Joshua Novick’s Post

🚀 Procter & Gamble vs. Unilever: Who is the master of #ConsumerGoods sector❓ 📊 Revenue: 🥇P&G’s revenue ($84B TTM) is 27% above Unilever’s ($66B TTM). 🥈Unilever is still only about half the size of P&G (if you exclude their business in food/nutrition where they compete with giants like Nestlé and Danone , with brands like Lipton -correction-sold to CVC in 2022-, Hellmann's, or Ben & Jerry's). 📊 Growth Rates: P&G (Tide , Pantene , Olay , Crest , Gilette, etc)  has grown faster Unilever (Dove , Axe , Pond's , Vaseline, etc) in the past 5 years: 4.5% CAGR vs. 3% % CAGR but slower in the past decade: 1.1% versus 1.7% 🥉Other Players: Henkel: $24B (Persil, Schwarzkopf, Fa) Kimberly-Clark: $20B (Kleenex, Huggies, Scott) Colgate-Palmolive: $20B (Ajax, Colgate, Palmolive) Reckitt: $19B (Durex, Lysol, Finish) The sum ($83B) is less than the billings of P&G ($84B) 💸 #Profitability: 🥇P&G (almost $15B Net Profit) is substantially more profitable than 🥈Unilever ($7B Net Profit), more than 2❎. 📈 #MarketCap: 🏆P&G is the sweetheart of investors. Its market cap is 3X Unilever ($390B versus $135B). 🤑Unilever is currently trading at 14X EV/EBITDA (TTM) and 2.5X Sales (TTM). P&G is trading at a premium 17X EV/EBITDA (TTM) and 5X Sales (TTM). 🌍 #Global Presence: Both companies have a global footprint but with brands and products often adapted to the local tastes of consumers. They have grown through a combination of #acquiring existing successful brands and developing their own new brands. 🔍 Differences: #Procter: A pure player in home care and personal care. P&G's Sales Breakdown: 🔹Fabric & Home Care: 35% 🔹Baby, Feminine & Family Care: 25% 🔹Beauty: 18% 🔹Health Care: 14% 🔹Grooming (Gillette): 8% Geographic Sales: 🔹North America: 50% 🔹Europe: 21% 🔹Greater China: 9% 🔹Asia Pacific: 8% 🔹Latin America: 7% 🔹India, Middle East & Africa (IMEA): 5% #Unilever: Formed in 1929 from the merger of Margarine Unie and Lever Brothers. Unilever's Sales Breakdown (2023): 🔹Personal Care: 23% 🔹Home Care: 21% 🔹Beauty and Wellbeing: 21% 🔹Food Segment, Ice Creams, and Nutrition: 35% Geographic Sales: 🔹Asia/Pacific/Africa: 44% 🔹Americas: 36% (USA 20%) 🔹Europe: 20% 🔬 R&D Investment: 💊Both companies invest substantially in R&D, but P&G invests $2B (2023), twice as much as Unilever’s $1B.

