rrufff- I am perplexed at your comments and analysis on the valuation of the combined Sulja lumberyards plus SAM.
If you are going to use multiples of revenues then it is important to use a multiple of comparable transactions.
In order to find comparable transactions you have to look to see if the size is similar - and in the case of the SAM acquisition, SAM is similar to the size of the SLJB lumberyard in terms of revenues.
You also have to look at the industry - and in the case of the SAM acquisition, SAM's industry (building products) is similar.
You also have to look at the geographical location - and in the case of the SAM acquisition, SAM's location is similar.
And finally, you have to look at the time of the acquisition - and in the case of the SAM acquisition, the timing is within months of todays valuation exercise.
So now you have an acquisition (SAM) with (1) similar size, (2) similar industry, (3) similar geographical location and (4) similar timing compared to the Sulja lumberyard valuation.
One would be hard pressed to find a more comparable transaction than the acquisition of SAM by SLJB in order to determine the valuation of the Sulja lumberyard by the use of a multiple to revenues. In this instance, the resulting multiple to revenues would be 0.10 ($0.6 million divided by 600 million shares), as stated in my previous post, giving the combined $12 million Revenue Sulja lumberyard plus SAM business a market value of $0.002 per share if we use 600 million common shares outstanding for SLJB.
Now lets look at your analysis:
You state that the combined Sulja lumberyard plus SAM business should be valued at 4 times revenue of $12 million or $48 million.
Let take a deep breath and review these figures that you have generated.
Is it reasonable to conclude that the SAM business that was acquired for $600,000 only a few months ago would now be worth $24 million? (4 times the SAM revenues of $6 million per year) as per your analysis?...this would be hard to believe, particularly with the lack of management ability that Steve Sulja, Mr. Khan and Petar Vucicevich have shown in the last six months.
Lets assume however that the SAM portion of your $48 million combined valuation stays the same as what it was valued when SLJB acquired it a few months ago, namely $600,000. This implies that the balance of the combined entity would be valued at $48 million less $0.6 million or $47.4 million.
And what do we get for this $47.4 million valuation?
We get only the sole SLJB lumberyard business, which according to these assumptions only has about $6 million in revenues ($12 million total less SAM's revenues).
I now ask you, how reasonable is it to value a lumberyard at $47.4 million that has only $6 million in revenues and has declined significantly from the previous year, at least 40%, according to SLJB management, and is located in the most depressed real estate market in all of Canada - and more than likely is losing money?
For these reasons, I believe that a valuation for the combined Sulja lumberyard plus SAM business would be closer to $0.002 per share figure than the figure of $0.08 per share that you concluded in your analysis.
AND THIS $0.002/share VALUE IS WITHOUT ANY DISCOUNT SHOULD THE COMPANY AND/OR ITS MANAGEMENT BE CHARGED WITH FRAUD BY ANY OF THE REGULATORY AGENCIES, BE SUED IN NUMEROUS CLASS ACTION LAWSUITS, HAVE ITS TRADING HALTED BY THE SEC OR HAVE THE FULL $1.5 MILLION DEFAULT JUDGMENT IN THE LOFTWERKS, INC. CASE BE ATTACHED
As previously requested of you, can you please post for us the press release where SLJB/LFWK announced that the merger of the Sulja Bros. lumberyard business with the public company LFWK was formally closed?...and in particular it would be important to obtain the date of this closing. |
