…are the need of the hour.
What are the signs that we need to look out for, to know that a management is benevolent towards its co-owner?
Frugality in lifestyle and attitude is worth looking at.
What I’m trying to say is…
…that one hates to see a promoter living it up on company funds, at the cost of the company’s health.
Living it up is ok. Have the balance-sheet to justify it – first – please.
Are you debt-free? Quasi debt-free will do too.
Does your company ooze free cash-flow?
Are your employees well-paid and automatons for growth?
RoE in the 20s?
Live it up for all I care.
Take a high salary. Throw in a hefty commission.
God bless you.
I still want to co-own your company.
Any or most of these metrics not present & living it up on company money – well, nice knowing you, but no thanks.
We’re then looking for shareholder give-aways, you know,…
…dividends, bonuses, buybacks and stuff.
Again, the balance-sheet should show enough robustness to justify a giveaway.
If it doesn’t, it means that the management is trying to appease shareholders at the cost of the balance-sheet, and that’s an avoid in my book.
Look for simplicity in the annual report.
If one is getting lost in fancy words and hi-fi design, without being given the nitty-gritty at a glance, one is probably knocking on the wrong door.
Free cash-flow is a good thing. It allows for leverage to act upon opportunity and without incurring debt, among other things.
Look at deployment of net cash-flow generated from operating activities also. Deployment should be healthy. Shows growth.
Instead of looking for fad-stuff like synergy, let’s look to see if promoter action adds to the balance-sheet and makes it stronger.
These are just examples.
Sniff out shareholder-friendliness.
Put your own metrics together, to do so.