Buyers and Builders
00:53:33 · Eric Tan, Mikk
Adapt always beats breath, and and take B2B experts as an example, I think what we understand of the industry today compared to, you know, two years ago is is completely on a different level, Once we get in the trenches, and there's just so much, like, due diligence can tell you, there's like another 20, 30% that you really, really can't find out until you walk into the business, and then the numbers hits you in the face, it's like, oh God, like, we, we missed this out. Okay, let's just figure it out. So that's kind of the... Where we are today. [00:54:05] S0: Eric, we have to cover public markets versus private markets. Yep. You're a public company. How has being listed made acquisitions Has being listed made your acquisition process easier or harder? What has been the experience?
00:54:22 · Eric Tan
[00:54:22] S1: It is a very loaded question because I think it is both. In some ways it's easier, in some ways harder. It is harder because every acquisition is public and the market reacts in real time, and we can't really quietly test an idea before we commit. So so if, like, some of the acquisitions didn't work out, it becomes very clearly, very quickly to our shareholders, and they will come to us and ask, and we better have a good explanation for why certain things don't work out. And because we are public, it's also harder because that we are subjected to more regulation around the size of the company we can acquire and the processes that comes along with it just because we're subjected to listing rules. But on the flip side, because we are public, there are few things that our life is a bit easier. So we can get access to capital markets a bit more easily. If you wanna raise funding, I think it's a lot easier as a public company, both to access equity and debt, especially. If a private company is hard to get that that capital in in the space, like, in in serial acquirer, especially in this part of the world, and because of public, it allows us to do that. The secondary kind of benefit, which I also learned over time is because we are public company, every deal and all the terms that we agree on are publicly available. Meaning, if a founders wants to negotiate against us, they can easily go and look at the the the the SBA that we signed and the lawyers can go dig it through from our our company secretary to really understand the deal parameters. In many ways, it makes our negotiation a lot more easy because we can tell them, hey, you can look at the eight deals that we have done last year and these are the parameters that we can we can work with, right? And I'm not, I'm not trying to play poker with you, it is the reality, and because of that, it makes it a little bit easier for, the, the founders to negotiate with us, because they know, like, what they see in public is just a reality, and we are quite transparent around it, and the lawyers can go dig through all the documents, and finally, I think it's easier because it provides default trust to the seller that they know we are serious.
00:56:27 · Eric Tan
They know they can find information about us and all our materials or strategy are published online, they, they can go look through it, if they want to do reference check, they can quickly talk to some of the founders that have sold to us, and that makes life a bit easier for us sometimes, because then, I've walked into many meetings where they are, they know exactly what we do, they have spoken to people that have worked with us, in some extreme cases, they even know who my family members are, and they, they say, hey, like, I know your wife, or I know your, your, your, your partners, etcetera, and, and well, it, it, it is a bit like crazy, but at the same time, just makes life a bit easier because it's all publicly available, but that is kind of build up over time, so like three, four years ago, we have to do a lot of explanation, today, we do less of the outbound, there's a lot more inbound of of prospect as well. So, so it's really depending on the the devil that you're choosing. But if I were to kind of roll back time, I think it might, we probably would benefit from being private a little bit longer before we go public, just so that we have time to build up the foundation and and I can can can be a bit more patient earlier on without the public market kind of scrutiny before it go public, but, you know, we have been through it, it's very painful, but I think we are we are getting the better end of it now.
00:57:48 · Mikk
[00:57:48] S0: Do you ever have any conflicts with those quarterly reports, numbers versus having this long term thinking of what you guys want to build? And maybe investors, for example, sometimes don't understand what exactly you see versus what they see.
00:58:05 · Eric Tan
[00:58:05] S1: Yeah. Definitely. I think this is a constant struggle over the last few years where we try to educate the market, and there's a few aspects, so, one, because of what we do, and, and Malaysia, we follow IFRS, accounting standard, and, and as a result, M and A driven strategy will result in a lot of non cash accounting that hits our income statement, even though that on a cash flow basis, it doesn't matter, like, this is a fine, but because of, no, accounting standards, the P and L looks a bit weaker, if you don't adjust it, so that we would then need to explain to our shareholders, like, what it means, and, in in our market, it's not very common. What we do is not very common, so there's extra explanation that that we need to do. That's one. Two is, there are, the strategy we take on is also not quite straightforward, meaning we rely a lot on on inorganic growth and we have a whole team built around it in our part of the world. It's not very common. So, there's a lot of education that needs to be done and and to assure them that hey, like, what we are doing actually is not that new, right? Like, there are many established company in the world, that, that has been there, done that, so the education process is quite tricky, so every now and then, yeah, we do, we do get confronted with, some shelters, kind of questions around, hey, like, why, why is your P and L looking a certain way? Can you explain a little bit more? We, we kind of accept that, that it's just a reality, and we have to educate the market, but it's getting better as, as we go. So, today, I think I'm doing a slightly better job in identifying investors that I think would be suitable for our kind of model. There's a bit more long term thinking that think in years rather than in quarters. And I think it is a kind of learning over, over the years where now I know, okay, if I meet a certain kind of investors, I want to spend more time with them, because they have invested in other compounders in the past, and, and there are lesson learns, from, from that end. Yeah, So, I think from time to time, we do get kind of questions or, I guess, existential crisis when it comes to quality earnings versus long term thinking.
01:00:16 · Eric Tan, Mikk
But I'm very fortunate that we do have quite a supportive group of shareholders, including Patrick himself, that rethink in years, in decades, that can help kind of filter out the voice, right? And he provides, he's almost like the, I guess, the the the sound of reason or or the confidence pill where other shareholders will be okay, like, you know, Patrick is in it. That's that's kinda stick stick around with it as well. So I think there are there are always a conflict like that. We just try to manage it and stay like level headed and very principal based rather than get pulled by different shareholders just because they try to optimize for short term gain. [01:00:56] S0: Eric, this is great. I mean, I really enjoyed the conversation. What you built is is very different. I'm sure many people would like to ask more about maybe the expo side, maybe the software. It's just one company CRM. Everyone understands this, but maybe the digital media as well. So where can they reach out if they would like to maybe ask additional questions? Who knows? Maybe invest. [01:01:19] S1: Yeah. Definitely. I'm always available on my email, Eric@CatchaDigital.com. You can find me on LinkedIn. You can find us on our website, catchadigital.com. All the information out there. All the contacts are there. So happy to get fielded with different questions. [01:01:35] S0: Okay. And guys, are you coming to the Stockholm again next year? [01:01:39] S1: Definitely. 100%. [01:01:40] S0: Okay. Awesome. So, again, thanks, Eric, for doing this, and talk to you very soon.