WEBVTT 1 00:00:07.825 --> 00:00:11.655 Hello and welcome to this Vidcast, which is devoted to two 2 00:00:12.175 --> 00:00:15.135 external growth operations in the industry of call centers 3 00:00:15.755 --> 00:00:19.295 and other digital marketing services to corporations. 4 00:00:20.275 --> 00:00:24.535 The the perfectly legitimate question will be about the 5 00:00:24.535 --> 00:00:28.775 value which is created or destroyed by these operations. 6 00:00:29.195 --> 00:00:30.655 During the last 12 months, 7 00:00:30.875 --> 00:00:33.015 two operations have been announced. 8 00:00:33.355 --> 00:00:36.655 The first one is the acquisition of web held by Concentrics 9 00:00:36.655 --> 00:00:39.295 for an amount, a total amount, enterprise value 10 00:00:39.295 --> 00:00:40.935 of $4.8 billion. 11 00:00:41.675 --> 00:00:44.655 The second acquisition is performed by tele performance, 12 00:00:44.705 --> 00:00:48.375 which acquires measure health for 3 billion euros. 13 00:00:48.995 --> 00:00:50.735 Not exactly the same value, 14 00:00:50.835 --> 00:00:54.375 but the same order of magnitude, same sector as well, 15 00:00:55.175 --> 00:00:59.335 business services, digital services, marketing call centers. 16 00:00:59.725 --> 00:01:00.935 What does it mean? Call centers. 17 00:01:00.995 --> 00:01:04.455 It means that there are operators who are giving 18 00:01:04.995 --> 00:01:09.415 or receiving inbound outbound calls for existing customers 19 00:01:09.435 --> 00:01:11.775 and future and potential customers as well. 20 00:01:11.885 --> 00:01:15.175 It's about support, it's about prospects and so on so forth. 21 00:01:15.635 --> 00:01:19.175 So roughly the same price, the same industry, 22 00:01:19.355 --> 00:01:21.015 and unfortunately the same 23 00:01:21.815 --> 00:01:24.415 negative capital market reaction. 24 00:01:24.665 --> 00:01:28.655 Let's start with the concentrics web help acquisition. 25 00:01:29.005 --> 00:01:31.015 It's announced in March, 2023, 26 00:01:31.515 --> 00:01:35.535 and the company says we want to create a diversified global 27 00:01:36.335 --> 00:01:37.775 customer experience leader. 28 00:01:38.045 --> 00:01:40.135 When we look at the economics of this deal, 29 00:01:40.395 --> 00:01:42.215 it looks fairly reasonable. 30 00:01:42.715 --> 00:01:45.055 The transaction value, the enterprise value 31 00:01:45.915 --> 00:01:48.775 is $4.8 billion going to be paid in cash. 32 00:01:49.705 --> 00:01:51.375 Stock notes payable. 33 00:01:51.375 --> 00:01:53.015 We are going to discuss that in a minute. 34 00:01:53.955 --> 00:01:57.935 And web help is supposedly generating about half a billion 35 00:01:58.005 --> 00:02:00.455 dollars of adjusted ebitda, adjusted 36 00:02:00.635 --> 00:02:02.455 for stock-based compensation 37 00:02:02.515 --> 00:02:05.215 and amortization of some intangibles. 38 00:02:05.565 --> 00:02:09.535 500 million of adjusted EBITDA for transaction value 39 00:02:09.535 --> 00:02:11.895 of almost $5 billion. 40 00:02:12.275 --> 00:02:13.575 It means an enterprise value, 41 00:02:13.575 --> 00:02:17.375 which represents a little bit less than 10 years of ebitda. 42 00:02:18.365 --> 00:02:20.855 It's reasonably high for this kind of deal, 43 00:02:20.955 --> 00:02:23.655 but it's still within reasonable limit. 44 00:02:24.375 --> 00:02:27.775 Interestingly, web help had been acquired 45 00:02:28.675 --> 00:02:30.015 in 2015, 46 00:02:30.115 --> 00:02:33.935 so some years ago the sales figure was quite lower 47 00:02:33.965 --> 00:02:34.975 than the one to today. 48 00:02:34.975 --> 00:02:37.575 It was about 725 million euros. 