How to Build a Business to Sell — Lessons from Dru Morgan, Business Broker
In this conversation, Adam James sits down with Dru Morgan, founder of Morgan Business Sales — Australia's leading business brokerage in the mid-market space, transacting around $1.2 billion in business sales per year.
In this episode of the Fireside Podcast, Adam James sits down with Dru Morgan, founder of Morgan Business Sales – Australia's leading business brokerage in the mid-market space.
With a team of around 40 people, Dru and his firm now transact around $1.2 billion in business sales per year, specialising in multi-million-dollar deals from $5 million up to a few hundred million.
This conversation is a masterclass on one big idea:
Your business is an asset – not a job.
And if you build it like an asset from day one, your eventual exit can be worth millions more.
Whether you're mowing lawns on the side or leading a nine-figure operation, Dru's framework for building a saleable, scalable, low-risk business applies.
From Surfing Snapper Rocks to Selling $100M+ Businesses
Dru didn't grow up dreaming of being a business broker.
He was born in Victoria, spent his early years on the coast, then moved to Coolangatta as a teenager. His teenage years were spent surfing Snapper Rocks and going to school on the Gold Coast.
He went on to complete:
- A business degree at Griffith University, and
- A postgraduate valuation degree at Bond University, purely out of curiosity for how businesses are valued.
In his early 20s, Dru "fell into" business broking. He started selling businesses at around 23 years old and has now been in the game for more than 25 years.
What kept him hooked?
- Getting to walk into thousands of businesses
- Seeing all the different ways people make money
- Learning from business owners at every stage of the journey
He describes it as having had "thousands of mentors" – soaking up lessons and applying them to his own business.
The result? Morgan Business Sales is now the leading brokerage in Australia in the multi-million-dollar segment, doing "really high-end, robust deals" and attracting some of the most skilled people in the country to the team.
The Biggest Mindset Shift: Build a Business You Can Sell
Most people start a business thinking about:
- How to earn more money
- How to replace their wage
- How to keep themselves busy doing what they're good at
Very few start thinking:
"How do I build this so someone can write a cheque for it one day?"
Dru's whole message can be summed up in one question:
Are you building a job – or an asset?
- A job-business depends on you to turn up, solve problems, and do the work.
- An asset-business is something you can eventually sell for a multiple of profit – often your biggest payday.
And here's the sting: Many owners do get a multi-million-dollar exit, but Dru regularly sees deals where the seller walks away with, say, $2 million, when with better preparation, they could have sold for $4–5 million.
That gap – the "money left on the table" – is where this conversation lives.
Why Owner Dependence Kills Value
One of the biggest killers of business value is owner dependence.
If the business falls over when you get sick, go on holidays, or step away – you don't have a saleable asset. You have a job with overheads.
Dru's rule of thumb:
**"You should be working on the business, not in the business."**
Whether it's a lawn-mowing side hustle or a $40M operation, the principle is the same:
- You shouldn't be the one pushing the mower.
- You should be the one who:
- Has someone taking calls
- Has systems that allocate jobs
- Has multiple people doing the work
- Clips the ticket on every job
From a buyer's perspective, owner dependence raises one scary question:
"If you leave… what exactly am I buying?"
When a business is not dependent on the owner, and there's a strong management team and documented roles, buyers will:
- Pay more
- Move faster
- Compete harder to acquire it
The Seven Drivers of a Saleable, Valuable Business
Dru shares seven key drivers that determine how saleable your business is – and how much you'll get for it when you sell.
1. Financial Performance
- Aim to sell when your business is growing, not declining.
- Have 3–5 years of clean, reliable financials.
- Use normalised EBITDA – strip out personal expenses, interest, depreciation and anything that distorts the true earning power of the business.
- Include a well-supported forecast year, grounded in data and what's already booked or contracted.
2. Management Independence
The less your business relies on you, the more it's worth.
- Build a strong management team with clearly defined roles.
- Put in place succession planning, especially for key positions.
- Accept that this will cost you in the short term (wages, training) but it allows you to scale, and it dramatically increases your multiple at sale.
