Mergers and Acquisitions
Strat Team delivers the well-matched, best-suited counter-party for your requirements.
And then hand-holds you at all stages, coordinating and discovering hidden value at each stage. To deliver the best deal, for the business unit. As we are a team of former CEO's and MD's : we understand what can add value to the business on-ground, not only what can look good in a board-room presentation.
Cashing out , Senior-citizen Business Retirement, or Business exit
At a certain time of life, any businessman will need to exit and gradually hand over to the next generation, or to a successor. To get the best deal, contact us 3 to 5 years ahead of the exit.
We join with you to evaluate the best course of action,
- Sale to a strategic foreign or Indian buyer
- Generational transition / sale
- Management buyout
- Buyout a partner / minority shareholder
- Recapitalization, merger or divestment
Joint Ventures
When you need more customers and more capital at the same time, often the right joint-venture will act like a charm. Helping you and the other company both move ahead fast.
Collaborations
When you need an alliance to help take your business forward, we help you evaluate and then to arrange all steps on the selected route to a successful consummation
- Brand licensing : foreign, and domestic
- Technology transfer
- Joint venture in existing or new business
Capital Injection / Funds for expansion
And when you need a tactical or strategic investor to add equity capital to your business, the rigorous approach helps you plan and action your fund raising. Often with sector expertise, market access, and other benefits adding a significant boost to the returns you generate from the transaction. So that the target ROI is supplemented by ROR : 'return on relationship' .
Some Frequently Asked Questions
What is the first step ?
Making up your mind is the most important step.
When you have thought about what your company needs from a business exit, a business acquisition, or a collaboration , and the value the company can offer to the other part in return. And how both, can gain from this association. That is the most important step.
After this , you will need to discuss. Come and meet us, for a discussion. By the second cup of coffee, in a sharp and blunt discussion, the thoughts in the mind crystallise : and you can see what you want to do. And the first discussion is always free.
What are the key benefits I should expect from an M&A or Collaboration advisor ?
There are 5 key benefits that should come from engagins an experienced M&A and collaboration advisor
- Matching expectations to market : When you discuss your current situation and your needs, including confidential data, there is an immediate check whether your expectations match market realities. This can be of immense value : almost in all cases, expectations can be too high or too low. Sometimes, the items you expect to be difficult or expensive, are simple and inexpensive . At other times, the reverse can be true. After understanding the market reality, you may decide, for example, that a brand collaboration for a minor product in your product range is not viable.
- Value discovery : At times, one or more important value in your proposal may be some aspect you consider minor : presenting the right benefit to the well-matched opposite-party wins you unexpected value. And putting your best foot forward, is important.
- Matchmaking : Every business has its strengths, and its weaknesses also. There are no perfect businesses, and your business is no exception : which makes matchmaking very important. The goal of matchmaking is to find a well-matched counter-party, who finds your weakness to be minor obstacles, and your strengths to be of immense value. And you should find the same in the proposal of the counter-party. When that match is made, a win-win solution is within reach.
- National and Cross-border Network : The best counter-party need not be in your city, state or country : you immediately gain access to a wide range of carefully selected domestic and overseas prospects. And not all businesses can afford to broadcast their openness to a transaction : the consultant network in that city or country can often make a personal approach to company owners discreetly and sensitively.
- Hand-holding through all stages, including negotiations and all due-diligence : legal, accounting, forensic, and special. Your advisor and their team need to facilitate the execution of the transaction on a timely basis and help you avoid many of the pitfalls common in complex M&A transactions.
I want to invest in a IT startup, and take a 70% share. They are usually started by few young men, who would have invested 5 to 10 lakhs. So about Rs 10 lakhs is my budget. Please find me a IT startup, about 2 years old, with good future potential. And you have to guarantee the future profits.
The few young people who own a 2 year old startup have invested an idea, and 2 years of their time , and some money, with a risk of getting nothing if the business does not take off : which is often the case. They would not be looking for 10 lakhs, and would not be willing to sell 70% share .If they sold most of it they would not have the commitment to take it to the right outcome, anyway.
And at the end of 2 years, what they have created may be worth Zero, or 1 crore, or 100 crores : the valuation of a startup is done on three or four popular techniques based on discounting the future profits the successful product would produce. And like all valuations, even for mundane items like land and building, there will be slightly different perceptions and a negotiation.
