Buy Public Companies Using A VC Mindset

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During his recent interview on The Acquirers Podcast with Tobias, David Barr, President & CEO of Pender Capital Management discussed Buying Public Companies Using A VC Mindset. Here’s an excerpt from the interview:

Tobias: When you’re looking at something like this, how do you think about valuation? Do you have your VC hat on when you’re looking at something like this? How do you think about it?

David: There’s two aspects. We wear our VC hat, and what that really allows us to do is conceptualize what the bull case scenario is. Where could this company be in five years, if they execute, how they think they’re going to, or we think they’re going to? Then, the other nice thing we can do is and what was great is we saw one of their competitors taken out by private equity, just do a private market value check.

ProntoForms today is trading at a lower multiple than what one of their competitors was acquired for about two years ago now. Having that market data point on what private market value is, but then also understanding from a cash flow perspective what the business is worth, and then having that bull case scenario built into where we think the company could go, it all frames how we value the business today.

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