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Can anyone here answer my naive Quindell question?
If you were S&G, and you were thinking, 'I want all those QLS industrial deafness cases', or whatever it is they do, or even 'I want all those QLS legal bods and a UK operation', why would you not:
a) wait for it to go bust, and try to hoover up all the suddenly representation-less claims & jobless staff yourself (e.g. national ad campaign), or
b) wait for it to almost go bust, and put in the best of a bunch of lowball bids?
rather than
c) pay £637m for it unprompted without any apparent competition?
The FT in particular are raising the point: how on earth do QPP or S&G shareholders know that it's a good deal?
If you were S&G, and you were thinking, 'I want all those QLS industrial deafness cases', or whatever it is they do, or even 'I want all those QLS legal bods and a UK operation', why would you not:
a) wait for it to go bust, and try to hoover up all the suddenly representation-less claims & jobless staff yourself (e.g. national ad campaign), or
b) wait for it to almost go bust, and put in the best of a bunch of lowball bids?
rather than
c) pay £637m for it unprompted without any apparent competition?
The FT in particular are raising the point: how on earth do QPP or S&G shareholders know that it's a good deal?
trashbat said:
Can anyone here answer my naive Quindell question?
If you were S&G, and you were thinking, 'I want all those QLS industrial deafness cases', or whatever it is they do, or even 'I want all those QLS legal bods and a UK operation', why would you not:
a) wait for it to go bust, and try to hoover up all the suddenly representation-less claims & jobless staff yourself (e.g. national ad campaign), or
b) wait for it to almost go bust, and put in the best of a bunch of lowball bids?
rather than
c) pay £637m for it unprompted without any apparent competition?
The FT in particular are raising the point: how on earth do QPP or S&G shareholders know that it's a good deal?
The deal and timing of it made no sense whatsoever and S&G aren't exactly fools when it comes to knowing the true value of the QLS book of cases and in terms of knowing how to value and acquire a large legal practice. It's a well trodden path to them.If you were S&G, and you were thinking, 'I want all those QLS industrial deafness cases', or whatever it is they do, or even 'I want all those QLS legal bods and a UK operation', why would you not:
a) wait for it to go bust, and try to hoover up all the suddenly representation-less claims & jobless staff yourself (e.g. national ad campaign), or
b) wait for it to almost go bust, and put in the best of a bunch of lowball bids?
rather than
c) pay £637m for it unprompted without any apparent competition?
The FT in particular are raising the point: how on earth do QPP or S&G shareholders know that it's a good deal?
Temporally it seems odd given the timing of the report into Quindells finances and practice. Anyone who knows their way around a hearing loss claim can see that the anticipated success rates and costs valuation is vastly overstated based on historical data. Those wildly optimistic outcomes have already been banked as accrued profit.
Basic cash flow principles indicate that QLS will be in significant trouble to sustain the business. Again, the time period in which it was suggested QLS would settle and turn over a hearing loss claim was laughable by anyone in the industry. It's simply not possible and I made my views clear on this a while back on this thread. Ergo, cash flow issues were always on the horizon and a refinancing or share dilution was really the only way they would keep the doors open.
I have a few friends who work at operational level at QLS. I have not voiced my opinion to them and neither have I had a discussion with them about the business, but none of it has made any sense for a long while and the S&G 'deal' is just another example of something that doesn't seem to stack up at all looking from the outside at least.
I don't know much about the inner workings of the legal profession, but taking a high level view of what QPP is, I quite agree. I just can't work out what S&G's play could be.
Certainly without S&G, they are out of operating cash, and have admitted as much.
In terms of Occam's razor, walm's reference to Autonomy is about the most sensible explanation I can think of, but like you I don't believe that S&G would do such a thing given the high profile potential of fraud in QPP's case.
Edit: the Law Gazette can't make any sense of it either, http://www.lawgazette.co.uk/analysis/comment-and-o...
Certainly without S&G, they are out of operating cash, and have admitted as much.
In terms of Occam's razor, walm's reference to Autonomy is about the most sensible explanation I can think of, but like you I don't believe that S&G would do such a thing given the high profile potential of fraud in QPP's case.