On a realistic valuation, even for Rs 10 lakhs a small slice of some 2 year startups could be available. Nobody can guarantee the profits, and there is always a very real and persistent element of risk.
The question is to decide if one would like to invest in such a situation, or opt for some different category of investment.
This teaser you have sent me has only 2-3 pages of information about a company for sale. It does not even give the name and address of the company, how can I tell you if I want to buy that company or not, based on such little information ?
The limited and masked information freely given to you, in a teaser, helps you answer : do I want to explore this company more?
- It looks like a relevant company to acquire, worth spending time to investigate
- It does not look like a good fit, I dont want to waste time on investigating it further
To investigate an option takes time and money, for you as the prospective buyer, for us as the consultant, and for the seller and his consultant as well.
If I decide to buy a company, I will sign an agreement. Why are you asking me to sign a non-disclosure non-circumvention agreement before showing me detailed information about the company ? And why are you giving me so little information before the NDA, why can't you just tell me the name of the company and its website ?
A business owner may spend a lifetime, slowly building up his business. But if the word leaks out that the business is up for sale, it can damage the business. Suppliers stop supplies and demand old payments. Customers hold back orders. Even reliable employees dust off their CV and start looking for another job.
A seller only agrees to disclose their details on being assured, through us and their consultant, that the organisation seeking the document is a serious prospective buyer, and that if there is no sale he will not talk about the company to anyone.
This is why the agreement is really a necessity. It is not paperwork : confidentiality is a real need.
What are the best acquisitions available currently? Why are you asking me questions about my company history and achievements ?
There is a saying "One man's food is another mans poison". This is very true of acquisitions : the best acquisition for you depends on your company history, and your strengths and opportunities.
Can an established brand be important ? Often, the answer is "yes", but for the owner of the strongest brand the answer may be "no"
Can a well-established design team, a smoothly running distribution network, or manufacturing know-how be the most critical factor to evaluate ? One of them can be most important to one acquirer, the second can be the most important to another acquirer.
The right match is well suited, and helps you gain the most. For this, it is necessary to understand what will fit your company the best.
How does the process work ?
At Strat Team, we begin by helping you dig deep within yourself and your company, to understand the strengths and the opportunities, and the gaps as well. And then facilitate you and your team to decide your acquisition & collaboration strategy.
If I offer better technology and a good brand, I know the customer will accept it more readily. But will customers want to pay the higher price ?
In many cases, better technology can reduce the cost of manufacturing : in that case there is no higher price necessary. It just increases your profit margin.In other cases it may increase the fixed cost or investment, and decrease the variable cost per peice.
Even a collaboration with a known brand can reduce cost. By decreasing the amount of advertising and sales expenditure per unit sold, by decreasing idle capacity: even a brand collaboration can actually reduce the cost.
As such, with the right selection, good technology or a strong brand can be the way to go the the next level, and leave your competitors behind.
If I find an attractive company to acquire, how do I know what is the right price. As an outsider I would be charged a sky-high price?
Valuation of businesses is one of the areas we help with, businesses in many sectors are often valued based on the adjusted EBITDA, multiplied by a prevailing multiplier reflecting market price.
Of course, each business is unique in its own way, and the value of a specific business can be estimated as a band. Within that band, the best possible deal should be negotiated.
Who will control a joint venture company ? After all, I understand India and the markets best.
As a general rule, a joint venture company is not entirely controlled by any one stakeholder. It is like any partnership : shared investment means shared profits and control as well. We would help you negotiate an arrangement, in which your key concerns are taken care of, and where both sides benefit.
I would prefer a joint venture to a collaboration, with 50:50 investment by both partners. Otherwise I would have to pay several crores for the technology and know how.
Suppose you own land and an industrial shed, which you give to the joint venture company to speed up the launch. Surely you would expect it to be counted as Rs. So-and-So crores worth of investment. After all, the land and shed are an asset, with a market value. Do you agree ?
Similarly, the technology owned by the foreign partner is an asset. If it is worth Rs. X crores, then the value would be paid in one way in a joint venture, and in another way in a technical collaboration. The important thing is to make sure it is the right technology at the right price, and a good amount of additional profit will be earned by both parties.
I would like to do a 50:50 joint venture with one of three top global companies, who have the right technology. I am making your task easier, I am giving you a list. How long will you take to arrange it, and what will be the cost ?
Matchmaking is best done among nearly-equals. If you think of a suitable match for your son or daughter, usually the same is recommended by the family members. It is often the same in joint ventures.
