Innovative Food Holdings Inc (IVFH)

[DragonKrys]

Not every fresh food delivery service deserves the same multiple. Blue Apron is in the midst of rapid growth, whereas Fresh Diet's sales peaked in 2012 at over 30M versus the 24M TTM revenues cited in the PR. A new management team was brought in last summer and, from the EBITDA figure provided on last night's call (800k YTD), it sounds like they've traded sales for margin improvement. I think it's safe to assume Fresh Diet's production and delivery infrastructure is more valuable to IVFH than it would be to anyone else on a standalone basis, hence the attractive acquisition multiple. The ultimate value in this deal will come from synergies that could take many quarters to be realized.

As for the bonus structure, I think it's welcome change. EBITDA targets alone could be abused through dilution, but the additional use of share price targets aligns management incentives with shareholders.