#Selling your company: What is the better offer❓ 🤔 Deal A: 100% #acquisition at 5 times EBITDA (paid half in cash and half in stock) with an earn-out of an additional 1X EBITDA (of the current year) if management stays through 2027. Deal B: 51% acquisition at 6 times #EBITDA paid in cash with a put and call option for the remaining 49% at 5 times EBITDA of 2027. 🤔It’s not easy to say offhand which is better. Part of the payment in Deal A is in stock. 📈 📊 Is the company publicly traded, and is the stock liquid❓ ⏳ Is there a lock-up period that prevents you from selling the stock for a certain time❓ 💡 Do you believe the stock price is at an attractive valuation❓ In Deal B: 💼 💵 You receive 51% of the payment upfront and 49% based on future performance. 📈 Do you believe your company will perform better in the next three years, providing upside potential? 🛠️ Will you continue managing the company❓ 🌱 Are there synergies with the buyer that could enhance EBITDA growth in the coming years❓ Deal A, if the stock part is attractive, is definitely a safer deal because you receive more money upfront. However, Deal B is better if you believe your company can significantly grow EBITDA and you want to profit from future growth. When selling your company, you might encounter various deal structures that can make comparing and decision-making complex. Here are some types of deals buyers might propose: Cash Deal: 💵 The buyer pays the full purchase price in cash at the closing of the transaction. 💰 Ideal for sellers seeking immediate liquidity and a clean exit without ongoing investment concerns. Stock Deals: 📊 The seller receives shares in the acquiring company as compensation instead of cash. 📈 Ideal for sellers seeking to participate in the future growth of the combined entity, indicating confidence in the buyer's business. Hybrid Deals: 🔄 A combination of cash and stock. ⚖️ Ideal for sellers seeking a balance between securing immediate returns and maintaining investment in the business's future. Partial Minority Acquisition in 1st Stage: 🥈 The buyer initially acquires a minority stake, with plans for future stake purchases. 🌱 Ideal for sellers seeking to gradually transition out of the business while still retaining some upside. Majority Acquisition in First Stage: 🥇 The buyer acquires a majority stake without a predefined agreement to purchase the remaining shares. 🏦 Ideal for sellers wanting to secure cash while potentially retaining a minority stake without future sell-out obligations. Majority Acquisition with Future Acquisition Options: 🔄📈 The buyer acquires a majority stake with agreed-upon options (puts and calls) to buy the remaining shares based on certain multiples in the future. 🗓️ Ideal for sellers seeking to align the initial sale with a structured path to sell the remaining interest at potentially favorable terms.

🏆 Amazon is probably only a couple of years away, at current growth rates, from becoming the leader 🥇in revenue rankings worldwide, overtaking Walmart, the current leader. 📉 If you look at trailing twelve months revenue, #Amazon is only 10% below #Walmart, but it grew twice as fast in the past year: 12% versus 6%. 🏪 The two companies operate fundamentally in the same space (retail), although Amazon has a more diversified revenue split, with one-third of its business coming from non-retail sources, while Walmart's revenue is almost entirely retail. 📊 When you compare the revenue of the two companies, some interesting differences arise: 💵 TTM Total #Revenue: Walmart leads by 11% Walmart: 💲657B Amazon: 💲591B 🛒 #Retail Revenue: Walmart leads by 62% Walmart: 💲650B Amazon: 💲400B 💻 #ECommerce Revenue: Amazon is almost 4X Walmart Amazon: 💲375B Walmart: 💲100B 🏢 Physical Retail: Walmart is almost 30 times larger than Amazon Walmart: 💲550B Amazon: 💲20B 🔍 Where is Amazon a lot larger than Walmart to justify it being almost 4 times the market cap of Walmart❓ 📈 Growth: 23% CAGR in the past decade versus 3.5% for Walmart 💰 Gross Margin (TTM): Amazon $270B and Walmart $158B (+77%) 💼 EBITDA: Amazon $96B versus Walmart $40B (almost 2.5X) 📊 Net Profit: Amazon $38B versus Walmart $19B (2X more profit) 📈 On the other hand, Walmart is a very profitable retail business with almost $28B of operating profit on its $650B retail business. 💸 Amazon does not have a profitable $400B retail business, possibly because it has prioritized growth. Over two-thirds of Amazon's operating profit comes from its cloud business (Amazon Web Services), and probably the rest from its $47B advertising business (Walmart's ad business is barely $4B). Obviously, the ads business would not exist without the retail business and to an extent could be considered just another way to make money on retail. But then again, it is quite remarkable that Amazon is not profitable through the direct margin generated by the $375B of products they deliver to people's homes. 📚 A few more interesting numbers: 🔬 Amazon is super R&D intensive: it spent $85.5 billion on R&D in the past 12 months. 🏬 Walmart, being fundamentally a brick-and-mortar retailer, owns over 60% of its premises worldwide and 85% of its premises in the US. That is over 6,000 stores, $219 billion in property and equipment at cost (probably worth a lot more, since a lot of the real estate they bought was decades ago). 📏 Walmart stores have a total of 1,053,064,756 square feet, which translates to an average revenue per square foot TTM of $617. 🌐 Amazon, as I explained, is a much more diversified business. The split of revenue for 2023 was: #Online Stores: 40% 3rd Party Retail: 24% Amazon Web Services (AWS): 16% #Advertising: 8% #Subscriptions: 7% Physical Stores: 3.5% 🌍 Finally, both companies are still super US-centric. Amazon only has 27% of its revenue from outside the US. Walmart: 18%