49 00:02:38.355 --> 00:02:41.455 At that time, the company had been acquired for a multiple 50 00:02:41.555 --> 00:02:43.215 of EBITDA of 10, 51 00:02:43.835 --> 00:02:46.295 and the total value was a billion Euros, 52 00:02:46.315 --> 00:02:49.735 so the EBITDA was 100 million Euros. 53 00:02:49.875 --> 00:02:51.895 To date, it's $500 million, 54 00:02:52.195 --> 00:02:53.935 but the multiple is the same, 55 00:02:54.195 --> 00:02:57.655 so it looks quite reasonable in terms of transaction price. 56 00:02:58.325 --> 00:03:01.005 Once we have looked at the price of the transaction, 57 00:03:01.095 --> 00:03:02.845 let's have a look at the financing. 58 00:03:03.515 --> 00:03:07.045 It's a combination of cash stock and notes. 59 00:03:07.815 --> 00:03:10.085 First, the web help shareholders are going 60 00:03:10.085 --> 00:03:13.365 to receive 14.9 million shares of Concentrics, 61 00:03:13.665 --> 00:03:16.285 though at the end of the day, 22% 62 00:03:16.385 --> 00:03:21.165 of the Concentrics Plus web help group are going 63 00:03:21.165 --> 00:03:24.645 to be owned by the former web help shareholders at the stock 64 00:03:24.645 --> 00:03:27.365 price of $121 per share. 65 00:03:27.625 --> 00:03:28.645 The date is announced, 66 00:03:29.105 --> 00:03:33.605 the 14.9 million shares represent about $1.8 billion. 67 00:03:34.535 --> 00:03:36.125 While today it's a bit less 68 00:03:36.125 --> 00:03:39.245 because stock price is no more 121, it's down 69 00:03:39.245 --> 00:03:41.165 to $97. 70 00:03:42.145 --> 00:03:45.685 The seven parties upfront cash for half a billion 71 00:03:46.495 --> 00:03:50.605 Euros at that time, a Euro worth $1.08, 72 00:03:51.025 --> 00:03:54.325 so it's a bit more than $500 million 73 00:03:55.065 --> 00:03:58.685 and 700 million euros in deferred cash. 74 00:03:59.455 --> 00:04:01.645 Notes payable at the end. 75 00:04:01.905 --> 00:04:05.085 In two years time with a 2% annual interest, 76 00:04:05.095 --> 00:04:09.805 700 million Euros, it's a bit more than $700 million, 77 00:04:10.025 --> 00:04:13.805 and if you combine these two, you get about $1.3 billion. 78 00:04:14.425 --> 00:04:18.165 So basically you have 1.8 billion in stocks, 79 00:04:18.305 --> 00:04:20.565 1.3 in cash, 80 00:04:21.025 --> 00:04:25.445 but the sum of these two represents 3.1, not 4.8. 81 00:04:25.505 --> 00:04:28.845 And the reason is that now the company is going 82 00:04:28.845 --> 00:04:32.245 to integrate the former debt of web help, 83 00:04:32.415 --> 00:04:34.685 which represent about 1.7 billion. 84 00:04:34.705 --> 00:04:38.845 Though at the end of the day, $1.8 billion is going 85 00:04:38.845 --> 00:04:40.365 to be the equity increase, 86 00:04:40.905 --> 00:04:43.885 but 1.3 plus 1.7 is going 87 00:04:43.885 --> 00:04:47.765 to be the increase in the debt of the company 88 00:04:47.985 --> 00:04:51.965 of Concentrics as a group, which is quite significant. 89 00:04:52.745 --> 00:04:55.565 Now interestingly, what will be the financial structure 90 00:04:55.565 --> 00:05:00.365 of the company at the end of 2023 estimated a bid there, 91 00:05:00.585 --> 00:05:04.485 you remember 500 million plus a 1.1 billion 92 00:05:04.985 --> 00:05:09.805 for concentric standing alone, it's about $1.6 billion. 93 00:05:10.625 --> 00:05:11.725 That's quite interesting 94 00:05:11.725 --> 00:05:15.645 because it means that web help represents about one third 95 00:05:16.305 --> 00:05:20.045 30% of the total EBDA generated 96 00:05:20.185 --> 00:05:21.885 by the consolidated group. 97 00:05:22.185 --> 00:05:23.565 So it's quite an interesting 98 00:05:23.625 --> 00:05:25.845 and important transaction for the group. 