GREY:CHALF - Post by User
Comment by
PortlandBlazeron Oct 28, 2021 2:34pm
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Post# 34060088
RE:Why create more debt by acquiring unsuccessful business
RE:Why create more debt by acquiring unsuccessful businessFrom the CHAL press release, Cannabliss was a money losing operation, it cost $6.5 million to CHAL and was bought at 0.8x revenue. So we know revenue was $8.1 million, or $2 MM per quarter.
We know Q3 was pre-announced as $8 MM in revenue with a 46% gross margin. So unless you think Cannabliss had a negative gross margin, the acquisition will contribute to CHAL gross margin. How much and when? That's where your pro forma analysis comes in.
We also know there will be some efficiencies brought to Cannabliss. It will no longer need a president nor accounting staff, those roles can be done by CHAL. So what will the new operating margins or net margins of Cannabliss be, under CHAL ownership? Again, you can start with your pro forma analysis.
And you can also factor in that CHAL has pre-announced that they expect their corporate gross margins to rise from 46% to 54%. You can build that into your pro forma analysis.
I think your analysis will turn your frown upside down, into a smile.