- Impact of Coronavirus
- Is there something we could do together? I am not looking for money but rather mentorship. People who are either a) very arrogant or b) know little about being on the ground and turning around a business.
- Two deals
- Spire payments
- Five CRM - high churn
- Enghouse model
- Pros/cons
- Do I buy insolvent businesses or health businesses at low multiple?
- How do you get the businesses to give you equity and take the money as a loan?
Relatively small companies. MOve from breakeven to high EBITDA
20-25% EBITDA
- Cutting costs
- Cleaning out sensible contract structure
- NEARLY 100% ON SYNERGIES
- Hit rate of cross-sell / upsell is very low
- All the back-office will be centralised. Payroll, HR, IT.
Enghouse model was that it wanted the director/shareholders to EXIT irrespective. I had an operations VP, CFO, VP Sales, VP Marketing and a whole team of people.
- Exiting the CEOs after 6 months
- Deferred payments would tie to CEO's doing certain things
- Maximise the relationship with the customers.
- I would go to customers after the founder CEO introduced us
- LOT of cost in the top level management
Always think about the Exit Strategy.
Five CRM
- You have certainity
- If you dividend it out, it will take 7 years
- You ahve to assume it is a cash stream. They should understand this.
3x return on investment on 3-5 years.
- Don't do a deal just becaues you are in a rush.
Enghouse model
- They pay 5-6x EBITDA OR 1-1.5x of recurring revenue
- Min £5M of recurring revenue
- By the time the synergies (aka cost cutting) is taken into account, you are paying more like 2x EBITDA
- Larger businesses have more cost to take out.
SPIRE
- How does the licensing work on the Spire terminals?
- Some assumptions around revenue drop off of the customers
- Assume 25% drop in revenue
- Certainly not going to get paid by customers right away
CASH FLOW MODELLING.
Three conditions
- I need to understand it. If I don't, I won't invest in it.
- If I cannot see it that it must be a return
- It is always dependent on the people who are running the business.
Do they fully understand how the business works? Know the market, know the customers.