With the FOR SALE sign above Reflect having such an unrealistic number painted on it is anyone surprised they haven’t yet been acquired?
[1]There have been some interested suitors of course (we’ll come to that in a second) but all the interested money has been way below the asking price.
Let’s start with, what we believe, are the facts:-
- Despite strenuous denials, the owners of Reflect are actively shopping the company
- Matt Schmitt might be listed as President (& Founder) but we doubt that he has had this business as his sole focus for many years now
- They will be losing one of their two big clients and there is no guarantee that they will keep the others
- They aren’t burning money and are likely cashflow positive but we don’t believe they have the funding to really grow the business significantly going forward
- Rumour from the retail sector is that they have won a small amount of business with Macy’s
- We don’t know which bank but it’s Canadian and they took that business away from Harris (what did we tell you about Harris)
So let’s get back to the subject of suitors. The owners don’t seem to realise that any price needs to be based on a multiple of EBITDA but it also has to adjusted for risk on older accounts (it could of course also be a deal based on earnout metrics related to ongoing cash flow but we are not sure that any of the owners want to hang around what with all their other business interests).
Their three big accounts are also ALL at an age when it’s time for a refresh of hardware and software – which obviously doesn’t help when you are trying to shop the business.
Bottom line we think it truly is time for them to reflect and take a lower offer – did we say that USD 3 Million is too much?
1 Comment To "Time To Reflect (And Take A Lower Offer)"
#1 Comment By Bill Warren, CEO, Reflect On 17 February 2012 @ 16:40 @736
WOW – once again you embarrass yourself. At least you’re consistent.
Adrian, you know it’s my fiduciary responsibility to consider professional and strategic merger and/or acquisition offers on behalf of the investors. That much is true. However, at the same time, we would never do anything that would adversely affect our customer base. They are job 1 for us.
Matt Schmitt is one of the most intelligent in store shopper marketing strategists on the planet and we work tirelessly everyday to help our clients succeed in their respective market segments. However, you are right – Reflect is not his sole focus. He also does a lot with his church, charitable causes and his family. You probably forgot to check into those facts.
As for dialogue regarding wins/new customers – customers will share their stories with the market place when and if they want to, not us – we will not publicize what our clients are doing without their permission. The great thing is that we’ve had another wonderful year. Come by our booth at DSE.