RE:RE:RE:RE:RE:RE:RE:RE:RE:Q32021 results on Jan 13?
kaykay22222 wrote: Okay sorry, it's still around $8m without Offerpad. Also the gross profit from the agencies will probably be used to make more acquisitions within the year (around $4M)
The agencies have net income margins of 10-15% and gross margins of 40-60%.
$8m*0.10 = $0.8 m
$8m*0.15 = $1.2 m
This would be the money available for shareholders ($0.8m -$1.2 m) or for additional acquisition growth. I've been able to conclude that the entire business will produce cash flows of anywhere between $2 m on the low end and $4 m on the high end. With $2m in ebitda, they could borrow up to 4 times that amount or around $8m in debt. With $4 m they would be able to borrow up to $16m given their debt covenants. I'm going from memory but I believe it's 4 times ebitda. It looks as if the company likes to incentivize the acquirees with shares in the company so there is the potential for additional dilution going forward. I would like to see them use cash/debt for at least 80% of the acquired company and 20% share dilution.