xman as to your point, of growing EPS through acquisition, I actually like it for few reasons.
1) you can expand your scope of offering, eg.. imagine RXP acquiring a technology company in the field of data protection, with an edge in the field of encryption, now beside the cross selling into other RXP clients. the company, on the whole, has more to offer to new clients with a great need in this area of data protection. so you start to leverage on the in-house solution, and the broader your offering the more you become a one stop shop.
2) many times when a company acquires another one in the tech sector ( private company that is ) the purchase price can be based on a multiple of 4 x Ebitda, so a 3 million next year estimated EBITDA will be a 12 million purchase price, now as a public company on the ASX, an IT company will have a share price valued at 7 or 8 x Ebitda, so the purchase of 12 million has increased to a market value of 21-24 million for the purchasing comp.
3) then there is synergies, cost's cutting and cross selling.
over all it can be very positive and a game changer.
Melbourne IT, MLB is a great example of a company turnaround and rising from death,
executing its transformation based on new acquisitions.
all is good, providing you did not buy a lemon ( due diligence), one pays a good price, and the new acquisition adds to your scope of offering and gives you a particular edge.
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