The NIMA sector is hot. Why else would KKR pay an extra $50m to secure Laser Clinics Australia (LCA) for $650 million on an earnings multiple of between 13 and 15 times? Put another way, they paid around $6.64 for each dollar of annual revenue in the expectation that their business model (joint franchise model as opposed to company owned locations) can be taken to the world. In stark contrast VTG paid 95c for each dollar of annual revenue for the Clear Complexions business. Sounds good, but unless they can rapidly grow to an annual TO of $50m+ they will struggle just as listed company Total Face Group (TFG) is presently experiencing. LCA pretty well own the market place presently and their rapid growth over the past few years suggests they will contnue to grow...but growth in this undustry is huge.
There are solid underlying reasons why growth is expected at 10% to 12% over the medium to long term. KKR paid such a massive amount because LCA has achieved "scale" and that's not easy to do as VTG will soon find out.
LCA say the franchise model (like HVN) where they are joint partners with the franchisees works better because the franchisee is more "involved". GFY has dropped the company store in favour of franchising.
If the company store approach doesn't work, this will be a balls up. One thing is VTG's favour is they do know how to run a network of company owned, geographically diverse locations. VTG will have to get their feet under the desk ASAP and really start to move this along. I do hope they have their next phases of this roll out in order, time is paramount here. Maybe old Barnacles is right to urge caution until we see the entirety of their plan. I'll join him in the saloon for a sherry rather than a wine, provided he drops the vinegar!!
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