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In advance of the new "M&A Hit List" element of our service, we have a post out later. "What's The Point Of M&A". Widely viewed as good for sellers, bankers & lawyers, and bad for buyers, we beg to differ. We'll be talking about $CRM a serial acquirer par excellence.
2/ $CRM, more so than most software companies, realized early that to keep its valuation multiples high even as it scaled, the key was to maintain >20-25% revenue growth.
3/ The company also realized that, by and large, the market differentiates little between acquired and organic growth.
4/ So $CRM has used acquisitions for many years to maintain high reported revenue growth, which keeps its stock price high (mostly - we'll explore later the buying opportunities that CRM's big M&A exploits can bring).
5/ And with valuable stock it can keep paying execs with a heavy bias toward stock-based comp. Leaving plenty of cashflow free to .... pay down debt used for acquisitions.
6/ To date - and we're 20 years in - this model has worked great. If you think of $CRM as just another money-eating cloud stock, you're wrong. It generates prodigious cashflow even whilst growing revenues at 20-30% p.a.
7/ That makes $CRM one machine of a business. We'll layer in detail in our blog post later. We'll add to this thread with a heads up when it's live.
