The businesses acquired by CVSL are much smaller t

T he businesses acquired by CVSL are much smaller than say an Herbalife, it is likely much easier for the operating businesses to delineate end user consumption. I expect that part of the IT infrastructure that is being put in place is designed to keep close tabs on the sales organizations and sales trends. The benefit here is that Mr. Rochon and his managers have considerable experience in this industry and are intimately familiar with the FTC regulations.

Finally, in terms of financial health, CVSL is in good shape. On a consolidated basis, CVSL had about $18 million in cash and marketable securities (likely the Blyth investment) as of September 30, 2013. We know that the Blyth investment was liquidated, so I suspect those marketable securities are now cash. Turning now to the liability side of the equation, CVSL listed $10.3 million in drawn credit facilities and $27.5 million in long-term debt. Subsequent to the last balance sheet snapshot, CVSL also sold certain non-core assets (a golf course owned by The Longaberger Company ), further reducing its net debt balance. In my view, the balance sheet is healthy and ready for the $500 million cash infusion from a debt raise for the purposes of acquiring more direct sellers at rational prices.

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