First off if could get my hands on 100 million for 3% its a done deal. It is very good move when you could easily get double the interest back on the money. Any negativity around this point is just plain sillyness. Complaining that Move has made this deal, and may very well be getting upto triple the return on it, makes absolutely no sense. Any deal that strenghtens a company financially should be persued and this was a stellar one.
So what is it for?
1. Gave a significant amount of cash on hand to provide financial stability to the company and to the street/investors. The chance of Move running out of money is gone helping them sail past the last quarters with burn it them. It bolstered the confidence of the street to buy, recommend and hold the shares.
Over 70% of this company is institutionally owned which is well above average. Current volatility is coming from individual shareholders but not the major holders.
2. Should the need arise to make an aquisition they now have the depth of funds to do it with without it being an immediate do or die proposition. You would want that flexibility in your organization. They purchased the small moving internet company for 9 million after the Elevation investement and no blinked an eye but without that investement it would have been a much bigger issue consuming a large portion of their cash.
3. Provided ability to invest in quicker infrastructure improvements and R&D for new product launches.
4. If the company gets aquired there will be massive legals fees that could easily approach or exceed 50 million. And this is one reason I think the money is there, but it also helped or can help with the other key points.
5. Elevation Partners are aquisition specialists, you interpret what that means in relation to the investment into Move.
--Elevation Partners are aquisition specialists, you interpret what that means in relation to the investment into Move--
We don't know that they are acquisition specialists yet. They haven't been around long enough to know.
From their website - their mission:
Elevation Partners is committed to the media and entertainment industry. We believe that changes in technology and demographics have created new business opportunities for content owners and creators, many of which exist outside of traditional media and entertainment distribution channels. Elevation�s mission is to help media and entertainment businesses develop and market great content, take advantage of new platforms and channels, and address demand in new geographies.
Elevation Partners targets investment in companies with: Unique content Potential for market leadership Management team committed to increasing shareholder value Attractive core business model Opportunities for operational improvements Potential for new growth through new licensing or strategic use of technology Potential for new growth in new geographies or through the development and deployment of new business models
I have to find the article that shared this detail. I was traveling and came across it but couldn't save it. It made it clear that they were actually aquisition specialists. That is why I have stated it a few times since learning that about them.