Pinned straw:
Austco today announcing the acquisition of NZ-based call system solutions provider and Austco reseller, G&S Technologies. I don't know about others but I find it very difficult to play armchair quarterback on acquisitions. There are just too many factors, like working capital pegs and balance sheet health, that are completely unknown unless you're in the tent. However, what we can say based on what's available to us:
- 3.5 times EBITDA - tick. It's in line with other acquisitions they've done, which have so far proven successful. They're maintaining price discipline.
- The EBITDA conversion % is roughly in line with the existing Austco business - tick. On that measure at least seems to be of reasonable quality.
- Strengthens direct sales capacity - tick. They've been doing this across multiple regions and it's been working so far.
- Up to 75% funded by scrip, at Austco's discretion - tick. Give them skin in the game and preserve cash. Yes, it's somewhat dilutive but there's always going to be a trade off.
- It's a meaningful addition - tick. It roughly represents half of Austco's business from 12 months ago. They've grown considerably since so probably represents about a quarter of FY25 business but still significant.
Only slight quibble is that they didn't take the opportunity to update on the order book but I'm nit picking.
[Held]
I wouldn't think so, other than the earn out being done 75% in AHC Shares which as @Noddy74 points out is a good thing.
In AHC's half year accounts they had AU$15m in cash & Equivalents and had very healthy Free Cash Flow.
Total consideration for this acquisition will be ~NZ$10m (AU$9m). They have paid NZ$8m upfront with 75% of the remaining NZ$2m paid Shares I certainly don't see the need to do another cap raise as a result of this acquisition.