99 00:05:26.465 --> 00:05:29.325 So at the end of 2023, the balance sheet 100 00:05:29.385 --> 00:05:33.245 of Concentrics plus web help, we show a total that 101 00:05:33.245 --> 00:05:35.725 of about $5.1 billion, 102 00:05:36.315 --> 00:05:40.445 including the three 3.1 additional debt consequence 103 00:05:40.445 --> 00:05:42.525 of the transaction of the acquisition of web help. 104 00:05:43.345 --> 00:05:46.445 So if you add about $3 billion of debt, 105 00:05:46.755 --> 00:05:50.725 when the additional EBITDA represents $500 million, 106 00:05:51.385 --> 00:05:54.805 it means that the incremental debt is about six times the 107 00:05:54.805 --> 00:05:58.805 incremental ebitda, which is quite high in terms 108 00:05:58.945 --> 00:06:00.165 of financing. 109 00:06:00.705 --> 00:06:04.325 The good news is that it's not going to negatively affect 110 00:06:05.025 --> 00:06:08.285 the rating of concentrates fit rating. 111 00:06:08.415 --> 00:06:10.245 Their rating agency, which is in charge 112 00:06:10.265 --> 00:06:13.645 of estimating the priority of deferred of concentrics, 113 00:06:14.435 --> 00:06:17.805 will declare that Triple B will be stable 114 00:06:18.435 --> 00:06:22.125 outlook stable in terms of rating for concentrate, 115 00:06:22.135 --> 00:06:23.285 which is quite good news 116 00:06:23.285 --> 00:06:25.445 because it means that the probability 117 00:06:25.445 --> 00:06:27.605 of default remains quite low. 118 00:06:27.915 --> 00:06:32.085 It's good credit quality, you are not that far from 119 00:06:32.705 --> 00:06:35.445 double B plus, which is another story, 120 00:06:35.785 --> 00:06:37.525 but it's still quite okay. 121 00:06:38.605 --> 00:06:40.245 A few comments on this operation. 122 00:06:41.345 --> 00:06:43.925 Of course, the price looks a little bit high, 123 00:06:44.165 --> 00:06:47.005 a little bit tight in terms of multiple, 124 00:06:47.465 --> 00:06:50.805 but it seems to be within reasonable between quotes limits 125 00:06:51.825 --> 00:06:54.685 the debt financing is a bit more challenging 126 00:06:54.795 --> 00:06:58.405 because it represents more than 60% of the enterprise value, 127 00:06:58.405 --> 00:07:00.405 which you are going to integrate in your accounts. 128 00:07:01.145 --> 00:07:03.165 As a consequence, there's quite a lot 129 00:07:03.165 --> 00:07:06.365 of debt in the past acquisition financial structure, 130 00:07:07.225 --> 00:07:09.845 but Fitch looks quite confident about the future 131 00:07:09.865 --> 00:07:14.205 of the company maintains a triple B rating, which is okay, 132 00:07:14.275 --> 00:07:18.245 even though you are two levels too notches away from 133 00:07:18.635 --> 00:07:19.645 speculative grade, 134 00:07:19.775 --> 00:07:22.005 which is an extremely dangerous situation. 135 00:07:23.145 --> 00:07:26.565 So the price is okay, the financing is a bit tight, 136 00:07:27.025 --> 00:07:31.525 and the market is absolutely dissatisfied by this operation. 137 00:07:32.105 --> 00:07:34.125 If you look at the evolution of the stock price 138 00:07:34.125 --> 00:07:36.925 of the company in the last two years, you observe 139 00:07:36.955 --> 00:07:38.205 that there are two periods. 140 00:07:38.225 --> 00:07:41.325 The first period, which is from two years ago, up 141 00:07:41.325 --> 00:07:44.845 to the moment the deal is announced as well. 142 00:07:44.845 --> 00:07:46.685 Basically the stock price is more 143 00:07:46.685 --> 00:07:49.445 or less following the NASDAQ index, 144 00:07:49.985 --> 00:07:54.085 and then there is a split from March, 2023. 145 00:07:54.265 --> 00:07:58.165 Up to today, the NASDAQ is going to go up by 20% 146 00:07:58.665 --> 00:08:01.285 and concentric stock price is going to drop 147 00:08:01.905 --> 00:08:04.085 by 25, 30%. 