For the acquisition of Lingfeng Factory, Duke's Mi Company cannot hold on, but the Sal Company still supports it. After all, in terms of scale, Lingfeng is just a small pit, and the Sal Company has enough strength to hold on. But if the acquisition of a big man makes it impossible for even the Sal, there will be no bigger person in front of everyone.

When Cai Siqiang mentioned this causal relationship, Dong Feng and Zhao Jianwu understood it.

In Europe, it is not easy to go bankrupt even if a company cannot be completed. Banking a company in Europe is a very expensive thing. The compensation for many workers is not a decimal. If you don’t solve these, don’t think about walking. Otherwise, you will just wait for endless lawsuits. Unless you are already alone and have nothing to do with you, there is no way for others to do anything. If you still have a family and have a job, you will never give up if you don’t lose all your money.

In addition, Zhao Jianwu also had problems calculating the total capital needs of the acquisition. He thought that a listed company with a market value of US$500 million or US$600 million could buy it directly for so much money. In fact, in most cases, it is impossible to buy it with such a little money.

The acquisition plan will trigger a premium phenomenon that investors value the most.

If the acquisition plan is initiated, the stock price will definitely rise after the news is revealed. This kind of tender offer must be announced in advance, so that public stock holders can decide whether to hold or sell based on the acquisition offer. In this case, ordinary investors will definitely be reluctant to sell when seeing a tender offer, so it is difficult to acquire shares at a fair price.

Foreign stock markets are different from domestic ones. Uncovered operations are difficult to work abroad. If you secretly hoard and acquire them before the news is announced, the feasibility is also very low, because of the transparent information disclosure mechanism, investors can obtain stock trading information. In this way, once there is any abnormal movement of a certain stock, people will soon find out.

It is precisely because it is so difficult to acquire stocks from the public that generally, people rarely choose to start with small public shareholders, but directly negotiate a merger plan with major shareholders. If the major shareholder is eager to take it off, it is very likely that the transaction price of the stock will be lower than the market price. That is, the major shareholder will cash out at a discount.

However, this usually rarely occurs. Only companies with very serious problems and slim prospects will have discount transactions. Usually, tender offer is a premium. Companies like Tomtom with small market value usually have a premium for initiating tender offer. According to general estimates, Cai Siqiang thinks that it would be good to be able to acquire 50 or 60% of the shares at that time for US$500 million to acquire 50 or 60 million.

This kind of small-cap company has no big problem with double the acquisition premium. You should know that Google's acquisition of a company as big as Motorola Mobile has a purchase price of up to 63% compared to the closing price of Motorola Mobile shares. Therefore, if you want to acquire the controlling stake in Tomtom, the expected total transaction price exceeds US$500 million.

For a while, Sal obviously did not have so much cash for this huge acquisition. If the acquisition was to be forcibly implemented, the short-term financing loan would definitely exceed more than half, which means the loan would be about 300 million US dollars. Although, in terms of Sal's current situation, it would be very difficult to obtain this short-term acquisition bridge loan.

However, once this loan is taken, the sal company will be responsible for repaying the loan of tens of millions of dollars a month. Such high debt makes Cai Siqiang feel really scary.

Although Sal's revenue will be approximately one billion US dollars next year, this is estimated and not real cash. Once this acquisition is launched, not only will the company's existing funds be invested, but all the loans for the middle bridge of the acquisition must be invested in, which is equivalent to putting all the entire family in.

In this way, the company's cash flow at the end of this year and the beginning of next year will be very dangerous, because the company's real money has been invested in acquisitions, and it has to bear heavy debt repayments every month, not to mention the sharp increase in expenses after the stall is opened. This fragile cash flow arrangement will be cut off as long as the market fluctuates slightly, and it may not be broken. If such a situation really happens, not only will the Tomtom not be able to be kept, but the Saal company will also be dragged down in the worst case.

This terrible ending is not that it is impossible, but that the probability of it happening is very high. After all, market changes are too difficult to predict, and a good product may not have any sales channels. Sal's current relatively certain income is the advertising revenue of Sal's Chinese and English versions, which is about RMB 20 million per month, and the English version is about US$50 million per month.

Other income uncertainties are relatively strong.

So Cai Siqiang disagrees with such a risky and radical approach. After all, the current development momentum of SAL is already very ideal. If it is destroyed by the implementation of this radical plan, everyone here will be heartbroken. So even if it is a one-percent possibility of failure, Cai Siqiang will not allow it to happen.

Cai Siqiang spread the reasons and consequences of this risk. Dong Feng and Zhao Jianwu understood it, and after listening, they were silent. Indeed, relying solely on Sal's own funds and financing to do this acquisition, the risk is indeed not ordinary.

This is simply a snake swallowing an elephant. Sal, who is still very thin, wants to swallow an old company that has been founded for more than 20 years. This imagination is a little too rich.

"Since our company cannot get it, I think it's better to do this. We might as well acquire it through financing. Anyway, venture capitalists are chasing us and investing money, but in this way, we have to admit the financing cost." Dong Feng thought for a while and said.

To be honest, if there is still a way to think about it, no one here is willing to make a hole. Although the valuation of Sal's financing is as high as 10 billion US dollars, everyone's current vision and appetite are completely different. Therefore, no one will be satisfied with this price. Because if the current momentum continues to develop and survive next year, the revenue exceeds one billion US dollars, Sal will definitely not be the price.

Venture capital companies have certain methods for valuing the companies they invest in. One of the simplest common algorithms is company value = predicted price-to-earnings ratio x company's profit in the next 12 months. According to this method, sal company belongs to the software industry. The price-to-earnings ratio of this industry is about 30 times. The expected profit this year is about 300 million US dollars, so sal's basic valuation = 30x3 = 9 billion US dollars.

Of course, start-ups generally cannot get the industry's average price-to-earnings ratio, and usually have to give a discount. It is just that due to the rapid development of SAL and its unique technology, although this valuation is still relatively high, venture capitalists still recognize it.
Chapter completed!