5 Reasons To Like SGN, page-2

I'd love to accept that one sided view (I hold the shares after all) but it ignores too many important points. (For the record, I hold the shares because I believe it's good value, not because I think it's a good business). The whole business model is flawed - buy successful companies because their sale multiple is less than the group's P/E ratio to boost the share price. Unfortunately, the businesses rarely perform as well under the corporate management than they did when they were private. Rather, the founders sell at the peak. Possibly negating all of this are the 'synergy benefits', however IMHO and experience they are normally illusory at best. I would wager that the various companies in STW often spend more time competing with each other than external competitors. They are judged by HO on their individual performance and thus lack incentive to contract work to sister companies at higher prices than they would pay to external vendors. Further, they fear internal competition taking work once introduced to the customer so keep the contacts to themselves.

Thus, destructive internal competition plus HO overheads and interference leads to the business model being flawed. (Cases in point, Blue Freeway - if anyone remembers them and Photon - now Enero).