Sharks, fair points, and I can't disagree to an extent. Personally I feel the evaluation and comparison should not be the strategy itself, but how that strategy is executed.
In this instance, I think inorganic growth was necessary to establish the scale needed to drive future growth for this business and expedite the opportunities available.
If in hindsight it proves the company slightly overpaid and integration was bumpy, but we get out the other end with a profitable tech company spitting out free cash in the mobile space with a vast DCB footprint, then I think from a business perspective the acquisition will be deemed a success.
Where I would argue behavior being repeated is if in 6-12 months time track performance has not improved, debt levels are not reduced and all of a sudden an acquisition is flagged with a cap raise and more debt. Then I would probably be selling my holdings.
If Management integrate track, gradually improve performance and remove debt, then I am happy for further inorganic growth to occur.
Dom seems like a very ambitious person looking to expand this business. However it needs to occur sensibly and systematically. The one thing I like about him is he is open and forthright about his past. He acknowledges what went wrong and is determined to learn from that. He did his balls big time with Destra. No doubt he wants to rectify that for himself this time by making this a success.
Only time will tell
CM8 Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
(20min delay)