148 00:08:04.685 --> 00:08:06.805 A little bit of recoveries is last days, 149 00:08:07.145 --> 00:08:09.405 but definitely the market is absolutely 150 00:08:09.635 --> 00:08:11.125 unhappy with this deal. 151 00:08:12.455 --> 00:08:13.965 Let's move to the second deal. 152 00:08:14.675 --> 00:08:19.285 Tele performance wants to create a giant in the world 153 00:08:19.425 --> 00:08:21.725 of customer experience as a consequence 154 00:08:21.725 --> 00:08:23.565 of the acquisition of Measure Health. 155 00:08:24.545 --> 00:08:28.845 If we try to calculate kind of multiple EBDA multiple 156 00:08:28.845 --> 00:08:33.725 of the enterprise value, we look at the operating EBDA, 157 00:08:33.725 --> 00:08:37.325 kind of adjusted EBDA of measure oil during the first half 158 00:08:37.325 --> 00:08:41.925 of 2023, about 170 something million euros. 159 00:08:42.625 --> 00:08:45.885 You multiply by two for the end of the year 160 00:08:45.945 --> 00:08:47.965 and you get 350 million. 161 00:08:48.955 --> 00:08:53.125 It's see multiple of 8.6 compared with the acquisition 162 00:08:53.345 --> 00:08:54.845 of 3 billion. 163 00:08:55.065 --> 00:08:58.885 So 8.6 is about nine's not that far from 10. 164 00:08:59.025 --> 00:09:01.645 So basically the same order of magnitude, 165 00:09:02.665 --> 00:09:05.765 the financing is predominantly shares. 166 00:09:06.435 --> 00:09:09.725 Basically, the payment will be at the seller's choice in 167 00:09:09.795 --> 00:09:12.765 cash, 30 euros per share or in shares. 168 00:09:13.585 --> 00:09:16.085 In shares. It means that there is a conversion rate. 169 00:09:16.225 --> 00:09:17.725 So for each and every measure 170 00:09:17.825 --> 00:09:19.205 and share, you're going 171 00:09:19.205 --> 00:09:23.525 to receive 0.1382 teleperformance shares, 172 00:09:24.265 --> 00:09:27.005 and there's a limit of 1 billion euros 173 00:09:27.025 --> 00:09:29.565 of new Teleperformance shares issued. 174 00:09:29.565 --> 00:09:32.845 Because Teleperformance does not want to be diluted 175 00:09:32.905 --> 00:09:37.565 by the deal, the deal is going to be a success, obviously, 176 00:09:37.565 --> 00:09:40.845 because the main shareholders hold 79% 177 00:09:40.845 --> 00:09:42.085 of Measure health shares. 178 00:09:42.105 --> 00:09:44.565 So there's no doubt that it's going to be a success. 179 00:09:45.035 --> 00:09:47.165 They are going to receive tele performance shares, 180 00:09:47.165 --> 00:09:49.405 and at the end of the day, the share 181 00:09:50.405 --> 00:09:53.485 exchange is significantly more than the debt 182 00:09:53.485 --> 00:09:54.965 issuance in the financing. 183 00:09:55.555 --> 00:09:57.925 Very, very prudent financing. 184 00:09:59.045 --> 00:10:02.445 A few comments for this second operation, comparable price, 185 00:10:02.455 --> 00:10:05.085 comparable multiple for web help 186 00:10:05.385 --> 00:10:06.845 and measure health operations. 187 00:10:07.585 --> 00:10:11.485 But for this second operation, which is about very limited 188 00:10:11.905 --> 00:10:15.125 and conservative and prudent debt financing, 189 00:10:15.855 --> 00:10:19.085 still the market is absolutely not happy with this deal. 190 00:10:19.545 --> 00:10:21.445 If you look at the evolution of the stock price 191 00:10:21.545 --> 00:10:23.685 of tele performance gains, a CAC 40, 192 00:10:23.935 --> 00:10:26.845 which is a stock market index where the company is listed, 193 00:10:27.585 --> 00:10:29.125 you observed that there is a perfect, 194 00:10:29.535 --> 00:10:33.005 reasonably good correlation from two years ago up to 195 00:10:33.765 --> 00:10:36.525 a first moment where there is an announcement, 196 00:10:36.525 --> 00:10:40.165 which is accusations of violation of labor law 197 00:10:40.185 --> 00:10:42.605 and extremely poor working conditions 198 00:10:43.225 --> 00:10:46.805 in Latin American operations of tele four month. 