Excellent post and one that makes perfect sense at the moment, I...

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ssv135

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01/03/16

11:13

Post #: 17152558
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Originally posted by Permabear ↑

yes, i learnt that the hard way from DSH. you need stop losses for investments. though arguably there were massive issues to do with disclosure of extra debt taken on in the last 6 months prior to collapse. always trust the numbers before the words of management was my biggest lesson. i met with IR and senior mgmt and they were classic MBA soothsayers, could give a legitimate sounding reason as to why all the numbers were temporary aberrations and would soon be fixed.

the fact that a lot of people seemingly don't get on these threads is what having these kind of debt loads means for a company. debt ranks ahead of equity, fullstop. the banks are fully in control of the company's fate at this point, they will be running it solely to try and recoup their massive loans, they do not care about equity investors. NAB and Westpac have hundreds of millions on the line here and they have the legal authority to first dibs on any money SGH makes. bankers are a greedy bunch at the best of times, how do you think they will act when their jobs/careers are on the line?

the other thing to remember is most of slater's smaller acquisitions in Aus were through equity with escrow periods for directors/owners of the law firms that were bought out. a lot of those guys have now essentially sold their lives work for a pittance. a lot of senior lawyers in SGH who would have been equity compensated and heavily invested in SGH have also seen their fortunes smashed. like a fund manager, law firms are about PEOPLE, they don't have hard assets, and people can get up and leave. what do people honestly think the motivation levels of senior staff is like at slater's at the moment? i personally think a lot of them would be on the precipice of walking and going to start their own legal practices.

grech is an absolute disaster doing this to a business which has been around for almost 80 years. should be books and case studies written about this failure with his face plastered all over them.

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Excellent post and one that makes perfect sense at the moment, I sympathise with your DSH example .
The major difference with DSH and SGH is that Dick Smith had ZERO value and goodwill as a business , meaning anyone with the capital can open a chain of stores and start selling electronic goods, with Slater and Gordon on the other hand they have a huge client base and goodwill built up over generations and intellectual property and infrastructure, it's a lot easier to find shop assistants than it is to find experts in law. I think Slater Gordon will survive because of the nature of the business.
As for them getting sued? yeah right i'd like to see that.

SGH Price at posting: 45.5¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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