In the prospectus, the company mentioned that all of the proceeds would be used to fund growth initiatives through acquisitions with the target companies expected to be acquired at a 1.0x-2.5x revenue multiple, with a few prominent economics including profitable or breakeven, highly recurring revenue, customer base with high retention rate, owner operator, etc. VHI’s Price/Sales is currently at 6.0x. Although we don’t like too much share dilution, issuing shares at 6.0x P/S to purchase acquisitions at 1.0x-2.5x does look okay to us so far. The risk of dilution is still there, and we would be mindful to watch if these acquisitions do not accelerate growth going forward. The insight on whether VHI will continue to issue shares meaningfully is a little hard to predict here, however.
5i Research Answer: