Drayton Richdale Corporation (DRYN) is engaged in the acquisition and subsequent operation of performing private businesses and corporations for financial gain and benefit of our shareholders. Management’s strategy is to acquire multifarious businesses that will provide long-term revenue streams, balance and stability within DRYN.
In strategic planning we determine how the acquisition will enhance self-renewal and create an advantage through the purchase of the existing enterprise and integration of the target within DRYN’s holdings.
The incentive for management to complete a purchase exists when the acquisition is cost-effective for DRYN to participate in the internal development of the business in focus. For this endeavor to be viable, the following conditions must apply:
- The price paid for the target must be lower than the total resources necessary for the internal development of a comparable enterprise;
- The projected benefits must reflect the generation of long-term future values for DRYN.
It is imperative that the merit of the acquisition involve, not only the assessment of the target’s balance sheet, but also the determination of the synergetic value of the transaction.
The acquisition of an on-going business implies the purchase of a set of income generating resources. The company’s approaches to acquisition are as follows:
- Vertical Acquisitions: Management will target operations with strong supplier-buyer relationships and the market for the target’s mid-stream product is imperfect, due to lack of resources, criticality aspects of the purchased mid-stream product and lack of production controls of product;
- Horizontal Acquisitions: Management will target businesses in the same industry. The benefits of this maneuvers are economies of scale in production, distribution and an increase in market share;
- Conglomerate Acquisitions: This is Management’s preferred approach. These types of transactions are not specific to shared resources, technologies, synergies or product market strategies. The focus of the acquisition is to enhance DRYN’s overall profitability and stability.
Integral to the Management’s approach to acquisition is the valuation of the target business. Management applies five most common methodologies in determining the value of the business operation, as follows:
1. Asset valuation;
2. Historical earnings valuation;
3. Future maintainable earnings valuation;
4. Relative valuation (comparable company & comparable transactions)
5. Discounted Cash Flow (DCF) valuation.
Management employs a combination of the foregoing methods in its valuation due diligence exercise. The information in the balance sheet or income statement is obtained by one of three accounting measures: a Notice to Target, a Review Engagement or an Audit.
Accurate business valuation is one of the most important aspects of acquisitions. Valuations have a major impact on the purchase price of the target.
The Company has assembled a management team with the necessary expertise to initially evaluate target enterprises, to structure an acquisition strategy and to implement a plan of action that is specific and unique for each target . The Company’s goal over the next two to three years is to acquire 3 to 5 businesses on a vertical or horizontal takeover approach. Our acquisition strategy is dependent upon the Company having the financial resources necessary to make the acquisitions.
The Company is currently focused in the energy industry; specifically, the efficient and cost effective extraction of shale oil through the exploitation of the PetroMicronic Process and technology by its wholly-owned subsidiary, PetroStrata Corporation, www.petrostrata.com. Eventually, the same environmentally sensitive technology will be modified and expanded to engage in the production of petroleum products from coal.
The Company seeks to horizontally diversify into a niche segment in the Aerospace Industry and the Health / Longevity Industry. Management is of the opinion that these industries will generate substantial revenue streams for the Company and, in the long term, for the benefit of Company shareholders.
Managers of the Company continually seek and employ new strategies that will provide DRYN with the competitive advantages. The company is therefore enhanced by substantial sales margins, above average profit margins and earnings, lower than average debt, higher that average credit rating and most important, being the leader in the target’s industry.