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VisasQ buys Coleman Research

By Max Friberg @MaxInex2021-08-18 19:19:53.180Z2021-08-19 05:29:46.796Z

Exciting news - VisasQ (who trades at trailing 23x sales and 120x P/E) buys Coleman Research for $102m or approximately 2.5x Coleman's sales. It's a mostly cash deal, with ~12% issued in VisasQ stock (entire deal subject to VisasQ shareholder approval).

A strong multiple arbitrage play - but also a complementary acquisition. Coleman is well-known in the market, particularly in US hedge funds and large consulting firms. VisasQ is dominant in Japan, mostly serving corporates and consulting firms. It has yet to prove itself abroad - which is a large part of the equity story to investors. Both VisasQ and Coleman are well-run firms, with experienced leadership. The deal must have been brewing for some time.

My initial thoughts:

  • Main opportunity: Strong complementarity (VisasQ has JP corporates and consulting ; Coleman has US + hedge funds and consulting)
  • Main risk: Coleman is 2x the size of VisasQ. Integration could be challenging - which culture will dominate, which IT system? etc.

What's next?

If this goes down well, the industry will notice. VisasQ might well set its sights on a European expert network. Atheneum, Prosapient or Dialectica seem most appropriate based on size - but are they also interested?
It could trigger a wave of M&A among expert networks, where other expansive and well-capitalized firms like Lynk or Capvision set out to acquire competitors.
What do you think?

  • 4 replies
  1. Max Friberg @MaxInex2021-08-19 05:29:16.521Z

    Looking closer at VisasQ's financials, the numbers look slightly different.
    VisasQ reports revenues the way most expert networks report Gross profit (Revenues - fees to experts).
    If we instead use the "Gross sales" as denominator, the trailing P/S is 14, based on today's market cap and the revenue from the last fiscal year, ending in Feb 2021.

    Using forecasted gross sales for the current fiscal year, the forward PS is 10.

    Either way you look at it, the financial structure is simply a way that allows VisasQ to execute a bold strategy. I'm excited to see where they go next.

    1. L
      In reply toMaxInex:
      Liam Sturges @liamsturges2021-08-19 07:11:17.761Z

      Very interesting indeed! Let's see what their game play to concur Europe will be.

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        In reply toMaxInex:
        Mitchel @expertopportunities2021-08-24 19:18:36.859Z

        Wonder if this is a big sign of the dam breaking. The industry needs some consolidation, and now you have a few deep pocketed players: VisasQ (public), Third Bridge is now owned private equity firms, and GLG is rumored to be a SPAC candidate. Plus, you've got a handful of upstarts like DeepBench and ProSapient with venture capital money, so they'll eventually be looking for an exit too.

        1. Max Friberg @MaxInex2021-08-25 13:08:45.283Z

          Will be interesting to see if consolidation will happen.
          I think it depends on what constitutes "the value" in an expert network.

          • If it's the expert database or IT systems, then buy-and-build should work.
          • If it's the people, culture or practices, then M&A is less effective.
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