199 00:10:47.545 --> 00:10:50.045 The consequence is going to be quite dramatic, 200 00:10:50.225 --> 00:10:52.885 and the stock price is going to immediately drop 201 00:10:52.985 --> 00:10:54.725 by about 30%. 202 00:10:55.515 --> 00:10:59.685 Then there will be a recovery, then will be a second drop 203 00:10:59.685 --> 00:11:01.325 because the market's a bit worried about 204 00:11:01.895 --> 00:11:05.045 these issues about human capital. 205 00:11:05.865 --> 00:11:08.085 And then when the announcement is made, 206 00:11:08.085 --> 00:11:10.805 there will be another drop in the stock price. 207 00:11:11.105 --> 00:11:12.205 And if you look at the evolution 208 00:11:12.205 --> 00:11:14.965 of the CAC 40 from the moment the announcement is made 209 00:11:15.665 --> 00:11:20.485 and today CAC 40 is stable, plus little bit positive, 210 00:11:20.905 --> 00:11:23.725 and what about tele performance minus 30%. 211 00:11:24.145 --> 00:11:27.325 So it is the same story as concentrics. 212 00:11:27.545 --> 00:11:30.085 The market reaction is very negative. 213 00:11:30.425 --> 00:11:34.285 Now, what is the reason why the market is very negatively 214 00:11:35.085 --> 00:11:36.445 reacting to these two operations? 215 00:11:37.155 --> 00:11:39.045 It's always very difficult to try 216 00:11:39.045 --> 00:11:42.085 to find out the reason why a number of people 217 00:11:42.885 --> 00:11:46.365 negatively reacted because you cannot interview them. 218 00:11:46.775 --> 00:11:50.085 There might be an explanation which deserves a detour 219 00:11:50.225 --> 00:11:52.565 to the balance sheet of these two companies. 220 00:11:53.255 --> 00:11:54.965 We're not going to have a look at the equity 221 00:11:54.985 --> 00:11:58.245 and liabilities, but at the asset side of the balance sheet, 222 00:11:58.495 --> 00:12:00.645 let's first have a look at Concentrics 223 00:12:00.645 --> 00:12:02.765 corporations balance sheet. 224 00:12:02.765 --> 00:12:06.485 When they close the account, the 30th of November, 2022, 225 00:12:07.345 --> 00:12:10.485 the total assets about $6.7 billion. 226 00:12:11.505 --> 00:12:15.605 Now, $3.9 billion are represented 227 00:12:15.865 --> 00:12:17.165 by two assets. 228 00:12:17.825 --> 00:12:20.285 One is goodwill for 2.9. 229 00:12:20.865 --> 00:12:22.925 The other one is intangible assets. 230 00:12:23.545 --> 00:12:25.525 Net of accumulated amortization 231 00:12:25.625 --> 00:12:29.285 for about 1000000002.9 plus one is 232 00:12:29.285 --> 00:12:33.685 $3.9 billion, which represents 58% 233 00:12:34.265 --> 00:12:35.445 of the total assets. 234 00:12:35.745 --> 00:12:38.645 So basically it's about the roots 235 00:12:39.025 --> 00:12:41.285 and the economic assets of the company. 236 00:12:41.825 --> 00:12:43.245 If you look at teleperformance, 237 00:12:43.635 --> 00:12:45.045 it's not exactly the same figures, 238 00:12:45.045 --> 00:12:46.605 but it's quite the same rationality. 239 00:12:47.255 --> 00:12:51.405 Total balance sheet, the end of December, 2022, 8.8, 240 00:12:51.405 --> 00:12:53.805 8.9 billion euros, 241 00:12:54.505 --> 00:12:59.485 and 4.5 billion Euros consists in goodwill 242 00:12:59.705 --> 00:13:01.085 for about 3.2 243 00:13:01.545 --> 00:13:04.485 and other intangible assets, 244 00:13:04.935 --> 00:13:06.805 which is about 1.3. 245 00:13:06.865 --> 00:13:08.445 The sum is 4.8, 246 00:13:08.505 --> 00:13:11.845 and it's a bit more than 50% of the total assets. 