OK, lets follow the money. Start with the fact that eBilling generated just over $1M in EBITDA in 1H11, suggesting annualised $2M. The company states that this is before corporate overheads etc, but that is not relevant to the purchaser. And given the bullish statements from the company re the "upside" for this business, you wouldn't be out of the ball park suggesting $2.5M EBITDA in FY12.
I would put a business like this on at least a 3x multiple and with an acquirer having obvious synergies it could attract a 4x multiple (and even higher). On 3x, it is worth $7.5M and 4x $10M. Yet it was sold for ~ $3M...?? I suggest that Lawyers maybe needs a basic lesson in investment analysis #101.
Let me be the Devil's advocate here and suggest a couple of questions that we should all ponder:
1. why Lawlers? I spoke to a corporate lawyer who suggested it was an unusual for Lawyers to be given a mandate like this. He thought it would have gone to one of the more high profile administrators. Think that one through..... 2. who were the advisers? 3. were the advisers also substantial shareholders (or Note holders) and, if so, did they not have a conflct of interest? 4. if there was a conflict of interest, what caveats did the company apply to ensure that the interests of ALL shareholders were protected? 5. did the disposal of this asset create any pecuniary benefit - directly or indirectly - to those advisers? 6. where did this "independent Director" come from and why appoint someone at one minute to midnight? 7. was the independent Director an associate (friend, relative, etc) of any of the advisers? 8. what happened to the $1M in cash that the company had?
Follow the threads and I think the rat starts to take some shape and increasing odour......Si?
CXN Price at posting:
0.9¢ Sentiment: LT Sell Disclosure: Held
