Greg Roberts: Sure. I mean we’re very excited, enthusiastic about this acquisition as well as all three of the acquisitions, but leading with LPM, which we believe and based on the price we paid, it’s the most significant of the three transactions. LPM, as you can see from our release, has been around for over a decade. They’ve been operating exclusively in Hong Kong. We here at A-Mark have looked at a number of different opportunities in Asia and over the last five or six years, and we’ve never been able to complete a transaction that we thought was good for us as well as good for the other side. This transaction came together through a fairly long negotiating period and quite a bit of diligence to this point. And obviously, when you have a lot of different factors as well as an international target, it was fairly complicated for the diligence side and for us to get to a deal.
We’re very happy with the deal. We’re happy with the price we paid. We’re happy with the earn out potential here for the seller, which would be very good for us. We looked at the whole transaction as is it structured and is the risk to reward properly recognized and we think that has happened. So we’re happy with it. I think it’s important to note that historically, we were a wholesale trading company before we got into our DTC segment. And as we’ve now expanded that greatly with JM, we believe we’ve built up a tremendous amount of expertise in DTC and e-commerce retail. LPM currently is a supplier of a number of different specialty products and they supply those all around the world, both retail and wholesale. They have a number of licenses and a number of relationships with Sovereign Mints, Private Mints, different product suppliers that we believe will be very accretive to A-Mark, that A-Mark currently does not have in their wholesale segment.
LPM currently is approximately 75% to 80% wholesale and about 20%, 25% retail. So we think there’s a tremendous amount of opportunity in the region to grow the retail side of things. Obviously, we have struggled over the years by not making an acquisition or expanding in this area for the cultural reasons that we just aren’t familiar with. I think the opportunity for us to acquire the business, the customers, the intellectual property and the pipeline of products that we’ve not had access to before is extremely important. This transaction gives us the best of both worlds. It gives us a very strong wholesaler, which if you’re going to be doing business in Asia, you need a wholesaler and you need a trading desk and you need people that are used to trading both wholesale and retail and you need the right people.
And I think we’re very excited about the LPM staff, particularly the CEO and Founder, Charlie Chang. And we think we are fortunate that we’ve been able to acquire a business or we are going to acquire a business that has both wholesale and retail. Bringing in both Charlie’s local knowledge and his cultural knowledge of being in business in Asia as long as he has, as well as the expertise we bring from Rob Pacelli and his team at JM Bullion on e-commerce, we’re very enthusiastic about what the potential is. And we think that we’re well positioned right now to go there and to go to that expansion. I think we’re also closely looking at the Singapore market. We believe that LPM is a good platform for us to expand into Singapore and we think there’s some great opportunity there both from the local population as well as visitors to Singapore or people who are doing business in Singapore that are from other country or so.
We think that’s a very safe environment for us, a very safe place to expand into. We’re very comfortable with LPM in Hong Kong right now, but just see this as just a really good opportunity for A-Mark to expand outside of the United States.
Lucas Pipes : Two follow-ups on that. Should we think of this as a kind of bridgehead platform into the Asian market? And then two, kind of what is your appetite for M&A after this announcement today? Is it — look, we put some good amount here on our plate, let us digest this first or do you think you will continue to be active elsewhere around the world or North America?
Greg Roberts: For sure. I think that the platform and the people and the business that we’re acquiring really gives us a great starting point to organically grow LPM’s business in Hong Kong. So, I think it’s very important and we’ve looked long and hard at this acquisition and we’re very enthusiastic about this opportunity it’s going to give us. And I think again, just to reiterate that, we really — to expand on the e-commerce side and retail in Asia, we would have needed to either relocate or we would have needed a desk and we need logistics and storage and we would have needed to create all those things before we could have even moved into the DTC market. And so the ability to acquire this business that has both things going is really a great platform for us and we believe it will be very good and we can expand very efficiently.
As I’ve said before, one of the silver linings to a slower market and lower premiums is that, we are seeing opportunities for M&A and we are look — still continue to look at a number of potential acquisitions. And I think that the two, three months that we experienced where things were softer, it’s also very difficult on our competitors. And I have always been a big proponent of, if you buy your competitors, good things happen. And we see there is opportunity out there. And we’re still very enthusiastic about other M&A opportunities. I think the size of this transaction, the $41 million as well as the other two smaller acquisitions. I think it’s a very good size for us. It’s about 10% of our tangible net worth. I think that we are able to do this very comfortably with no new debt or without any thought of raising more money.
