No Founder Is Bigger Than The Biz He Runs!

A well-written article in ET today, many inside nuggets of the dealings at JET Airways, many lessons for family run/controlled businesses. Even if there is a competent team but without any significant decision making power, it is a team like the Lion in the cage. 

This is the company I built from scratch, I have shed blood and sweat for this company, how can I give control of this to someone else? 

Shall I exit? 

He talks to them all, but finally listens only to himself. He refuses to relent or cede control.

The only suitor with a comprehensive offer walked off never to return. 

Above are some of the quotes and findings while speaking to different stakeholders with the knowledge of JET Airways. Click the link below to read this insightful article 

https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/jet-airways-naresh-goyals-folly-how-to-crash-a-business/articleshow/68930916.cms

It’s not surprising that many small business owners expect their children to continue running and expanding their business. After all, the founders of a business have dedicated many years to build it and continue running it. By the time they are ready to retire and let someone else manage the operation, the business is intertwined with many of the family expectations and traditions. IndiaBizForSale transaction advisory team comes across many such promoter driven businesses which are not suited for a profitable exit or investment in the company; the second line of the management is almost not there. Our team strive hard to share the best practices and corrective actions, ultimately the management team has to plan and execute these. The newer generation in the business is generally bit more aligned with this approach.

The new age business life cycle is the progression of a business and it phases over time, and is most commonly divided into stages: Idea, Startup, Growth, maturity, and decline/or repeat. The business life cycle of most businesses is very different (much shorter) than businesses launched in the past. 

You can read more about the life cycle of new age businesses at this link https://www.citigroup.com/citi/citizen/community/data/guide10_eng.pdf published by Citibank. 

“Now what?” you may ask. Whatever path you choose, make it a point to share your experiences and encourage other small business owners in their endeavors. Ask anyone who has ever started a small business — from that point on, his or her life was never quite the same. They look a little closer when they go to a new restaurant, see a new ad, or hear about a new product. They are more alert to ingenuity, customer service, value, product quality, and performance. Most likely, you will be too. And, best of all, you will be able to share your experiences with others. Encourage, teach, support and advise them to learn all they can about small business. Your knowledge can be their springboard. Share it openly and often. Our economy depends on entrepreneurs and is counting on you to help expand the growing tradition of small business opportunities. Excerpts from Citibank guide. 

Re: Jet Airways, we wish all the best to JET Airways team (22,000+ individuals) to find the SILVER Lining very soon amongst these dense clouds of uncertainty.

 

3 Investor Rights You Must Know Before Putting Your Money in a Startup

“You Can’t Fight for Your Rights If You Don’t Know What They Are”

Investment in a startup is an opportunity to enter a new industry, a new market and develop a long partnership with your investees. Though, sometimes it can be a little scary to fully comprehend the terms and conditions entailed in the deal documents. A typical deal agreement covers five key areas – deal economics, investor rights, governance, management and control, and exit. We have worked closely with thousands of businesses, business buyers and investors over the last 5 years, and in this article, we will share with you the key rights that are available to an investor in a startup.

Rights Against a Down-round: This right is called Anti-Dilution Right, and it protects the investor from devaluation of his stocks against any future investment into the startup at a lower price or valuation. If there is a down-round, i.e., the business raises the next investment at a lower valuation, then the prices of shares of the earlier investors are also reduced to the current price with retrospective effect. The adjustment is reflected by a proportionate increase in their shareholding percentage. Need a refresher on business valuation? The following article tells you in a nutshell everything you need to know about business valuation.

Rights Against Investor Overriding: This provision is collectively referred to as ‘Control Rights,’ and it makes the business owner liable to communicate and take approval of the investors for any material changes in ownership, business model, strategy, any material transaction, contracts, and so on. Control Rights are usually negotiated between the investor and the business before finalizing the agreement, however, at the end of the day, the stronger your partnership with the investee, the more you can stay involved in the startup. Here are some additional tips you should remember when investing in a small business.  

