TIM COHEN: Fast growth is always a problem — as EOH learns
The risks of decentralisation are one reason for the 90% drop in the company's share price from its 2016 peak
A few years ago, I had the feeling that the business press was not covering EOH, then a fast-growing IT group, particularly well. The company grew steadily but aggressively in the 2000s and by 2014 was a regular feature in the Sunday Times company of the year awards. But the writing about the company wasn’t particularly elucidating. There were a couple of reasons for this. Even after its fabulous growth phase, it still wasn’t a particularly big company. Its market cap in the 2010s was around R10bn (a lot more than it is today!) rising to a peak of about R20bn — solidly in mid-market territory. It’s also an IT services company, which are generally speaking fantastically hard to read. This is a contract-based business, and everything depends on the nature of the clients and the character of the projects. It’s difficult to know what these are, never mind what the margins are. In any event, I asked founder and then CEO Asher Bohbot for a meeting and he surprised me by readily agreeing. ...
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