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Published 11 October 2012 04:14, Updated 11 October 2012 04:28
Once an entrepreneur sells an investment it’s rare to get the chance to increase their return from it. But that is what has happened to Costa Anastasiadis and Michael Logos.
The pair appeared on this year’s BRW Young Rich after Retail Food Group bought Crust Gourmet Pizza in August.
Retail Food Group is listed on the ASX and has a market capitalisation of $325 million. It owns several food brands including Donut King and Michel’s Patisserie.
The terms of the Crust acquisition specified payments of $21 million in cash, $3 million in shares and a further amount in 12 months’ time if performance targets are met.
Anastasiadis and Logos were majority owners before the sale and were chiefly responsible for it growing from one store in Melbourne in 2002 to a 119 store national network of pizza shops.
The deal was a good one for the pair but on October 4 they received even better news.
Retail Food Group decided that after “extensive due diligence”, the original contract should be amended in favour of Crust’s vendors.
The terms are complicated but provide Crust’s former owners with a lot more cash in the short-term; by the end of the year they’ll be getting $34 million as opposed to $21 million as originally agreed.
Apart from being paid sooner, they are also entitled to up to $4 million more that they originally were.
Cases like this don’t happen often but carry a clear investment tip: when selling a business it pays to have your books in order.
The sooner a new owner can gain confidence about an acquisition, the better it will be for everyone.