ANALYSIS

Qualitative Analysis

The first part of the analysis will look at the qualitative parts of the Summit’s Investment, in relation to Fleet Cor. Below are the attained key strengths of investment in FleetCor Organization: Key Strengths of FleetCorp  Following are the major reasons why summit partner planned to invest in FleetCor:  FleetCor consist of high performance management team including an experience CEO, Ron, who has completely changed the dynamics of the company and brought it back on the track within the period of 18 months. Other executives of the company also possess many expertise in their relevant filed and are experienced and contributing positively in the growth of the company.  FleeCor is operation under a unique business strategy and is leading a competitive business. it has adopted the following strategy to operate in different markets:  A strong network among local branches have been built by FleetCor to reach the targeted customer by implementing direct selling model.   The size of the merchants has been limited to provide a significant traffic volume to retailers participating.   The market shares have been established in a potential and growing market.  It enjoys high gross profit, on an average 5% which is double than the other card issuing companies or even more than its competitors in the market.  The historical data indicate that the customer are very reluctant in switching card network providers and the average crunch rate of the company is also very low comparatively that is 10% annually.  The acquiring of seven super licensees at 3.9×2001 EBITDA and 3.3×2002 EBITDA will increase the overall growth potential of the company and was a necessary step to be take.  The risk price of the fuel is very limited due to the adopted structure by Fleetcor. As a result any volatility in the gas prices don’t affect the revenues of the company  Investment Concerns  Some of the investment concern that should be kept in mind while investing the amount in the FleetCor business are as follows:  Currently FleetCor do not possess any financialexperience individual having the knowledge regarding the industry trends, to project effective long-term growth by incorporating financial systems.  As the company is going for a centralized system, no necessary prevention controls has been establish by the company in case of any unexpected event that can eliminate the risk.  The company has not made any final agreement regarding the acquisition of the super licensees. As high prices may result in large A/R financing cost and might lead to high bad debt expense. The company is not even assured of its ability that it will be able to close all seven transaction within time.  The managerial reporting system of the company is not very effective. Resulting in inefficient reporting.  The FleetCor manages its topline performance on the basis of net revenue, two of the expense areas are affected by gross revenues and can majorly affect the profitability of the company. The items are bad debts and interest related to A/R. Though they are small in number but together they hold 11% of net revenue. Any changes in these item can have a major impact on the bottom line……………

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