Edit: the Law Gazette can't make any sense of it either, http://www.lawgazette.co.uk/analysis/comment-and-o...
Edited by trashbat on Wednesday 1st April 11:36
Indeed. My business operates in a not dissimilar field and I would be extremely nervous of purchasing the alleged 53,000 hearing loss cases from QLS at any price.
QLS purchased these leads themselves. I would want to do significant DD on where and how they were acquired and how they have been progressed since.
I don't have the benefit of any detailed analysis so far from me to judge, but I would expect a significant discount on the value of the case load based on my own concerns, even with a heavy degree of DD having taken place. I would also possibly allow a £ provision for a bespoke insurance product if one were to be available to offer some degree of protection for any legacy issues on acquisition.
QLS purchased these leads themselves. I would want to do significant DD on where and how they were acquired and how they have been progressed since.
I don't have the benefit of any detailed analysis so far from me to judge, but I would expect a significant discount on the value of the case load based on my own concerns, even with a heavy degree of DD having taken place. I would also possibly allow a £ provision for a bespoke insurance product if one were to be available to offer some degree of protection for any legacy issues on acquisition.
Assuming S&G know what they are doing then it isn't worth waiting for bankruptcy.
Even cash-absorbers like QPP can rights-issue themselves into a protracted death which takes a while.
And given that law firms are people-driven you will see talent run for the hills (although I am amazed this hasn't happened already).
So it makes sense to pay a fair price today (from a distressed seller) in order to buy a much better business than the dregs that are left after the spiral of death.
QPP shareholders are given a choice between - cash now (although why the remaining business needs £100m is a mystery) or holding onto an asset that QPP itself claims it can't fund: "constrained capital base".
So even if QPS were worth 2x S&G's offer, it doesn't matter because there isn't an alternative bid and so the choice is a stark one.
However, I strongly suspect S&G have no idea what they are doing and are massively overpaying for smoke and mirrors.
I haven't done any work on that - I just recognise previous form from QPP when it comes to numbers.
The FT has a good point, in that QPP shareholders aren't in a position to decide whether the S&G bid is fair, but given the enormous premium implied to the previous price I don't think they can complain too much.
Particularly as the alternative is slow death.
Saying "it's a discount to QPP a year ago" just means that either the price offered is too cheap - or FAR MORE LIKELY is that QPP was massively overvalued.
Even cash-absorbers like QPP can rights-issue themselves into a protracted death which takes a while.
And given that law firms are people-driven you will see talent run for the hills (although I am amazed this hasn't happened already).
So it makes sense to pay a fair price today (from a distressed seller) in order to buy a much better business than the dregs that are left after the spiral of death.
QPP shareholders are given a choice between - cash now (although why the remaining business needs £100m is a mystery) or holding onto an asset that QPP itself claims it can't fund: "constrained capital base".
So even if QPS were worth 2x S&G's offer, it doesn't matter because there isn't an alternative bid and so the choice is a stark one.
However, I strongly suspect S&G have no idea what they are doing and are massively overpaying for smoke and mirrors.
I haven't done any work on that - I just recognise previous form from QPP when it comes to numbers.
The FT has a good point, in that QPP shareholders aren't in a position to decide whether the S&G bid is fair, but given the enormous premium implied to the previous price I don't think they can complain too much.
Particularly as the alternative is slow death.
Saying "it's a discount to QPP a year ago" just means that either the price offered is too cheap - or FAR MORE LIKELY is that QPP was massively overvalued.
walm said:
However, I strongly suspect S&G have no idea what they are doing and are massively overpaying for smoke and mirrors.
Well, in theory, PWC have done their work under closer than normal scrutiny, and S&G ought to have a good idea as a result of that, not that I have enormous faith in auditors here.Realistically QPP shareholders can't complain about getting even the thinnest bit of floating debris to cling to instead of an actual lifeboat, but S&G shareholders can.
Regardless, my second, only slightly weaker theory here is that what S&G have actually bought is the film rights to the next The Greatest Story Ever Told.
