Master Class on Mergers & Acquisitions (M&A) for Business Owners, HNIs, Corporates, Investors

Enabling Growth of Pro-active Companies

Master class on M&A I How to Grow Retail Franchise I
Top Business Opportunities & Investors

 
   
  • V C Karthic is a serial entrepreneur, angel-investor, leadership coach, startup mentor and contributor to the startup ecosystem in India. 
  • Among the highlights of his exciting journey is founding Buzzworks in 2001 (IT solutions company), which has more than 15,000 employees on payroll with multi hundred crore turnover in a short span.

Recently, IndiaBiz had invited him to address a Masterclass where he talked about “Acquisition and Investment as a Growth Strategy”. Major aspects covered were:

M&A Mythbusting > Investment thesis > Large Pipeline > Management Meetings > LOI –  Negotiations  >  Closure

Reply to this email now to receive a link to this Masterclass session by V C Karthic.


 
 
Hearty Mart Supermarket (started in February 2004 by Mr. Nadeem Jafri) has grown into a chain of retail stores operating under the brand name of Hearty Mart. Standing amidst the bigwigs operational in the Indian market, Hearty Mart is a name that is emerging and focusing on tier 2 and tier 3 cities in India and making inroads into the rural sector. With access to very limited capital, learn how Mr Nadeem Jafri grew Hearty Mart into many franchises and different verticals. Click to read more

Top Buyers & Investors


Latest Business Opportunities

Make Your Money Work Hard – Invest in a Small Business!

You may have explored a number of investment options, such as bank deposits, shares, stocks and bonds, mutual funds, and so on. But, have you ever considered putting your money in a small business? Yes! In India, we are slowly warming up to the idea of investing in small and medium sized businesses, as more and more people get allured by the return potential and the exciting journey that it involves.

In this article, we discuss the benefits of investing in a small business, and why you should consider it as a major investment goal in the years to come!

  1. Capital Gain – Unlike investing in a business for dividend income, which gives steady but relatively smaller, periodic pay-outs to the investor, you can invest in the equity of a small business for capital gain. What does this mean? Essentially, an investment made for capital gain does not pay out a steady stream of income, and waits for the value of the business to multiply instead, so that the value of the investment made by the investor also multiplies proportionally. This implies a longer gestation period, but a much larger return potential.                 For example, let’s say you have Rs 1 Cr. to be invested. You can invest in a company which pays say 10% dividend monthly, or you can invest in a small business whose value will potentially double in 5-7 years by using your money as growth capital. When this happens, your investment also doubles! Now, how would you identify a business with a good growth potential and what value multiplier can you expect? Usually, a good consultant or deal professional should be able to help you with these aspects.
  1. Interest Income – If you are interested in immediate, periodic payments instead, go for debt investment in a small business as opposed to the equity route. A debt investment is like a loan, but an investment all the same. A predefined interest rate is agreed upon between the business owner and the investor, and annualized pay-out streams of repayment are disbursed periodically. The upside? You do not have to wait for the business to start minting good money, and a debt investor usually has preference above all other investors!
  1. Diversification – As Warren Buffet once said, when it comes to investment, “one should never put all one’s eggs in one basket”. Instead of only sticking to the conventional investment options, bring a fresh flavour to your portfolio by investing in a high-growth small business. Let your money work hard for you as you reap the benefits of a diversified investment basket.
  1. Grow Your Network, Grow Your Money – Not all investment returns are tangible. Apart from the direct monetary rewards of investing in a small business, there are also indirect benefits that can help you grow your money in the future. These include securing your foothold in the industry to which your investee business belongs, growing your professional network through business promoters, consultants, deal professionals and co-investors in the business. Unlike other investments which tend to be passive, investment in a small business is a high-involvement one that also makes your journey exciting and the returns manifold.

You must be wondering if there are risks associated with investing in a small business. Investments are never risk-free, and investing in a small business is not an exception either. However, there are several ways to safeguard your money, and mitigate the risks involved. These include: opting for low-risk instruments such as debt investment, vetting the business, its owners and the industry rigorously, and securing investor rights for protection against future unforeseeable circumstances.

At IndiaBizForSale.com, we provide first-time investors with thorough support and handholding, and also help you connect with professionals to help you with the transaction and risk-management. We have thousands of businesses on our platform which can be filtered by industry, location, asking price, credibility and so on.

Tips to Remember While Investing in a Business

Be it for business expansion or otherwise, investing in a business can be exciting. However, it is often expensive and comes bundled with risks. In this article, our team at IndiaBizforSale shares with you the common tips to remember as you set out to explore an investment opportunity in India!