247 00:13:12.985 --> 00:13:14.525 Now, where do these 248 00:13:15.335 --> 00:13:18.205 fixed intangible assets come from? 249 00:13:18.435 --> 00:13:19.925 They come from external growth. 250 00:13:20.835 --> 00:13:21.845 When you buy a company 251 00:13:21.905 --> 00:13:24.005 and you control the company, you fully integrate the 252 00:13:24.005 --> 00:13:27.245 accounts, then you pay the enterprise value 253 00:13:27.665 --> 00:13:29.245 and you integrate the net book values. 254 00:13:29.395 --> 00:13:30.845 Very often there is a gap 255 00:13:30.915 --> 00:13:33.405 because the value of a company is much more 256 00:13:33.405 --> 00:13:34.485 than a net book value. 257 00:13:35.225 --> 00:13:36.485 You have to explain the gap. 258 00:13:36.825 --> 00:13:41.365 And the gap is, for example, customers, brands, uh, 259 00:13:41.365 --> 00:13:43.925 the quality of the contract you have signed 260 00:13:44.005 --> 00:13:46.565 with your customers, which is very likely, 261 00:13:46.655 --> 00:13:49.045 which explains the intangible assets, 262 00:13:49.045 --> 00:13:51.805 which you show in the balance sheet of concentrics 263 00:13:51.815 --> 00:13:52.885 until it performs. 264 00:13:53.545 --> 00:13:54.765 So intangibles 265 00:13:54.785 --> 00:13:58.085 or other intangibles about customers, customer contract, 266 00:13:58.305 --> 00:14:02.685 market share, when part of the purchasing price, 267 00:14:02.865 --> 00:14:04.085 the acquisition price, 268 00:14:04.145 --> 00:14:06.085 the enterprise value cannot be allocated 269 00:14:06.185 --> 00:14:08.365 to specifically identified asset. 270 00:14:09.145 --> 00:14:11.285 It means that there is something which is a quality 271 00:14:11.545 --> 00:14:15.365 of the organization, the talents, the people, 272 00:14:15.545 --> 00:14:19.045 the human capital there, which really had value. 273 00:14:19.185 --> 00:14:21.645 So goodwill is very much about people. 274 00:14:22.665 --> 00:14:26.765 So you understand that the two pillars of the economic value 275 00:14:26.765 --> 00:14:28.925 of these companies are their customers. 276 00:14:28.925 --> 00:14:31.445 On one hand, their people and talent. 277 00:14:31.665 --> 00:14:34.605 On the other hand, the economic challenges 278 00:14:34.665 --> 00:14:37.045 for any company on the planet including, 279 00:14:37.905 --> 00:14:39.285 and probably more important 280 00:14:39.545 --> 00:14:42.965 for Concentrics anti performance, is to attract 281 00:14:43.425 --> 00:14:46.605 and retain customers, is to attract 282 00:14:46.985 --> 00:14:48.605 and retain talent. 283 00:14:49.665 --> 00:14:50.765 The problem is what? 284 00:14:50.945 --> 00:14:53.565 The problem is that these assets are 285 00:14:53.875 --> 00:14:55.885 extremely volatile assets. 286 00:14:56.665 --> 00:14:58.765 If the customers are not happy with the quality 287 00:14:58.825 --> 00:15:02.045 of execution on your side, they're not going 288 00:15:02.045 --> 00:15:03.165 to renew the contract. 289 00:15:03.945 --> 00:15:05.045 If people are not happy 290 00:15:05.045 --> 00:15:07.565 with the new environment in which they're working, 291 00:15:07.715 --> 00:15:10.685 they're leaving and they will get a job somewhere else. 292 00:15:10.985 --> 00:15:14.005 And you know the challenge today of attracting 293 00:15:14.305 --> 00:15:17.245 and certainly retaining good people 294 00:15:17.425 --> 00:15:18.885 inside the organizations. 295 00:15:19.545 --> 00:15:23.005 So most of the assets, economic assets 296 00:15:23.025 --> 00:15:26.565 of these two companies are made of extremely volatile 297 00:15:27.165 --> 00:15:28.405 contracts and people. 