00:21:33 · Mikk, Andrea Allegrini
[00:21:33] S0: Now when it comes to the acquisitions you've done so far, you mentioned smallest has been like 300,000, the largest one eight million. So it's a pretty large gap. So moving forward, do you see you still keep acquiring those small tiny tiny businesses with revenue less than 1,000,000? Or it's... It works for you because you can integrate them so well? [00:21:54] S1: We like them a lot actually because they come at a low price and they gave e e... Above all, when you already have a company on the same territory, you can exploit lots of synergies. For example, we did an acquisition last year on the Adriatic Side of Italy. It was it's called Salvucci, and he was the local competitor of a company that we already had. And it was a company doing 1,000,000 turnover. So we bought it at a good price, and the integration was 100% managed by the local manager. So for us, it was maybe one of the best deal ever closed. So we merged them. We closed our house. We closed the offices of the company. We bought. We... And and now we basically are monopolist in that city. And this is a good strategy. So to go on building this local monopolist, maybe staying away from big cities like Milan or Rome, where you have high competition, price issues, while Italy is made of lots of little cities where you have lots of customary, mainly residential business in HVAC. And so if we are able to build these local little local monopolies, our strategy is it means it's working.
00:21:54 · Andrea Allegrini, Mikk
[00:21:54] S1: We like them a lot actually because they come at a low price and they gave e e... Above all, when you already have a company on the same territory, you can exploit lots of synergies. For example, we did an acquisition last year on the Adriatic Side of Italy. It was it's called Salvucci, and he was the local competitor of a company that we already had. And it was a company doing 1,000,000 turnover. So we bought it at a good price, and the integration was 100% managed by the local manager. So for us, it was maybe one of the best deal ever closed. So we merged them. We closed our house. We closed the offices of the company. We bought. We... And and now we basically are monopolist in that city. And this is a good strategy. So to go on building this local monopolist, maybe staying away from big cities like Milan or Rome, where you have high competition, price issues, while Italy is made of lots of little cities where you have lots of customary, mainly residential business in HVAC. And so if we are able to build these local little local monopolies, our strategy is it means it's working. [00:23:22] S0: When it comes to capital allocation and more specifically deal structures, you've done so many. Maybe you can summarize like what has been the acquisition multiple, the average one and how does the you said there is no earn out for the sellers. So can you share more of of of the deal structures?
00:23:22 · Mikk, Andrea Allegrini
[00:23:22] S0: When it comes to capital allocation and more specifically deal structures, you've done so many. Maybe you can summarize like what has been the acquisition multiple, the average one and how does the you said there is no earn out for the sellers. So can you share more of of of the deal structures? [00:23:39] S1: Okay. Today, didn't... We I have never did earn out because we bought companies from sellers willing to retire. So maybe in the future, if you are buying a company from a young guy willing to help us in our strategy, maybe he will jump on board. And in that case, could be that earn outs will be implemented. In average, we buy four, 4.5x EBITDA, plus net financial position added on top. And with that, we use also to deduct the severance, which is the biggest debt that those company have. But it's, as you know, it's a long term debt for workers, so it's not that important for us and we pay we have to pay 3040% upfront and the rest in two three four years if it's possible so that the cash generated by the operation can basically pay itself the deal. And this is really powerful. [00:24:40] S0: So the businesses asset light, debt free, cash conversion is high. What is your take when it comes to the capital allocation in a way that how much depth are you actually using when doing those deals, when structuring those deals?
00:24:40 · Mikk, Andrea Allegrini
[00:24:40] S0: So the businesses asset light, debt free, cash conversion is high. What is your take when it comes to the capital allocation in a way that how much depth are you actually using when doing those deals, when structuring those deals? [00:24:56] S1: Have a ratio between a net financial position and EBITDA, which is less than 1.5. So we can push a little bit more on the financial leverage. We have a very good standing with our banks. In general, we are not willing to raise any equity by doing capital increase because we have well written in our mind the per share concept, which is our mantra today. So we are not willing to dilute ourselves and our shareholders. And maybe we can add some... We can get some money, for example, by issuing some bonds, for example, but pure debt. So according to what we actually need because we are not asking or raising 10,000,000 if we don't have opportunities where those 10 millions can be spent. So it's always a matter of growing, but we prefer to grow slow to grow fast. So with no rush, we don't need to buy €10,000,000 EBITDA per year. We prefer to be, again, very prudent. And if a deal is not convincing us, we are not closing it. So prudence is our main approach today.
00:24:56 · Andrea Allegrini, Mikk
[00:24:56] S1: Have a ratio between a net financial position and EBITDA, which is less than 1.5. So we can push a little bit more on the financial leverage. We have a very good standing with our banks. In general, we are not willing to raise any equity by doing capital increase because we have well written in our mind the per share concept, which is our mantra today. So we are not willing to dilute ourselves and our shareholders. And maybe we can add some... We can get some money, for example, by issuing some bonds, for example, but pure debt. So according to what we actually need because we are not asking or raising 10,000,000 if we don't have opportunities where those 10 millions can be spent. So it's always a matter of growing, but we prefer to grow slow to grow fast. So with no rush, we don't need to buy €10,000,000 EBITDA per year. We prefer to be, again, very prudent. And if a deal is not convincing us, we are not closing it. So prudence is our main approach today. [00:26:19] S0: You being a public company, what are some of the pros and cons when it comes to buying those small tiny companies from those aging owners? Because they might think that, oh, it's a public company. They might be maybe not afraid, but they're like, obviously feeling honored, you going after them. But does the does the process is any way more complex because they are public versus you wouldn't... You would be private?
00:26:47 · Andrea Allegrini
[00:26:47] S1: No. With with the seller, it's it's something that give us standing. So they can trust us because we are we are a public company. On the other side, it's true we are public. We are listed on the EGM listing, which is the one in Italy for micro and small caps, even if in the last days, we reached more than EUR 100,000,000 market cap, which is really good. But yes, in terms of also the relationship with investor, it's good because we have we built over the years a very good investor base, mainly abroad with a few institutional Italian funds still inside. And they help us a lot, mainly when it's about capital allocation. So we have very active shareholders. And mainly they teach us and we used to talk often about roll up experiences abroad because it's it's something that it's more common in The US in The Nordics rather than in Italy where we don't have so many roll ups or serial acquirers you know and so knowing that our strategy has already worked in other countries is really important, and it helped us also to understand the real potential of our roll up progression that is tailored, I would say, on our economy. So again, fragmentation, little companies run by the seller. So the seller is the one main show in most of cases. So we need to adapt the strategy to the actual scenario that we find in Italy.