Recently more negative news from startup world than positive ones (Vizzio fraudulent founder, lomotif owner delisting/crashing, Live17 crashing etc), so it’s good to have a positive newsflow from a now considered old time entrepreneur tech Roshni who runs parentinc.
Met her way back in 2011-12, her Asianparent business just started not long. Got her involved in a founder peer group and I think her best takeaway besides hopefully some learning, is her now husband.
Long story short, she took some money from vertex and later from more investors and now just bought motherswork. Also expanded over the years to 12m usd revenue in 2021. Multiple countries and product now media and ecommerce. Only thing not so good is still very loss making at 6.9m usd losses. That’s 2 years ago during the crazy days, it seems like they got the memo to rightsize for profit and claims ebidta positive now. Time will show.
On surface looks like good buy if not too expensive. Some comments.
1) deal definitely accretive since AP still loss making. Gross margins may be worse in retail as online media is very high GP. Also helps revenue by boosting it 10-15m right away. I suspect that’s why can grow from 12m usd to 30m usd in 2 years.
2) Omnichannel as a strategy I am less sure. You can Omni.. but I think still must be either online or physical at scale first. And the skill sets to run either side are not the same. So need to build great mgmt depth for each side. So far retail Omni really strong one I can’t think of any… it’s either retail first like lulu, Charles and Keith and sell a good chunk profitably online or online first like neiwai, jd with some offline stores for presence.
3) community always works if you can build it. Whether it’s for online media, e-commerce or retail. So this part I totally agree and they have a nice niche topic.
4) MW angle makes sense too. The 2 equal founders have taken it to this size over many years. Nearing retirement at late 50s. So probably negotiating some cash and upside in stock makes sense. Esp if no one to take over.
5) 70+m usd target in 3 years is 24% growth rate on top line. I think it’s a good target and achievable if can integrate MW and expand Ecommerce sales. Issue is how do the margins look like? They are already experiencing the margin drag since starting to sell online in 2021 where revenue may have doubled due to ecommerce but the gross margins dropped further.
6) deal terms can’t tell. But can see MW Intl wing not big. 4-5m in sales and barely profitable. Local wing no filing est Sg probably similar size or slightly larger as just 2 stores. Price should be like retail valuation with maybe a slight bump as it’s not all in cash. My guess is <20m sgd depending on profitability. And likely below 10m.
Nb: parent inc issued about 1+m usd in shares to motherswork owners. So likely deal was below 10m for sure. Using high valuation shares to buy is good move if you can convince the SME owner.
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