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Opinion

Equals' odd takeover doesn't make sense

Equals' odd takeover doesn't make sense
April 24, 2024
Equals' odd takeover doesn't make sense

Picture the scene: you’re the board of a fast-growing payments group with excellent technology, strong client relationships, a raft of revenue streams, a clear outlook, and a multi-trillion-dollar total addressable market. Profitable, brimming with good ideas and cash, and on course to boost annual sales by 36 per cent, you’ve every right to feel bullish.

But this being October 2023, the valuation of your Aim-traded shares is derisory – even after a threefold price leap in the preceding three-year post-pandemic rebound.

Your firm’s enterprise value sits at eight times analysts’ cash profit forecast, a ratio that at the current level of earnings growth will halve within two years – assuming the share price stays at its current level. Little suggests sentiment will suddenly shift. The buzz that initially greeted a recent plan to pay a maiden dividend proved short-lived. Blinded by a narrative of UK economic gloom, you sense investors wouldn’t know a home-grown success story if they fell over it.

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