Before You Begin

Industry: Every investment opportunity is a risk-return proposition. Start by shortlisting the right industries for you to invest in. These could be either the ones where you already have a portfolio, or the ones you have an understanding of, or simply something that is new and has good return potential.

Size: Identify a range of business sizes that you would be comfortable investing in. The size could be in terms of revenues, customers, employees, infrastructure, or any other indicator as you may deem fit.

Location: Location becomes important in terms of the local environment and your accessibility to the locations. You don’t want to put your money in a location that is fraught with political / communal unrest, or one that is not easily accessible within a few hours!

Transaction costs: Take stock of professional costs such as legal fees, accountant’s fees, banker’s fees before you initiate the investment process!

 

 

Sourcing Investee Businesses

To invest in a business in India, source out businesses to invest in from local magazines, classified, directories and web portals. Information on other businesses which are not listed there can be obtained from third party agents, brokers. Alternatively, you can also check with consultants or CAs and Lawyers describing what kind of business you are looking to invest in. 

Due Diligence Checklist

Reason for investment: Why is the business owner raising investment for his business? Check for obvious red flags like ailing business, financing concerns or court litigations. As an investor, you should look out for businesses that are raising money for expansion and/or diversification.

Credit history of business: Check for outstanding debt, unpaid creditors, and other liabilities – you definitely don’t want to take on liabilities of the owner!

Reputation: Delve thoroughly into the reputation of the business as well as personal reputation of the owner. Visit the area, speak to the local people, and do not restrict yourself to the customers and creditors.

Financials:  Dig deep into the sales pattern, seasonality and periodicity, major cost drivers, a review of audited financial reports for the past 3 to 5 years for fair valuation of business assets.

 

Compliance Considerations

Tax: Your business investment decision will have a few tax implications and you should consult your accountant to take stock of these. For starters, Capital Gain Tax and Stamp Duty are common considerations.

Legal Issues: The commonly applicable provisions are from the Company Law, Income Tax Act, Labour Laws, and approvals by Banks or Financial Institutions, copyrights, patents, trademarks, etc. along with licenses, zoning requirements, insurance coverage and lease rights. There are also special provisions for startup investments, which are worth looking into.

Valuation

There are various approaches to value a business.

Return on Investment: The most common way to value a business is to estimate the percentage return on investment that a commercial investor would expect from the business over a certain period of time.

Cash Flow: The Discounted Cash Flow (DCF) technique values a business by projecting its future net cash inflows over a period of time using the time value of money approach.

Assets: This process entails valuing tangible assets such as land, building, plant, machinery, etc. and intangible assets such as intellectual property and management expertise.

Investment Terms and Conditions

Payment: Decide on payment mode, tranches, conditions for tranches, and arrangements such as escrow.

Documentation: Obtain a receipt against your payment and an original copy of all investment documents.

Non-Compete: It is important that the purchase agreement ensures that the owner is not allowed to set up a similar, competing business of his own post-investment.

Post Investment

Secure rights for attending board meetings, being updated on crucial business changes, and make sure you have a say on important company decisions. Most importantly, build a relationship of trust and transparency with your investee – it can go a long way in making investments smooth and hassle-free!

If you have any queries on the above or about investing in businesses in general, please write to us at [email protected]. Happy investing!

Indiabizforsale.com is India’s largest online platform for M&A, Investment, JV, Partnership, Fund Raise and allied needs. With approximately 20,000 registered clients and a dedicated team of professionals we provide end-to-end services for all needs related to buying/investing in, selling/investment for a business, franchise or distributorship network.

Growing Investment Interest in Indian Education Sector

Education is considered the most crucial and the vital key for modernisation and development. The importance of education can be evaluated from the fact that every advanced society and culture is promoting universalisation of education as a parameter for long term economic development. There is a huge demand for advancement and modernisation of education system in India, as the country is estimated to have an excess of 47 million resources in the working age group by 2020. As per the prediction of the consumption trends urban India is investing 9% of earning on education whereas the rural consumer is limited to 6%.

Ecosystem of Education in India
Of late education sector in India has witnessed a chain of changes, resulting in a significant rise in the market share of the education sector. With economic development and evolving technology, Indian education sector has reasons to celebrate. The Government of India has also initiated many plans to attract investments from non-resident Indians for the development of education infrastructure.

Continue reading “Growing Investment Interest in Indian Education Sector”