Its Over, page-1600

As WTC continues to come under seige from more damning revelations from JCap, it serves to remind us of the number of "good" companies that pursued the strategy of "roll up" acquisitive growth - buying numbers . We have had seen quite a few- G8 Education, Slater & Gordon, Corporate Travel and Greencross came to mind , and while growth through acquisition by itself is not necessarily a bad strategy for some business models that depend on scale, for others it may well reflect management internal knowledge that sustaining the previous high levels of organic growth was proving to be more challenging going forwards and that the only way to appease the market (and prevent it for slashing down its sp ) with an unsatiable expectation for continuation of high y-o-y growth is to resort to buying revenues. We have seen in recent times with LVT, BTH and earlier on CAT.

What JCap says about WTC:
"I think that honestly what it shows is that WiseTech is raising money in order to buy revenue. Imagine spending 6 times revenue for a company that’s not growing? Nobody does that. You can pay a multiple of sales if it's profitable and growing fast. I think what WiseTech shows is the valuation is what enables it to raise money.
"As that collapses you’re going to find the supposed growth collapses."

https://www.copyright link/opinion/roll-up-roll-up-for-the-next-blowup-20181030-h17aki

AFR's Shapiro had previously wrote an article on this roll-up strategy about this time last year.

Trust the investment bankers with financial engineering - it works only if the company achieves integration synergies and the acquisition has a good ROI and that the acquisition was not designed to mask the true progress of its organic growth. With exception of truly visionary companies, more often than not acquisitions (in Australia) are seldom made to provide optimal returns to serve the long term interests of shareholders, especially when they are either made on excessive valuations based on future promises that never get delivered or a distraction away from the fact that their existing business is a near failure or fast becoming less relevant.