A good roll-up can be long and enjoyable. No no, I’m not talking about the lolly. The type of roll-up I’m going to be talking about can be much sweeter or sourer depending on your timing and how it was put together.
If you had your ears open, you would have been privy to the worst kind of roll-ups. The type that blew up. ABC learning’s collapse of child-care roll-up, from what was then the world’s largest operator of child care operator. In more recent times, there were Slater and Gordon (law firms roll-up) and Retail Food Group (restaurant franchises roll-up).
The road is indeed littered with disasters.
The difficulty in sustaining a successful roll-ups is structural. As the holding company becomes larger, it requires even larger acquisitions to keep boosting its revenue and profits. The integration then becomes harder and more error-prone. Add debt into the equation and the mix can be even more explosive. Continue reading
The energy utility sector has provided its fair share of headlines this year. From crippling blackouts in SA, stand-offs between AGL and the Australian government over the Liddell coal power station to soaring energy prices, it has certainly been a talked about issue.
One company that can form part of the solution is Locality Planning Energy (ASX: LPE). LPE is an electricity retailer (largely in QLD) that specialises in serving strata communities. In a strata community, each lot pays its separate network and metering charges. Locality Planning Energy comes in and installs a parent meter and thus consolidates the network and metering charge for the strata. After this procedure is completed, the strata then becomes an embedded network with LPE as the electricity retailer. Continue reading
Scale. It’s a fickle thing. All companies want to harness its absolute potential, yet only a few really are able to fully utilise it. Every company who made the jump from a microcap used it. It is one of the oldest theory in economics, yet many microcap investors overlooks it. One aspect particularly overlooked is when a company is sub-scale. Continue reading
In my previous post I mentioned the impact management can have and how taking a longer term view can be profitable. In Quickstep (ASX: QHL) there is a situation where a change of management might have provided a positive catalyst for a change in the long term value of the business.
Quickstep started in 2001 as an R&D company out of WA to commercialise their patented Qure process for composites manufacturing. The technology is valuable as it provides a way for fast curing of composites compared to the more traditional autoclave based manufacturing. Additionally, it has other advantages such as greater design flexibility, reduced capital investment and other cost savings. Continue reading
Jumbo Interactive (ASX:JIN) is an Australian online lottery seller. It has a simple enough business model, yet it was the complete opposite of BPF in terms of its moat and the impact to my portfolio. It is (still) one of my best investments. The reason why it was misjudged by the market was due to 2 main reasons: internal short-term woes AND a misunderstanding of the strength of its business model.
Bulletproof (ASX: BPF) is a cloud services provider in Australia and New Zealand. It has 3 main businesses: private cloud, public cloud and professional services. In a nutshell, the company has previously been growing revenue and Earnings before Interest Taxes, Depreciation and Amortisation (EBITDA) significantly through organic and inorganic growth. However, things have taken a turn for the worse.