How big is #Microsoft? Really massive. Microsoft's #revenue in the trailing 12 months is almost $50 billion (+25%) more than the combined revenue of the next 10 software companies. Microsoft's #marketcap is more than double the combined market cap of the next 10 highest revenue software companies: $3,150 billion versus $1,435 billion. And finally, Microsoft's trailing 12 months' #earnings ($105 billion) are two and a half times more than the combined earnings of the same list ($40 billion). 🥇Revenue TTM Ranking (in US$ billions): Microsoft 237 Oracle  53 Salesforce 34,9 SAP 34,4 Adobe 20 Intuit 15,8 ServiceNow Now 9,5 Constellation Software Inc. 8,9 OpenText  5,9 SS&C Technologies 5,6 Autodesk  5,3 🏆Market Cap Ranking (in US$ billions): Microsoft 3150 Oracle  339 Salesforce 235 SAP 225 Adobe 205 Intuit 160 ServiceNow 144 Constellation 59 Autodesk  46 SS&C Technologies 15 OpenText  7 🎖️Earnings TTM Ranking (in US$ billions): Microsoft 105 Oracle  14,7 Adobe 6,3 Salesforce 5 SAP 5 Intuit 4 ServiceNow 1,3 SS&C Technologies 1,3 Autodesk 1,1 OpenText 0,8 Constellation 0,6

🥷¡Te compro la empresa y de paso me financias la compra! ¿Te parece bien❓ ¿Cómo puedes financiar la compra de una compañía❓ 🔹Con tu propia caja 🏦 🔹Pagando con acciones de tu compañía 📈 🔹Haciendo una ampliación de capital para captar dinero 💰 🔹Con financiación bancaria o de otras entidades financieras 🏢 🔹Combinando varios métodos 🔀 Y, por qué no, que te financie la compra el vendedor. 😎 ¿Por qué un vendedor querría financiarte la compra❓ 🔹Para dar facilidades 🔓: Esto puede aumentar las probabilidades de cerrar la operación y quizás en mejores condiciones. 🔹Porque realmente no necesita caja a corto plazo Cobrar el precio de la compraventa, más unos intereses abultados (por un riesgo que conoce íntimamente) es un buen negocio. 💸

🎵 Spotify and 🎬 Netflix may seem comparable at first glance, as they are subscription services and undisputed leaders in their respective categories of #digital #streaming content. However, they couldn't be more different. How are they similar❓ 🚀 They are both the leaders in their space: #audiovisual and #music streaming subscription services. 🏛️ Spotify was founded in 2006, Netflix launched streaming in 2007 (even though it was founded 10 years before). 💿 They both were born in the transition era from analog to digital, from CDs and DVDs (and loads of 🥷 pirating) to subscription services. 📶 They both profited from the massive increase in bandwidth at home and on mobile, as well as the surge of smartphones and smart TVs. 📈 They both went from nothing to very similar numbers of subscribers: Netflix 270 million, Spotify 239 million. How are they different❓ 🎥 Netflix created its own proprietary content, while Spotify is fundamentally an online distributor of third-party content (in particular Warner Music Group, Sony Music Entertainment, and Universal Music Group). 💰 Netflix needs to spend massive amounts of cash on producing its proprietary content (💲17B in 2024), while Spotify distributes audio content owned by creators, artists, and record labels to consumers. For every euro it earns from subscriptions and/or advertising, it distributes 70 cents to artists/labels under a "pro-rata" model. 📊 Netflix is a combination of platform and content producer, achieving a 46.9% gross margin versus Spotify's 27.6%. 🏆 Netflix's proprietary content allows it to clearly differentiate itself from Amazon Prime, HBO, or The Walt Disney Company. Many families subscribe to more than one video streaming platform due to unique content offerings. In contrast, most music streaming users subscribe to only one platform since there's little content differentiation among Spotify, Apple Music, Amazon Music, Deezer, or YouTube Music. 📉 Netflix has been growing subscribers faster, recently adding 9.3 million subscribers in Q1 2024, compared to Spotify's 3 million. 🏦 Netflix is currently valued at 4.5 ✖️ more than Spotify on the stock market: 💲280 billion versus 💲60 billion. 💸 Netflix generates 2.5 ✖️the sales of Spotify in Q1 2024: 💲9370 million versus 💲3953 million. 💵 Netflix generates almost 10✖️ the free cash flow of Spotify: 💲2137 million versus 💲225 million in Q1 2024. 🌍 The audiovisual market is significantly larger than the audio market. The audio market was $28.6 billion in 2023, with $17.6 billion from streaming, while the TV & Video market is forecasted to reach $701 billion in 2024. The video streaming (SVoD) market alone is expected to reach $108 billion in 2024 (6✖️ the audio streaming market) Spotify and Netflix may share a subscription-based model and are the leaders in their respective streaming segments, but their operational strategies and market dynamics set them apart significantly.

