Do you have an idea of how much of their 2021/22 pipeline they have to win to achieve 2022 Rev/EBITDA target & how that compares to historical win rate? Also, what has been their historical recurring revenue rates? TIA.
1) Who are the natural strategic acquirers for this asset? Doesn't Bain's decision to borrow against their shares in 2014 imply a dearth of good exit options? A clean sale would have been preferable, no? (I understand this may be a very different company now, just trying to understand how a sale process might go.)
2) Any chance of a take-under or de-listing? I was involved in one company where Elliott held an PIK preferred stock, they then converted it to equity via a rights offering, got 90% of the equity and then de-listed the company. I recognize these guys probably want an exit, but to what extent would going dark help them?
I'm no expert but...they appear to have a lot of debt denominated in $$, while their revenue is in EM currencies. Pretty big risk, or quite costly if they hedge it. What gets you comfortable?
Great post. I used to work for IBM sales. I covered one of the big 4 banks, the global one:) IBM has since divested a lot of their BPO business. All I can add is that the margins in this business are razor thin and its cut throat. It's definitely not easy to just swap BPO providers in and out, but nonetheless, these contracts keep getting re-negotiated lower and lower as competitors under cut one another. It's brutal.
Great post, thank you for sharing and really appreciate all the in-depth work here. Looks like a really interesting situation with multiple ways to win here. A couple of quick questions / comments:
1) What's driving the wide margin ranges between comps? Could be reporting (e.g. EBITDA vs. EBITDAR), but want to ultimately understand if there are any structural differences / service mix.
2) Customer concentration here is a real risk - despite the 106 individual contracts. Unless the customer is truly run on a business unit level basis (e.g. pharma companies with brand managers for specific drugs), it's likely a corporate-wide decision. Let me know if there's anything else that got you comfortable with that risk.
3) The take-out thesis is a big part of the overall thesis - is there anything incremental that makes you think it's likely (e.g. specific acquirers, why now?, etc.). Normally I would view high insider ownership by private guys as an overhang given the supply dynamics when they register for secondaries. A sale would solve this, but would need to feel strongly that it's the ultimate outcome. Otherwise once the stock runs, it'll get sold off.
Any update on this?
Do you have an idea of how much of their 2021/22 pipeline they have to win to achieve 2022 Rev/EBITDA target & how that compares to historical win rate? Also, what has been their historical recurring revenue rates? TIA.
Interesting post. Thanks.
Two questions:
1) Who are the natural strategic acquirers for this asset? Doesn't Bain's decision to borrow against their shares in 2014 imply a dearth of good exit options? A clean sale would have been preferable, no? (I understand this may be a very different company now, just trying to understand how a sale process might go.)
2) Any chance of a take-under or de-listing? I was involved in one company where Elliott held an PIK preferred stock, they then converted it to equity via a rights offering, got 90% of the equity and then de-listed the company. I recognize these guys probably want an exit, but to what extent would going dark help them?
Thanks!
I'm no expert but...they appear to have a lot of debt denominated in $$, while their revenue is in EM currencies. Pretty big risk, or quite costly if they hedge it. What gets you comfortable?
Great post. I used to work for IBM sales. I covered one of the big 4 banks, the global one:) IBM has since divested a lot of their BPO business. All I can add is that the margins in this business are razor thin and its cut throat. It's definitely not easy to just swap BPO providers in and out, but nonetheless, these contracts keep getting re-negotiated lower and lower as competitors under cut one another. It's brutal.
Great post, thank you for sharing and really appreciate all the in-depth work here. Looks like a really interesting situation with multiple ways to win here. A couple of quick questions / comments:
1) What's driving the wide margin ranges between comps? Could be reporting (e.g. EBITDA vs. EBITDAR), but want to ultimately understand if there are any structural differences / service mix.
2) Customer concentration here is a real risk - despite the 106 individual contracts. Unless the customer is truly run on a business unit level basis (e.g. pharma companies with brand managers for specific drugs), it's likely a corporate-wide decision. Let me know if there's anything else that got you comfortable with that risk.
3) The take-out thesis is a big part of the overall thesis - is there anything incremental that makes you think it's likely (e.g. specific acquirers, why now?, etc.). Normally I would view high insider ownership by private guys as an overhang given the supply dynamics when they register for secondaries. A sale would solve this, but would need to feel strongly that it's the ultimate outcome. Otherwise once the stock runs, it'll get sold off.
Thanks for sharing the thorough work!