Oddbjørn Dybvad (REQ Capital) - Acquisition-driven Compounders
Far From The Finishing Post
Capitalizing on Valued Small Private Acquisitions
The insight here lies in the strategy of acquiring small private businesses, which are often undervalued compared to public companies due to information asymmetry. This presents an opportunity for companies to acquire them at low multiples, typically between four and eight times EVE beta, enabling them to enjoy high returns on capital and growth opportunities. These acquisitions are considered less risky and more manageable compared to larger acquisitions, as integration processes are less extensive and financial risks are lower. The market recognizes the skill in capital allocation by these companies through the premium valuation of their listed entities. The key for investors is the long-term perspective, as the market tends to undervalue the future growth potential of these small private acquisitions.
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