely a limited liability partnership, what motivates you to do that?

Setting up limited liability partnerships (LLPs) has been critical in what we do post deal. It allows us to not only maintain the culture but facilitate and reward it. When you already have a successful business that effectively can run itself, being able to focus our efforts on transforming the business structure towards having more exposure and incentivising the employees through the LLP model is fantastic to be honest.

It also translates nicely if you choose to have the business owner on board on a retainer. By having the LLP structure in place, you are also able to give the ex-business owner a vote alongside other partners so it doesn’t feel like they have been completely cut out. It’s a smoother transition but also beneficial for the company because as I mentioned previously, the owners may have had 15, 20, 30 years worth of experience and relationships to share. The alternative to this is to give out bonuses and things, but that does nothing for the overall team morale. So for me, it’s the culture that matters as that’s the distinction between a partner and an employee. And this is key for me.

Have you come across issues when you set up an LLP in a business?

At times you will find that sometimes you can’t give people too much as they make take the piss, but more often than not, we’ve found that if you trust people, and they want to work with you, then you got to kind of give them the free rein to work within parameters set for the business. I always say to everybody that if you know what you’re doing and it’s in the best interest of the business, we will back you 100%.

Now people that want to be lazy and are cutting corners and don’t want to be involved with an LLP structure get found-out pretty quickly. There’s a reason it’s called a partnership, everyone needs to be pulling their weight. So people who aren’t team players, don’t work for us anymore. Pretty simple. I don’t want them on the journey with us. But apart from that, yeah, living the dream as we say on a daily basis.

Are you looking to buy and convert a business into a limited liability partnership? Get in touch.

Looks like you reached the bottom of the article! Fancy checking out some of our other posts?

Let's work together

Optimal compliance, supporting business, supporting innovation, tax, small business

A team of mavericks that is disrupting the business consulting sector since the nineties and provide solutions that help support small and medium sized businesses.