Sources:-
i. How disruptive are they? What do they do that is better, cheaper and faster than what others are already doing
ii. Is the business model sustainable or is it just an idea or a multi-billionaire’s wishful thinking on space travel or making life multi-planetary or colonizing Mars – don’t forget he’s using Corporate Finance 101 i.e. other people’s money
iii. Who is running the show: do they have the expertise, the know how, the experience, and do they still have a raging fire in their bellies (i.e. passion); and don’t forget to ask how much they are paying themselves
iv. When will they be cash flow positive or EBITDA positive
v. How does their valuation compare with the industry average – are there any specific reasons why they should be valued at a premium to the industry.
i. If the US Feds are anything to go by, the pickup in inflation is “transitionary” (to quote Neal Freyman of Morning Brew,) partly due to supply chain bottlenecks, and partly due to “surging” demand as markets and countries open up.
ii. We also need to throw into the mix, production disruptions last year, ongoing government stimulus and handouts, and extra savings from less travel and holidays, and pent up demand during lockdowns.
1. From Pandemic to Endemic
i. As we had said back in Sept 2020, Covid-19 is here to stay, just like the flu
ii. Expect more variants / strains and therefore more waves to come
iii. And like flu jabs, we will have to continue to take vaccine booster shots
iv. But unlike the soothsayers, we see earlier-than-expected advancements on 3 battle fronts against Covid: preventatives, diagnostics and treatments, thanks to the availability of funding and government support
v. Case in point: our client is developing a topical spray which contains 6 antibodies that have been proven effective against certain strains – the neutralizing antibodies in the preventative application will be used to coat the mucous membrane of the upper airway to block infection by the virus
2. Travel Bubbles and Vaccine Passports
i. International travel will continue to be restricted, probably well into 2023
ii. The key here is how soon countries can achieve herd immunity (defined as when 75% of the population is vaccinated) – the Covax plan will also help
iii. In the interim, there will be travel bubbles as early as 2H 2021, starting with USA, Australia, NZ, Singapore, Hong Kong, while those with vaccine passports (i.e. those duly vaccinated) will be able to travel without having to be quarantined
3. Inflation is Transitionary
i. Main causes: supply chain bottlenecks (production disruptions last year didn’t help) and “surging” demand as markets and countries open up (coupled with ongoing government stimulus and handouts, extra savings from less travel and holidays, and pent-up demand during lockdowns)
ii.Post-Covid, we have bigger problems but that’s a different issue i.e. Capital Letters Issue No. 2 week of 12th July
i. We anticipate arrival in Asia (specifically Hong Kong and Singapore) in 4Q 2021
ii. But unlike in the US, our concern here is not frothy valuations but stifling over-regulation on the part of the authorities
1. Hiring an Advisor Who Is Not a Fiduciary
By definition, a fiduciary is a person or organization that is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.
Cornwalls Capital Australia Pty Ltd (AFS representative no. 001283354) is an authorized representative of CS & Co Manager Pty Ltd (AFSL license no. 495639). The regulatory obligations for AFS licensees and their representatives include fiduciary duties.
2. Hiring the First Advisor You Meet
While it’s tempting to hire the advisor closest to home, or the first advisor in the yellow pages, or an advisor, your friend recommends, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.
3. Not Asking about Credentials
Other than licenses, ask about capabilities, track record, past achievements, and deals or projects or mandates successfully completed.
At Cornwalls Capital, we are research-focused and therefore have research capabilities. What’s more, we are buy side driven, which means when we take up a mandate, more often than not, we already have the investors, funders and lenders that may be interested in the deal or project or opportunity.
4. Choosing an Advisor with the Wrong Specialty
One size does not necessarily fit all, nor can one put a square peg into a round hole. Not every advisor can do everything.
At Cornwalls Capital, we specialize in:
· Listings: IPOs and Back Door Listings
· Mergers & Acquisitions
· Capital Raising
5. Picking an Advisor Who Doesn’t Know How To Say No
Too often, companies surround themselves with “Yes” people who say yes more often than they should to avoid upsetting or displeasing anyone in order to keep their job.
A healthy client-advisor relationship rests on the principle that we must sometimes agree to disagree, so as to bring different, if not needful, perspectives and insights, although at the end of the day, it is the client who ultimately makes the decision, rightly or wrongly, for better or for worse.
6. Choosing the Cheapest Advisor
You don’t need to pay an arm and a leg for the best advice, but then again, best advice doesn’t come cheap. Don’t be “Penny Wise Pound Foolish” or “You Get What You Pay For”.
You need to understand how advisors are paid.
All too often, companies engage advisors who only charge success fees. These are typically advisors who don’t put in sufficient work if any at all, but success doesn’t come without hard work.
At Cornwalls Capital, we believe in putting in the commitment, the hard yards, and have no qualms doing so, and therefore like to work with clients who recognize and believe that hard work should be rewarded and compensated.
7. Hiring A Consultant Instead of an Advisor
Generally, the single largest difference between consulting and advising is the length of the relationship.
Typically, consultants are brought in to address a specific problem during a particular time.
An advisor, on the other hand, works with a company on a long-term basis, pursuing pre-set goals from the initial relationship genesis.
With the consultant, the relationship is transactional, whereas an advisor will dive into the many areas of your company to help you achieve more.
Finally beware of advisors who are driven, if not pressured, by the need to meet targets or budgets. Case in point: Initial public offerings (IPOs), for many advisors, an IPO is a means to an end, i.e. a number in their budget and their journey with you ends with the IPO. For us at Cornwalls Capital, an IPO is just the beginning of your journey.