Shnozz said:
The deal and timing of it made no sense whatsoever and S&G aren't exactly fools when it comes to knowing the true value of the QLS book of cases and in terms of knowing how to value and acquire a large legal practice. It's a well trodden path to them.
Temporally it seems odd given the timing of the report into Quindells finances and practice. Anyone who knows their way around a hearing loss claim can see that the anticipated success rates and costs valuation is vastly overstated based on historical data. Those wildly optimistic outcomes have already been banked as accrued profit.
Basic cash flow principles indicate that QLS will be in significant trouble to sustain the business. Again, the time period in which it was suggested QLS would settle and turn over a hearing loss claim was laughable by anyone in the industry. It's simply not possible and I made my views clear on this a while back on this thread. Ergo, cash flow issues were always on the horizon and a refinancing or share dilution was really the only way they would keep the doors open.
I have a few friends who work at operational level at QLS. I have not voiced my opinion to them and neither have I had a discussion with them about the business, but none of it has made any sense for a long while and the S&G 'deal' is just another example of something that doesn't seem to stack up at all looking from the outside at least.
Do your friends at Quindell refer to themselves as 'Qundiellions' as well or is it just the dTemporally it seems odd given the timing of the report into Quindells finances and practice. Anyone who knows their way around a hearing loss claim can see that the anticipated success rates and costs valuation is vastly overstated based on historical data. Those wildly optimistic outcomes have already been banked as accrued profit.
Basic cash flow principles indicate that QLS will be in significant trouble to sustain the business. Again, the time period in which it was suggested QLS would settle and turn over a hearing loss claim was laughable by anyone in the industry. It's simply not possible and I made my views clear on this a while back on this thread. Ergo, cash flow issues were always on the horizon and a refinancing or share dilution was really the only way they would keep the doors open.
I have a few friends who work at operational level at QLS. I have not voiced my opinion to them and neither have I had a discussion with them about the business, but none of it has made any sense for a long while and the S&G 'deal' is just another example of something that doesn't seem to stack up at all looking from the outside at least.
heads I know?Edit: Apparently the suspension is due to a mistake in the RNS relating the £637million S&G deal.
Edited by Oakey on Wednesday 1st April 12:30
gaz1234 said:
qpp suspended - why?
Something to do with people not bothering to read the very top post on the most recent page of a thread.Although I might be wrong.
According to the Telegraph it is to do with an error in Monday's announcement.
They probably mis-wrote £63.7m as £637m or something minor like that.
According to the Telegraph source though, it's not a material error, which is balls, because QPP have been very happy in the past to correct their RNS errors on the fly without suspension. Suspension itself implies material news. It's possible that an error breaches some listing rule, especially one particular to this kind of transaction, but I have my doubts.
walm said:
If I were a betting man - and I am - I would be willing to bet an internet pint that the stock re-opens UP because QPP made a "mistake" that when corrected actually implies a better deal for QPP shareholders.
And monkeys may also fly out of my butt.
There was someone posting on LSE prior to the weekend that there'd be an RNS on Monday relating to the S&G deal and lo and behold there was and the price hit 180p before doing it's usual of going back down. Insider trading?And monkeys may also fly out of my butt.
Oakey said:
There was someone posting on LSE prior to the weekend that there'd be an RNS on Monday relating to the S&G deal and lo and behold there was and the price hit 180p before doing it's usual of going back down. Insider trading?
I think posting anything on LSE is prima facie evidence of being too stupid to benefit from insider trading.walm said:
If I were a betting man - and I am - I would be willing to bet an internet pint that the stock re-opens UP because QPP made a "mistake" that when corrected actually implies a better deal for QPP shareholders.
Well, it looks like you were right, about the latter anyway. They understated profits, apparently.trashbat said:
walm said:
If I were a betting man - and I am - I would be willing to bet an internet pint that the stock re-opens UP because QPP made a "mistake" that when corrected actually implies a better deal for QPP shareholders.
Well, it looks like you were right, about the latter anyway. They understated profits, apparently.Stocks up though - naturally.
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