Acquisition Highlights - Chairish, a leading online marketplace for vintage furniture, décor, and art, generated $51 million in revenue in 2024 and has 1.3 million active listed items[5] - The acquisition is expected to generate approximately $8 million in accelerated operational synergies[5] - The purchase price is $85 million, funded from existing cash and RCF, with adjusted EBITDA expected to be positive in FY26 and accretive to adjusted EPS in FY27[5] Chairish Key Metrics - Chairish has 4.1 million total accounts[8] - The total inventory listing value is $2.6 billion with 1.3 million active items[10] - Chairish has 4.5 million monthly sessions[12] Synergies and Growth - The acquisition immediately adds $2.6 billion in inventory and approximately 1.3 million items to the network[20] - Approximately $8 million in annualized synergies are expected to be executed by FY27[27] - $2-3 million from marketing efficiency[27] - $3-4 million from headcount optimization[28] - $2 million from increased take rate[29] - The list price market is 3x the Total Addressable Market (TAM) of the US Arts & Antiques (A&A) auction market[23] Financial Impact - Adjusted EBITDA is expected to be positive in FY26[36] - The acquisition is expected to be accretive to adjusted EPS in FY27[36] - In the medium term, Chairish is expected to achieve double-digit revenue growth and adjusted EBITDA margins of around 30%[36]

Summary of Auction Technology Group (ATG) Acquisition of Cherish Company and Industry - **Company**: Auction Technology Group (ATG) - **Acquisition Target**: Cherish - **Industry**: Online auction and fixed-price marketplace for art, antiques, and collectibles Core Points and Arguments 1. **Acquisition Rationale**: - ATG aims to transform the market for art and antiques by integrating auction and fixed-price listings under one roof to meet diverse buyer needs [3][4][5] - The acquisition of Cherish is expected to strengthen ATG's marketplace position by increasing supply and demand, thus accelerating growth [4][6] 2. **Market Position and Synergies**: - Cherish adds 1,300,000 active items to ATG's existing 14,100,000 items, increasing total inventory to 2,600,000,000.0 [6][7] - The acquisition is projected to generate $8,000,000 in high-confidence cost synergies in the first year, primarily from headcount reductions and marketing rationalization [9][19] 3. **Growth Opportunities**: - ATG anticipates double-digit revenue growth and adjusted EBITDA margins of around 30% for Cherish in the medium term [18][20] - The integration is expected to enhance buyer acquisition at a low customer acquisition cost (CAC) and improve the overall buying experience [7][8] 4. **Monetizing Underbidders**: - ATG plans to capitalize on the 17,000,000 unconverted bids from auctions by offering immediate purchase options from Cherish's inventory, which is expected to be a significant growth driver by year three [16][45] 5. **Financial Considerations**: - The acquisition was completed for $85,000,000 on a cash-free, debt-free basis, with funding sourced from ATG's cash reserves and an extended revolving credit facility [18][21] - Post-acquisition, adjusted net leverage is projected to be around 2.3 times, which is considered manageable [21][22] 6. **Market Dynamics**: - The acquisition allows ATG to enter the fixed-price market, which has a total addressable market (TAM) three times larger than the auction market [8][9] - ATG's strategy includes leveraging digital marketing and cross-listing to enhance visibility and sales for Cherish's sellers [10][15] Important but Overlooked Content 1. **Integration Costs**: - Approximately $4,000,000 in integration costs are expected as ATG integrates Cherish into its operations [48] 2. **Competitive Process**: - The acquisition was competitive, with multiple bids, indicating strong market interest in Cherish [57] 3. **Future M&A Strategy**: - ATG is open to future acquisitions that align with its strategy of transforming the secondary goods market, whether in auction or fixed-price formats [46] 4. **Market Sensitivity**: - Cherish's business is expected to be similar in sensitivity to ATG's existing auction and fixed-price segments, with no significant additional risk anticipated [32] 5. **Performance Post-COVID**: - Cherish experienced good growth pre-COVID but has been flat since, with ATG confident in revitalizing growth through integration and synergies [34] This summary encapsulates the key points from the conference call regarding ATG's acquisition of Cherish, highlighting the strategic rationale, expected synergies, growth opportunities, and financial implications.