The right of First Refusal (ROFR): What if a business owner or promoter decides to sell a part or all of his shareholding? ROFR gives the investors precedence over any third party when it comes to purchasing the owner’s / promoter’s shareholding. It is only when there is a written refusal from investors to buy the promoter’s stocks that a third-party sale can be initiated. How does this protect the investor? Note that as an investor you not only bet your money on the startup but also on the people running it – i.e., the owners or the promoters. You can avoid onboarding an unknown third-party by exercising ROFR.

While we have tried to explore the key investor rights briefly in this article, a professional deal consultant can help you understand the full plethora of rights available to an investor, and help you negotiate the same. Indiabizforsale.com is India’s most preferred business opportunity platform that is trusted by over 25,000 business owners, investors, buyers, consultants and investment bankers. To know more about what we do and how we can help you, explore us.

Budget 2016: Impact on Startups

Startups were awaiting anxiously for Mr. Jaitley to come with bonanza for them. Few years have been happening for them and companies started by new breed of entrepreneurs have attracted huge investment from domestic as well as foreign investors.

Modi’s emphasis on “Make in India” and “Standup India” had raised expectations to peak. Even the FM speech gives an impression of fresh blood infusion by offering various tax sops to start-ups. FM mentions in his budget speech (Para 125) to assist Startups by allowing 100% deductions of profits in 3 out of 5 years of their start. However, let’s have a look at the fine print of various provisions of Finance Bill, 2016. Continue reading “Budget 2016: Impact on Startups”

Reasons Why Entrepreneurs do not Sell their Inactive Startups

Entrepreneurship was something people were averse to pursue some 15 years back in India. But now the scenario has completely changed and it has become the order of the day. After completing graduation, some students prefer to work on their own startups to lucrative corporate jobs. At the same time, a section of people working in MNCs are also starting their own ventures, leaving high paid corporate jobs. But not all of them ace the test of entrepreneurship.

Statistics say that in India 80% of the startups do not succeed and they become inactive over time. These startups could be at different stages, with some of them hardly completed 1 year and some with 3-4 years running. Some entrepreneurs usually want to sell off their startup and others do not do anything about it. But the products/services they have developed might be of use to some other startup/ company (these may even include website, mobile app, customer database etc.). Even if they are sure of getting some return on their investment, many entrepreneurs do not sell their startups (that are almost at the verge of failure) due to several reasons.

Continue reading “Reasons Why Entrepreneurs do not Sell their Inactive Startups”

Have a failed startup? Sell it on ‘Indiabizforsale.com’ – PCTech

Indiabizforsale.com, a platform for selling small and medium sized businesses, is seeing a spate of listings from small startups that wish to divest a part of their business or cash out entirely as entrepreneurs hope to see some return from the code, application or platform they have built even as their ventures didn’t succeed.

Continue reading “Have a failed startup? Sell it on ‘Indiabizforsale.com’ – PCTech”

Startup EXIT – coverage by IndiaToday.in

IndiaBizForSale.com is an interesting start-up that helps sell other start-ups. According to a report from TOI, the company initially started off as a medium to sell small businesses but with time the site has been witnessing listings of start-ups that either fail to scale up their businesses or want to shift to a new venture.

Bhavin Bhagat, co-founder of Indiabizforsale said, “When we began, it was mainly Smbs, but now we are seeing listings from even start-ups, either to sell some intellectual property or sell their platform because they don’t have the money to take it further, or are moving to do something else.”

Continue reading “Startup EXIT – coverage by IndiaToday.in”

Selling Failed Startups Online at Indiabizforsale.com

Now, you can sell failed startups online at Indiabizforsale.com 

Indiabizforsale, a platform for selling small and medium-sized businesses, is seeing a spate of listings from small startups that wish to divest a part of their business or cash out entirely as entrepreneurs hope to see some return from the code, application or platform they have built even as their ventures didn’t succeed.

“When we began, it was mainly SMBs, but now we are seeing listings from even startups, either to sell some intellectual property or sell their platform because they don’t have the money to take it further, or are moving to do something else,” said Bhavin Bhagat, co-founder of Indiabizforsale.

Continue reading “Selling Failed Startups Online at Indiabizforsale.com”