298 00:15:30.065 --> 00:15:32.805 Now, it might be an explanation for the aversion 299 00:15:32.805 --> 00:15:35.925 of the stock price because both concentrics 300 00:15:35.925 --> 00:15:37.965 and tele performance, they want to grow 301 00:15:37.965 --> 00:15:39.485 and they want to show nice growth. 302 00:15:40.135 --> 00:15:42.405 Years ago, it was about organic growth, 303 00:15:42.785 --> 00:15:47.245 but today the organic growth is slowing down a bit weak. 304 00:15:47.785 --> 00:15:50.365 Now, if you want to show some growth to your investors, 305 00:15:50.625 --> 00:15:53.845 you have to replace this weak, soft arguing growth 306 00:15:54.465 --> 00:15:57.125 by something which is a bit more rough 307 00:15:57.425 --> 00:16:00.205 and accelerating external growth. 308 00:16:00.945 --> 00:16:04.805 But when you replace arguing growth by external growth, 309 00:16:05.235 --> 00:16:07.565 it's maybe not that good news. 310 00:16:08.505 --> 00:16:10.365 In September, 2021, 311 00:16:10.525 --> 00:16:13.285 I produced a film which was about MercadoLibre. 312 00:16:13.945 --> 00:16:15.165 We are in Latin America, 313 00:16:16.185 --> 00:16:18.085 and MercadoLibre is demonstrating 314 00:16:18.085 --> 00:16:21.005 that it's much better than Amazon locally. 315 00:16:22.085 --> 00:16:24.685 Interestingly, at the very beginning of the story, 316 00:16:24.685 --> 00:16:25.805 there are two competitors. 317 00:16:25.905 --> 00:16:29.765 One is MercadoLibre, whose strategy is definitely 318 00:16:29.905 --> 00:16:33.485 to attract customers, organic growth. 319 00:16:34.145 --> 00:16:37.085 The clients are going to select MercadoLibre 320 00:16:37.085 --> 00:16:39.325 because we are better than our competitors. 321 00:16:39.695 --> 00:16:43.485 There is an another competitor which decides to grow 322 00:16:43.485 --> 00:16:44.765 through excellent growth. 323 00:16:44.985 --> 00:16:48.645 So you buy the customers, you don't attract them, 324 00:16:49.425 --> 00:16:50.885 and who's going to be the winner? 325 00:16:51.415 --> 00:16:55.125 Merca Libre, which interestingly is going to in the end, 326 00:16:55.215 --> 00:16:57.445 eventually buy its competitor. 327 00:16:58.585 --> 00:17:01.405 What's very interesting in this story is that the murder 328 00:17:01.405 --> 00:17:05.085 of Merca Libre is we want to attract the customers. 329 00:17:05.595 --> 00:17:08.045 They have to select Merca Libre. 330 00:17:08.115 --> 00:17:10.565 They're not going to select Merca Libre 331 00:17:10.565 --> 00:17:14.045 because they selected somebody else, which has been acquired 332 00:17:14.185 --> 00:17:15.325 by Merca Libre. 333 00:17:16.265 --> 00:17:19.205 I'm not going to tell you that this conclusion is valid 334 00:17:19.425 --> 00:17:23.325 for any industry at any moment in the history, 335 00:17:23.905 --> 00:17:26.245 but it seems that for a number of businesses, 336 00:17:26.735 --> 00:17:30.485 attracting customers, attracting people, people 337 00:17:30.545 --> 00:17:33.125 who are happy to work within the company 338 00:17:33.785 --> 00:17:36.325 is probably a bit more performing 339 00:17:36.625 --> 00:17:40.245 and a little bit more sustainable than acquiring the clients 340 00:17:40.905 --> 00:17:42.445 and acquiring the talents. 341 00:17:42.445 --> 00:17:43.645 Because at the end of the day, 342 00:17:43.705 --> 00:17:45.725 you are not the owner of your clients. 343 00:17:46.225 --> 00:17:48.405 You are not the owner of your people. 344 00:17:48.835 --> 00:17:51.645 They decide or not to work with you. 345 00:17:52.315 --> 00:17:55.445 They are volatile and they are the value of the company. 346 00:17:56.025 --> 00:17:59.725 So probably the good news is to attract them more than 347 00:17:59.785 --> 00:18:00.845 to buy them. 348 00:18:01.975 --> 00:18:02.765 Thank you very much.