1. Inexpensive Market Share. Buy Now.
If you have time for only 3 lines, you might find the following text worth reading :
Now is the time to acquire cheap market share; it will generate improved cash
flows and increased market power. Let’s talk about how you can improve the
performance of your portfolio of companies.
“T
his crisis is going to impact everyone’s business. In a negative way. Retail chains
will sell less merchandise, banks will lend less money and funds will invest less
capital in local companies.” Should all this be true, we would recommend you to
just exit the market. Actually, we would also exit the market and get jobs in the public sector.
But we are here because we see sound business opportunities in Romania. One of them is
euphemistically called market consolidation, but what the local market will experience is best
described by “market shake-out”. Therefore, we believe that the coming shake-outs will purge
the local competitive landscape and we hope that your portfolio companies will ride the tide
instead of becoming economic seafood.
Investors are always on the lookout for economic profits. As such, the companies you invest in
will always have to improve the way they create value. There are four major financial footprints
to track their progress: (1) operational profits or (2) support costs (the non-operational
baggage we gladly carried around while the good times lasted) or (3) the usage of employed
capital and, lastly, (4) the company’s market share.
All these four footprints are now affected by lower sales forecasts and this is the point where
market opportunities emerge. Your investees should acquire ailing competitors in order to buy
low-priced market share which means more market power and, ultimately, more cash.
Entrepreneurs seem stuck in a state of denial as EBITDA multiples plummeted in the last few
weeks. However, economical reasoning will soon overcome their reluctance and sellers /
investees will shortly listen to your business proposals with more keenness.
W
e could use a few more pages for telling you about the business opportunities we
see in Romania and this region of Europe. But we think it is more profitable for
you to meet us and discuss how actionable business information can propel your
business further towards a more profitable future.