Replies to post #48718 on EcoloCap Solutions Inc. (fka ECOS)

[deal guy]

You are I share a very different view of the likelihood of a merger. In a merger, if you value LRS as a waste company and ECOS as a distribution company (or a waste company), LRS ends up owning more than 99% of the market cap of the combined firm.

here is a simple way to think about it. ECOS has no EBIT or EBITDA so a deal would not be valued that way. If you value ECOS on trailing sales (let's say $700k for the LRS sale), the market cap is $1m. If you value LRS at 1.3, you get a value of $200m.

If you give ECOS some credit for future sales you might double get to $2m.

This doesn't take into account the relative leverage of the two firms. ECOS has a much higher component of debt financing which will impact their equity valuation.