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EZCORP, Inc. Message Board

  • jacosa jacosa Jun 28, 2013 10:02 AM Flag

    For imsmedley, about purchase terms for Go Cash.

    The date filtering on this board appears to be by original posting. I asked this question in December, so even freshened it doesn't show up with the usual 3-month filter.

    There's an item that I hope I don't understand. Please, someone tell me that "At the end of each of the first four years following the closing, EZCORP will make a contingent supplemental payment equal to six times net income (subject to certain adjustments), minus all consideration payments previously paid." doesn't mean that this acquisition is guaranteed to be dilutive for at least 4 years.

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    • Just bumping this up to the first page. I'd REALLY like to be told that I'm reading it wrong (with explanation, of course)

      • 1 Reply to jacosa
      • That's a great catch and pretty interesting. Don't think it means it's dilutive, it's just that the purchase price is basically 6x Go Cash's maximum net income in any of the next 4 years. So, the purchase price will just be adjusted. If the company earns $1 each year for the next 4 years then there would be 1 payment of $6 in year 1 and then no payments for the next 3 years.

        It doesn't seem like a great way to structure it if you think the income is going to double or triple over the next 4 years though, especially with the risk levels in this industry.

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