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Thursday, October 3, 2013

Current Record Holder for Best Multiple in an Acquistion - Hungrygowhere

Decided to write this article after reading this article on techinasia

Deal as we know it. InSing bought GTW Holdings who owns Hungrygowhere and TableDB back in mid 2012. Great deal for NYPS, CHS class mate Dennis, UofMich school mate Hoong Ann and last partner Yung Yih.  They put in a lot of pain and effort to build up the business. I met the 3 of them periodically from the day they started back in 2006/07and it is clear that they went though hard startup times like anyone else. So I am happy for them that the deal was done and that their effort was rewarded.

Deal details based on public information :

1) Sold for S$12M cash to Singtel
2) Entity integrated into InSing under Singtel Digital Media.
3) 3 main founders with 2M investment from Walden. Each of 3 main founders had about 24% stake so about 2.88M each (nice number).
4) Best deal ever in SG based on historical revenue multiple of about 16 since in FY 2012

Consider that Sgcarmart sales is only 7.5 times revenue and they had profit margins in the 30+%!

Rationale for Deal?

Singtel POV makes some sense. Great traffic on the topic of F&B. I think it Singlehandedly gives InSing good traffic moving forward if they do not screw up running HGW. There is further upside, if they can implement TableDB well. Everyone can see how strong OpenTable is as a NASDAQ listed business in USA. I also believe there was a strong acquhire element here. We may feel 2.88M is alot, but if we think that a fresh graduate scholar costs an organization about $300K and 3 years to wait... then to get these 3 founders is quite ok?

HGW POV makes great sense though i would personally feel a little early. There was probably room to grow revenues and hence profits many folds more and build the local and regional story a bit more. TableDB also was just started and so has a lot potential. But as I always believe, only the management and founders know the full details and to take money off the table will never be totally wrong.
 






2 comments:

  1. Hi Der Shing,

    Noticed the tag "scholars" which was not mentioned in the article. Were the founders scholars? If so, the transition onto an entrepreneurial path is worth a story itself.

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  2. Dennis is psc scholar from lse/Cambridge I believe. Scholars can make decent entrepreneurs but we will never know as most are too comfortable by e time bond ends. But govt needs the talent attraction and retention tool.

    ReplyDelete