3. Systems, Processes & Compliance
Sophisticated buyers look at dozens or hundreds of opportunities a year. They will not wrestle with chaos.
- Use a proper CRM, not sticky notes or a single spreadsheet.
- Have employee agreements, contracts, licences and compliance documents organised and easily accessible.
- Make sure you're fully compliant with industry regulations and licensing requirements.
If a buyer asks for licences, contracts or staff documentation and you can't produce them quickly, they'll simply move on.
4. Customer Base & Revenue Quality
Buyers hate concentration risk.
- If one customer is 40–50% of your revenue, that's a major red flag.
- Aim for no single customer to be more than 20% of your revenue – ideally 10% or less.
- Diversify both your customer base and your suppliers.
Then look at revenue type:
- Pure one-off sales are worth less.
- Recurring / service revenue (maintenance contracts, subscriptions, ongoing services) is worth far more.
Dru gives examples where simply building service and recurring revenue to 20–30% of total revenue increased the multiple from 2–3x profit to 4–5x profit on the same business.
5. Industry Position & Scalability
Buyers aren't just buying what you've built – they're buying what it could become.
- Is the business maxed out, or can it be scaled into new locations, sectors or product lines?
- Do you have a unique selling proposition – software, systems, IP or a way of operating that's hard to copy?
- Are you riding favourable industry trends, or exposed to headwinds?
6. Risk Reduction
Buyers pay more for low-risk, easy transitions.
That means:
- Cleaning up legal issues and disputes before going to market
- Ensuring strong financial stability – healthy balance sheet, sensible debt, clean AR/AP
- Taking out key person insurance on critical staff
- Documenting and mitigating operational, financial and regulatory risks
Dru's line: key-person insurance is cheaper than people think, and more important than they realise.
7. Presentation & Preparation
Just like selling a house or a car:
- A clean, well-maintained business presents better and sells faster.
- Outdated websites, dead social media pages and messy premises quietly kill deals.
Dru's firm often spends months preparing a business for sale: cleaning up financials, tightening documentation, fixing risk issues, and sharpening presentation.
There's no strict "season" for selling businesses – but preparation is everything.
A Simple Case Study: Same Revenue, Very Different Exit
Dru shares a simple example to make the point.
Two businesses:
- Both doing $2–4 million in revenue
- Both with around $450k in profit to start with
Scenario A – Owner Dependent, High Risk
- Owner is heavily involved
- One customer is 40% of revenue
- Minimal documentation or systems
This business might sell for around 3x profit: 3 × $450k = $1.35 million
Scenario B – Owner Independent, Better Structured
- Owner hires a manager on ~70k
- Profit drops to $380k, but
- Owner is now out of the day-to-day
- Customer base is diversified
- CRM, systems and documentation are in place
This business is now far more saleable, and could attract 5x profit: 5 × $380k = $1.9 million
Same revenue. Lower profit. Higher sale price.
Because the asset is less risky, more scalable, and easier to own.
Start With the End in Mind
Dru's advice to those in business is simple:
- Pick something you actually enjoy. If you hate mowing lawns, don't start a lawn-mowing business.
- Start with the end in mind. Ask: "How do I build this so I can sell it?"
- Trade margin for scalability. Don't chase 100% of a small pie. Take 10% of a much bigger pie by building teams and systems around you.
- Refuse to be the bottleneck. From early on, design the business so it can operate without you in the middle of everything.
Don't Leave Money on the Table
Most people will only sell a business once or twice in their lifetime.
Dru has watched thousands of business sales – and the pattern is clear:
- Those who think like asset builders from early on
- Who reduce risk, systemise, build teams, and diversify revenue
…often walk away with millions more than those who don't.
Wherever you are in your journey:
It's never too late to start treating your business like an asset – but the earlier you start, the better your exit will be.
Connect with Dru Morgan
If you're running a larger business (typically $5M+ in value) and starting to think about your exit, you can connect with Dru and his team at Morgan Business Sales – Australia's leading firm in the multi-million-dollar business sale segment.
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