Former Coolbet CEO and founder Jan Svendsen recently took to LinkedIn with scathing commentary on GAN Ltd. (NASDAQ:GAN) — the gaming technology provider that acquired his company last year.
Svendsen, a 35-year gaming industry veteran with a track record of starting companies and selling those entities to larger rivals, unleashed his criticism of GAN ahead of the company’s annual meeting. That’swith the shares down almost 81% over the past year.
The former Coolbet boss didn’t hold back, levying harsh words at GAN and CEO Dermot Smurfit. He opined on issues regarding lavish executive compensation to sending the wrong messages to Coolbet managers that joined the company, among others.
One of the most disappointing issues is the amount of the salaries and bonuses the leaders and the board have been paying themselves. 2021 was a horrible Year for GAN; GAN did not deliver on the bottom line and the share price dropped significantly. Regardless, the leadership team gave themselves huge bonuses. Why? Aren’t bonuses something you should pay out when you produce positive results?,” said Svendsen in his LinkedIn post.
Data confirm GAN’s time as a public company has been trying. Its May 2020 initial public offering (IPO) was priced at $8.50 a share, and from there, the stock caught some of the 2020 gaming equity rally. The shares flirted with $32 in February 2021. But by late November that year, the stock labored around $10. Shares of GAN reside at $3.33 at this writing.
Svendsen Wasn’t Enamored with GAN Takeover
In November 2020, GAN offered $175 million in cash and equity for Coolbet – a move that was heralded by analysts. At that time, the buyer said the purchase would be accretive to earnings, and gives the buyer an avenue for bolstering its offerings targeted at iGaming and sportsbook operators, two of its marquee clientele in the US.
Svendsen said he had “many reservations” about GAN acquiring his company, and that he signed off on the deal out of respect for Coolbet board members, investors, and managers that made it possible for him to build the company.
At the time the deal was announced Coolbet was debt-free, slightly profitable on the basis of earnings before interest, taxes, depreciation and amortization (EBITDA), and sported breakeven operating income. Today, Coolbet, in Svendsen’s estimation, is the jewel of the GAN crown.
The Coolbet founder notes the entity he started is the only part of GAN that’s making money today, and “If you separated Coolbet from GAN, the value of Coolbet on its own would twice as much as GAN now.”
Svendsen has skin in the game. He owns 840,000 shares of GAN and his son is chief financial officer of Coolbet. Additionally, he mentored Coolbet’s chief executive officer for 20 years.
Board, Organizational Structure Criticized
Svendsen acknowledges that he wanted a role at GAN, as he wasn’t ready to retire, and ultimately decided to leave the company because he was offered a mid-level role in Spain — a position well-below his qualifications.
Still, he took issue with the board’s apparent unwillingness to check Smurfit and its preference for using share options grants almost exclusively for directors and high-ranking executives.
“I don’t think the Board is very professional at GAN. From what I heard, the Chairman is an old friend of the Smurfit family. Dermot Smurfit’s uncle also serves on the Board,” notes Svendsen. “In addition, the CFO of GAN, Karen Flores, serves on the Board. In my opinion, one of the responsibilities of the Board is to look after GAN’s money; it does not seem wise to have the CFO serve on the Board. My general impression is that the Board is weak and more like a ‘yes Dermot’ Board.”
The former Coolbet leader also said GAN’s organizational structure is ineffective, with leaders spread across the world, making in-person meetings difficult.
On a more positive note, Svendsen believes GAN has “great potential,” particularly if it embraces new leadership. He’s optimistic about the growth prospects for iGaming in the US, and believes GAN could be an acquisition target in the future.
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