🥇The Trade Desk and AppLovin are the big-time, fast-growing leaders in the #AdTech space. Way above all the rest. 🏆The Trade Desk's impressive growth: 🔸Revenue skyrocketed from 💲44 million (and $1M EBITDA) in 2014 to 💲1946 million (with $321M EBITDA) in 2023 😱 🔸Revenue grew by 23% in 2023 compared to 2022. 🔸The stock trades at a staggering EV/EBITDA (TTM) multiple of 141✖️. 🔸The company's market cap matches the sum of the other top 19 in the list ($46B). 🔸The market cap exceeds the combined total market cap of the leading holding groups: Publicis ($28B) and Omnicom ($17B). 🎖️AppLovin's Remarkable Rise: 🔹Revenue surged from 💲483 million (with $247M EBITDA) in 2018 to 💲3,283 million (with $1,138M EBITDA) in 2023. 🔹Revenue increased by 17% in 2023 compared to 2022. 🥷What is truely impressive is AppLovin's $1.4 billion TTM EBITDA, over 4✖️the TTM EBITDA The Trade Desk is able to generate. 🔹AppLovin's EBITDA is 30% more than the next 19 players combined ($1,077 million). 🔹ThAppLoving is trading at 22X EV/EBITDA (TTM), that is 1/6th the multiple The Trade Desk is trading at currently. 🤔 Why the huge difference in EBITDA trading multiples❓ 💥My feeling is that The Trade Desk trades at higher multiples mainly for two reasons: it's faster growth and being perceived as a SaaS business, while AppLovin is viewed as a media business. 🏓Also I believe the market feels some discomfort with AppLovin's highly fluctuating gross margin: 70% (2023), 55% (2022), 65% (2021), 61% (2020), 75% (2019), 88% (2018). 💡 Comparative Insights: |🔸Google's #AdNetwork business, essentially an adtech competitor, was a $31 billion revenue giant in 2023, dwarfing everyone else in this adtech list. 🔸Criteo, the 3rd player in revenue, decreased sales by 3% in 2023 and barely doubled revenue from 2014 to 2023 (from $988M to $1,950M), when The Trade Desk grew 44X in the same period. 🔸Taboola (4th in revenue) grew by a mere 3% in 2023, and Outbrain (5th) decreased by 6%. Both are #nativead networks, a model that seems to be suffering. 📈 Notable Growth in viewability and #brandsafety players in 2023: 🔸DoubleVerify grew revenue a strong 26%. 🔸Integral Ad Science grew a super heathly 17%. 📉 Stagnation and Decline in #performance #marketing players. ⛔Fluent, Inc's revenue has remained stagnant over 5 years (from $281M in 2019 to $298M in 2023). ❌LiveRamp’s revenue decreased from $805M in 2015 to $660M in 2023 📊 Some Gross Margin Insights: 🔸Nexxen and DoubleVerify lead with 82% gross margin. 🔸Followed by Integral Ad Science (78%) and Innovid (76%). 🔸On the low end: MediaAlpha (18%), Outbrain (20%), Fluent (27%), and Taboola (29%) 🚀 The Trade Desk and AppLovin have established a commanding lead over their competitors, yet they still trail significantly behind Google's AdTech giant. 🔍 Do you think they will manage to start closing this gap? 💬 Can any other players rise to challenge The Trade Desk and AppLovin's dominance?

