Exxe Group Inc (AXXA)

[davied25]

Let’s do a calculation and put this “goodwill” thing to rest already! Take the 3 agribusinesses. The PRs for those deals say approximately:

Onyx: valued at $12 mil, 2018 revs of $5 mil
Dioni: valued at $9 mil, 2018 revs of $3 mil
Portlani: valued at $11 mill, 2020 projected revs of $6 mil

Let’s be conservative and estimate Portlani had 2018 historical revs at only $2 mil which is 33% of the projected 2020 revs and in-line with the percentages of the other two businesses.

So this means $AXXA likely values these agribusinesses between 2.3x sales (32 / 14), and 3.2x sales (32 / 10). This is actually right in line with valuations of other US agricultural businesses and averages, according to sources like MossAdams (https://bit.ly/389b6K5) and SDR Ventures (https://bit.ly/3ckmsOI).



So now that we can see the agribusinesses are well in-line for being fairly valued, let’s look at the financials from the filings and calculate goodwill.



Here’s one of the formulas (there are several) to calculate goodwill (https://bit.ly/2Ib2yrw).
Goodwill = (Consideration paid + Fair value of non-controlling interests + Fair value of equity interests) – Fair value of net identifiable assets

So it’s all right there in the filing, just do the calculation based on approximately a $32 mil valuation:

$25,758,100 (goodwill) = [$16,000,000 (consideration paid) + $16,450,782 + $35,366 ] - [1,240,985 + 5,667,063 ]

So what does this actually mean?

Since the agribusinesses have identifiable assets (like machinery, equipment, buildings and receivables) valued at $6.9 mil, but yet the business overall is fairly valued at $32 mil using a multiple of revenue it produces (that we discussed above), the remaining value has to be accounted for on the balance sheet with the instrument called "goodwill."

So take an accounting class, read a textbook or two, talk to an accountant who handles M&A deals - I dont care. But those who don’t back up their “goodwill” conjecture with accurate numbers & facts are just fooling themselves and others that they understand how this works.