Friday, November 3, 2023

Tech in Asia exit - new norm lens

Nice ending to an entrepreneurial journey. Kudos to team for working at this business for 13 years and securing what looks to be an ok outcome for early investors and founder.  We need many more such exits for our ecosystem to be considered successful!

TIA last raised 6.6m usd in 2017 led by Hanwah on a post money of about $25m usd if I remember right. In total, raised about 17.7m sgd and founder end up about 16+%

TIA did about 7.6m sgd in 2022 and reverted to loss making of about 600k. Profitable in 2021 with 900k profit on 7m. 2022 subscription weakened and they grew poorer margin production business. 

It’s also important to note that revenue growth from 2017 to 2022 is barely 6-7% per annum from 5.5 to 7.6m.  So it has plateau and is not a growth company any more. So selling is probably a good move. Remember my last post about growth being worth something only if profits are good too? TIA got the memo.. slow down growth but move from very loss making on 5.5m to nearer profits on 7.6m. 

I do think SPH media won’t overpay as a non profit funded by taxpayers but TIA shareholders also won’t sell unless in distress (I don’t think so). The number will come out in due time but my guess is between 30ish-50ish million sgd. Revenue multiple between 4-8 seems fair. Probably no meaningful PE to use. 

If use midpoint of estimate at 40m sgd, then everyone ok and it’s a decent story in terms of capital efficiency vs outcome. Management team I would expect them to be incentivized further via some form of earn out.

The interesting thing to see is post deal, whether the new SPH will be better at integrating acquired assets. It’s mostly new management so should give them benefit of the doubt. And it’s a good acquisition of production and media talent for the new entity. Also give them a regional subscriber base. The big question is how to integrate and how to resume the revenue growth using existing team  if that is the goal.

1 comment:

  1. Doubt we see a 3x in this acquisition for sure.

    ReplyDelete