The #top25 quoted #tire manufacturers #ranking by 2023 revenue in US dollars. 💰📊 Since a bunch of people (rightly) complained that my previous post "Michelin versus Bridgestone" was incomplete, I prepared this new visual that includes Continental (the tire division) plus the Korean, Indian, and Chinese firms. 🌏🛞 Michelin $31.3B 🇫🇷 Bridgestone EMEA $30.6B 🇯🇵 The Goodyear Tire & Rubber Company $20B 🇺🇸 Continental $14B 🇩🇪 #Sumitomo $8.4B 🇯🇵 Pirelli $7.3B 🇮🇹 Yokohama Tire Corporation $7B 🇯🇵 Hankook Tire $6.7B 🇰🇷 Maxxis International $4.5B 🇹🇼 Toyo Tires $4B 🇯🇵 Apollo Tyres Ltd $3.2B 🇮🇳 Kumho Tire $3.1B 🇰🇷 Sailun Group $3B 🇨🇳 Linglong Tire $2.8B 🇨🇳 Giti Tire Corporation $2.8B 🇸🇬 MRF $2.7B 🇮🇳 Nexen $2.3B 🇰🇷 #Titan $1.8B 🇺🇸 JK Tyre & Industries Ltd. $1.8B 🇮🇳 Triangle $1.5B 🇨🇳 Prinx Chengshan Tire North America $1.4B 🇨🇳 CEAT Specialty Tyres India Ltd $1.4B 🇮🇳 Nokian Tyres plc Tire $1.3B 🇫🇮 Kenda Tires $1.1B 🇹🇼 Balkrishna Industries Limited(Unit : Balkrishna Tyre) $1.1B 🇮🇳 Missing any? 🤔

📈 ¿Qué es un #Management #Buyout (MBO)? Un Management Buyout es una oportunidad para que el equipo de dirección de una compañía (típicamente liderado por el CEO) se transforme en #emprendedores, sustituyendo a la propiedad actual. Esta operación se financia, en su totalidad o en parte, con los activos y la generación de caja de la compañía. 🏠 En esencia, para que se entienda, se parece mucho a las operaciones inmobiliarias a pequeña escala. El banco financia la mayor parte de la compra de propiedades mediante un préstamo hipotecario, utilizando como garantía el propio activo (el inmueble). La devolución del préstamo se financia con el flujo de caja generado por el alquiler de la propiedad. 💼 Para realizar este tipo de operaciones, es necesario contar con un activo y un flujo de caja constante. En el caso de un inmueble, el banco financiador tiene clara la previsión de ingresos típicos por metro cuadrado en una zona específica, basado en el historial. En el caso de una empresa, se analiza el historial de la misma y del sector para validar las proyecciones futuras. 🔍 ¿Cómo funciona entonces una compra apalancada en una micro PYME❓ En el caso de una compañía muy pequeña, por ejemplo con menos de 1 millón de generación de flujo de caja anual, el equipo de management podría aportar una parte del dinero de su propio bolsillo. El banco o los bancos, basado en el flujo de caja, aportarían también un porcentaje de la cantidad necesaria para pagar a los dueños de la compañía. 📊 ¿Cómo funciona entonces una compra apalancada en una PYME más grande❓ Si la compañía tiene un mayor tamaño, generalmente se realiza en conjunto con un fondo de #privateequity. En este caso, es probable que el fondo se convierta en el mayor accionista de la compañía, aportando entre un tercio y la mitad del capital necesario, mientras que las entidades financieras aportan el resto. El equipo de management contribuiría con una parte pequeña (para demostrar que tienen "skin in the game"), pero recibirían un porcentaje de entre el 10% y el 30% a medio plazo. 📑 En la #infografía verás explico el proceso en más detalle. ¿Eres manager y estás pensando en #comprar la #compañía que diriges❓ En Bondo Advisors podemos asesorarte sobre la factibilidad y apoyarte en todo el proceso.