Hmm, this one is a long while ago. From memory they overpaid for several of the businesses in the roll-up. I was given the impression by a broker after the fact that they might have been mislead as to the value of a couple of the businesses. But I really don't know whether the fault lay with the directors (and their lack of due diligence) or whether there was something more nefarious going on. To be honest, when I checked it out originally I thought they were paying top dollar for a couple of the entities and I was silly enough to take part anyway (having seen a couple of roll-ups work very well in other industries). That was my bad.
I have a feeling the directors were willing to pay whatever they needed to just to get the roll-up done when a couple of the individual businesses were actually in industries that were going backwards anyway. So I feel there was a lack of quality in some of the underlying assets from the get go. Not sure that there is much to learn from this but to do your due diligence - which you are doing, so well done! I haven't looked at RPM (and have interests elsewhere, so won't be) so can't comment at all on it.
All the best.
4WD Price at posting:
34.5¢ Sentiment: None Disclosure: Held
