RE:RE:RE:RE:RE:The fly in the ointmentnavajojoe wrote: Whydunnit wrote:
I think it's also pretty common to use tiers in contracts. Like, you get 10% commission on sales but anything past 100 triggers 15%, or if there's more gold in the ground than we thought you'll get 1.5 million shares instead of 1 million. In this case in particular it seems to me that KNR simply wanted to pocket some cash, maybe to apply to the purchase price, integration costs, marketing or whatever, before sharing with the previous owners.
Possible. I guess what counts is that we got Global HVAC pretty cheap, even if we have to give them a big chunk of the profits for the first 3 years. Without Global, we would have a fraction of the revenues we now see coming in.
Crazy cheap price for what Global brings to KNR. But also look at what KNR brings to Global. Before, on tens of millions of revenue they were netting a measly $186K or something miniscule like that (and no doubt handsome executive salaries to reduce the sting). So KNR goes in, starts leveraging up the profit margin from a needle to an ever-fattening wedge. Now the previous owners, who do nothing but golf and go on vacation, are making multiples more than they were when they were slaving away at the office.
Another point on the acquisition deal. I can see Global's owners wanting some cash up front. Who wouldn't? No prob, says Ghezzi, here's some cash and all we want in return is a $4.5M cushion until we start giving you your next wads.