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http://www.businesstimes.com.sg/sub/news/story/0,4574,378477,00.html?
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Business Times - 26 Mar 2010
Brookstone saga enriched OSIM: CEO
Ron Sim to share learning experience in Going Global talk By CHEN HUIFEN
MUCH of the talk about M&As among SMEs has been centred on the rationale and benefits. But every M&A transaction - no matter how well planned or executed - involves a degree of risk.
One local company that understands this is OSIM International. Although its acquisition of American retailer Brookstone in 2005 did not generate the results it expected, the company came out of the whole episode 'enriched', says OSIM founder and CEO Ron Sim.
'I'm actually enriched and empowered with this experience,' Mr Sim tells BT. 'I actually won a lot of things. I would say today, nobody else has such an experience like us - a first-hand experience of a leveraged buyout, a first-hand experience of turning a financial engineering buyout into an effective company. So if you look deep, actually we are all enriched.'
One of the key things that Mr Sim took away from the US expansion was the importance of being a financially strong entity. In 2005, when it acquired Brookstone, it had to borrow $100 million to finance the acquisition. The interest payments, together with the fact that Brookstone depended a lot on the last quarter for profits, impacted OSIM's financial performance for three quarters of the year.
'I think if you look seriously into Brookstone's performance after our acquisition, actually we performed very well,' Mr Sim explains. 'When we bought into the company, the Ebitda (earnings before interest, tax, depreciation and amortisation) was low. First year, we got the Ebitda up to US$32 million. Second year, US$45 million. Third year, US$55 million. The fourth year, we're supposed to list Brookstone - in 2008. But second half of the year, the whole market crashed.
'So in terms of financial performance, we didn't do very bad. We actually did quite well. But the fundamental structure, I would have to say, fundamentally, the structure was not very strong.'
So when the financial storm struck in late 2008, the healthcare group couldn't take the blow. To cut the pain short, it undertook a huge, one-time writedown that dragged the company to a full-year loss in 2008.
But OSIM has since climbed back from the episode, most recently reporting a net profit of $23 million for the year ended December 2009. Sales for the same period climbed 4.4 per cent to $476.8 million.
To hear what OSIM founder and CEO Ron Sim has to say about his company's experience in the US market, BT and Action Community for Entrepreneurship is organising the second 'Going Global' talk featuring the man himself. The quarterly series is a platform where a business leader and trailblazer shares his company's expansion and experience in venturing overseas.
At the upcoming event on April 5, Mr Sim will share nine things that a company should consider when growing regionally or globally. The 'Going Global' talk will be held at M Hotel and it is supported by TNT. For more information, go to: www.apesnap.com/event/acebse5
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
http://www.businesstimes.com.sg/sub/news/story/0,4574,378477,00.html?
+++++++++++++++++++++++++++++
Business Times - 26 Mar 2010
Brookstone saga enriched OSIM: CEO
Ron Sim to share learning experience in Going Global talk By CHEN HUIFEN
MUCH of the talk about M&As among SMEs has been centred on the rationale and benefits. But every M&A transaction - no matter how well planned or executed - involves a degree of risk.
One local company that understands this is OSIM International. Although its acquisition of American retailer Brookstone in 2005 did not generate the results it expected, the company came out of the whole episode 'enriched', says OSIM founder and CEO Ron Sim.
'I'm actually enriched and empowered with this experience,' Mr Sim tells BT. 'I actually won a lot of things. I would say today, nobody else has such an experience like us - a first-hand experience of a leveraged buyout, a first-hand experience of turning a financial engineering buyout into an effective company. So if you look deep, actually we are all enriched.'
One of the key things that Mr Sim took away from the US expansion was the importance of being a financially strong entity. In 2005, when it acquired Brookstone, it had to borrow $100 million to finance the acquisition. The interest payments, together with the fact that Brookstone depended a lot on the last quarter for profits, impacted OSIM's financial performance for three quarters of the year.
'I think if you look seriously into Brookstone's performance after our acquisition, actually we performed very well,' Mr Sim explains. 'When we bought into the company, the Ebitda (earnings before interest, tax, depreciation and amortisation) was low. First year, we got the Ebitda up to US$32 million. Second year, US$45 million. Third year, US$55 million. The fourth year, we're supposed to list Brookstone - in 2008. But second half of the year, the whole market crashed.
'So in terms of financial performance, we didn't do very bad. We actually did quite well. But the fundamental structure, I would have to say, fundamentally, the structure was not very strong.'
So when the financial storm struck in late 2008, the healthcare group couldn't take the blow. To cut the pain short, it undertook a huge, one-time writedown that dragged the company to a full-year loss in 2008.
But OSIM has since climbed back from the episode, most recently reporting a net profit of $23 million for the year ended December 2009. Sales for the same period climbed 4.4 per cent to $476.8 million.
To hear what OSIM founder and CEO Ron Sim has to say about his company's experience in the US market, BT and Action Community for Entrepreneurship is organising the second 'Going Global' talk featuring the man himself. The quarterly series is a platform where a business leader and trailblazer shares his company's expansion and experience in venturing overseas.
At the upcoming event on April 5, Mr Sim will share nine things that a company should consider when growing regionally or globally. The 'Going Global' talk will be held at M Hotel and it is supported by TNT. For more information, go to: www.apesnap.com/event/acebse5
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
