[MUSIC] I’d say the one of the main points in doing the business analysis is the strategy of the company. Now you've seen in business schools, on in many manuals or textbooks how to define strategy. What is the meaning of strategy? There are courses and courses about strategy. And there are some people who say that, well it's about the longterm goals of the company. There are many other definitions. The one I like the most actually is why are clients buying from me? So why am I good to my clients? So what is the specific things that make me good to my clients? And in this case, we know that they are very specific, three things, right. The first one is that the prices are low, so we have lower prices than competitors. And this is a very good point of a strategy. People come to us because we are cheaper than the competition. As simple as that. Second is that we have good and quick service. I mean if you have good service and people are cordial with you and then they give you a very good service and fast service, you are very happy with the service. And then the third one is that we have variety of products. This case we have 200 references. As opposed to how many references in the competition, they only have 10, 10 to 20 references. they're very small, low references compared to the 200 references that we have, right. And there is one last thing that we should look to business knowledge, which is the Management Team. Now management team that who's behind this company? Who is the guy that came to the bank that we saw coming in to the bank and asking speaking to these three guys. This guy is a German guy called Mr. Lichstein, he's 41 years old. Now, do we care about who is managing the company? We're the bank and we're interested in the business. Do we really care about who is managing or not? It turns out that we do care. Because if you think for a second is not the same to ask a credit. If you are a company that is producing 2 million, 3 million in finance. That if you are a big multinational. Let's put an example. If you were for example the CFO of Hewlett Packard and you go to Bank of America to ask for a loan of $35 million euros, do you think that Bank of America Cares about whether the guy is experienced or not experienced. Your intuition is telling you that probably Bank of America doesn't care about that. Because the Bank of America is giving the loan to Hewlett Packard not to the specific guy, or the CFO, or that other CFO. Whereas in this case, it turns out that the company's so small that it's just a one man show, so you are not giving the credit to "poly panel". You're giving the credit to Mr. Lichstein, which is one person, right? And if you are giving the credit to a person, you have to ask yourself, do you trust him or not? Well, I don't know. It says that he's 41 years old, he's experienced, he has worked in the competition before, and he left the competition and he started his home business. This inspires me a lot of confidence, because when someone leaves one place and starts something it's probably because he thinks I can do better. And he's actually doing better. More references, cheaper, and very good service, and then when we ask the other third parties they say that he's very trustworthy and hardworking. So I guess you would agree with me if I say that we trust this guy. This guy seems to be a serious guy, hardworking, experienced enough and knows about the business, right. Now it doesn't mean that by trusting the guy, we give the credit straight away. This is not true, we have to analyze. But it could be true the opposite, which is, if I don't trust the guy, I might stop here and not do any more analysis, because this is not rocket science. Given a credit or understanding a business is not rocket science, the people are involved. We need to see whether we trust people, because we're working with people here. So with all this in mind, as a brief recap of the business analysis you can see that this company is selling panels for construction in the vicinity of Munich. It's not very cyclical because it does repairs as well as new construction. It's not seasonal because 55% of the sales are throughout 6 months of the year. And then the clients are many 2000, which has a good thing of being a very diversified pool but the bad thing of difficult to manage. There's one big supplier that if we lose him, we're in trouble but then we can have big discounts from him, right? The strategy we're very good in the strategy and having very clear, very good price lower than competition. Good service and fast service and then a variety of products. And then thirdly if we look into the management. It's clear that we trust the guy, the guy is experienced and it seems like he knows how to run the business. So now we will turn into the next step which is let's look into the numbers. [MUSIC]
