ACU 0.00% 15.5¢ acumentis group limited

Agree mostly however thankfully consulting has far lower...

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    Agree mostly however thankfully consulting has far lower barriers than valuation - qualifications, associations, territories, mandates/panels, data walled gardens, and logistics (actual time to and from a location).

    Your central point though is that in a low barrier (relatively), disaggregated market, then there are only a few levers to gain and hold market share inc tech and IP, process, culture, incumbency, relationships, M&A (eg roll-ups, mergers etc). We can see ACU pulling most of these levers but we haven't seen evidence of output against this which I assume management are acutely aware of.

    The other majors are also pulling these levers so essentially the clock is ticking for ACU management to execute over the chamber pot or hand the keys over to another team. I give it around 12-18 mths for ACU management to move the SP back into 6-8X territory or submit to handing over control. It's now been a number of years since the bingle so I'm afraid that rationale is done. We are in a buoyant property market, the wind is at our back. This is why I absolutely agree the July update is pivotal. Management needs to be able to draw a line and point clearly to the new future. Another can kick down the road to me increases the chances we are a nearer-term acquisition by PE or a major but at lower multiple than hoped.

    In this type of market roll-up is a good strategy to lean on if you have access to capital / shares with value and liquidity. ACU has been executing a roll-up strategy for some time. Buy or merge with minors at 2-5X EBITDA for reval at 6-8X under the ACU roof (in theory). Pre the IT bingle ACU was able to issue shares at 60c for this strategy alongside cash payments - this made a lot of sense. However recently, with shares at all-time lows, ACU is giving away shares cheaply pursuring this strategy and therefore the economics are way off (although if I was a minor I would jump at the offer). For this to work ACU SP needs to rise into the 5-6X level at least where they can pay 2-4X for minors, bulk up and build the case for an ACU acquirer to need to pay 6-8x for control or show the market the benefits of acquisition in EBITDA terms. This works for everyone. An easy scenario, ACU buys S&P at 2.4X, issues ACU shares at 5-6X (not 2-3X as we did eek.png ), Opteon offers 7-9X for ACU knowing they themselves are moving towards 10X territory and have access to synergies/upside.

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