Raising Private Equity

Transcription

1 Raising Private Equity Seminar on Private Equity Organised by WIRC of the ICAI Shailendra Jindal C.E.O., Continental Capital Advisors Mumbai, July 7, 2012

2 Raising Private Equity You need money now... on your terms. The problem... the world of capital doesn't work that way.

3 Agenda How to analyze whether the Company will be able to attract PE? When is the right time in your business cycle to attract PE money? Managing Valuation Expectations Deal Analysis and investment process Q & A

4 Whether the Company will be able to attract PE? What you need to have for attracting Private Equity?

5 What you need to have for attracting Private Equity? The Management Team Corporate Governance Strong growth story Due- Diligence Great Business Plan Exit options Technology Pricing

6 The Management Team Who are these people? Do they fit the way we do business? Not just the CEO! Ability to achieve the Business Plans Are they Motivated? Whether they have enough Experience What is their Technical Competence Are they Committed? Can we/they win?

7 Strong Growth Story Market Size Growth Potential Profitability Market Share and Track record Competition and Entry Barriers Industry Sector

8 Great Business Plan Whether the Business Plan is well-documented Current financial performance vis-à-vis Projections Underlying assumptions Operating performance relative to Industry benchmarks Realistic, relevant and flexible business strategy? Awareness of the market and competition Financial model with Sensitivity analysis

9 Technology Do you have any technological advantage? Use of latest technology Availability of skilled resources Obsolescence Quality of Products/ Services IP s/ Trade marks R & D

10 Pricing The Valuation Enough returns to the investors? Peer Comparison Growth rate Projected Cash Flow

11 Exit Options??? Whether Exit Option is available? Whether Exit Option is acceptable? Industry trends for exits Time-frame for exit Track record for successful exits

12 Due-Diligence Financial Due-Diligence Legal Due-Diligence Operational Due-Diligence Technical Due- Diligence Marketing Due- Diligence HR Due- Diligence MIS and Systems Due- Diligence

13 Corporate Governance and Social Responsibility The Corporate Governance Board Seat and participation Acceptability for Change Transferring Control? Social/ Environmental factors

14 The Right time in your business cycle to attract PE money??? Raise Debt Dilute Equity The Right time? Buy Sell

15 The Four Cycles The Business Cycle The Fiduciary Cycle The Four Cycles The Liquidity Cycle The Ownership Cycle

16 Managing Valuation Expectations PE Funds would always want Management would always want Higher Stake Lower Value Lower Dilution Higher Value

17 Deal Analysis and Investment process Management Competence Valuation Industry Outlook Due Diligence Verifiable numbers Sustainability Key trends Peer Valuation Exit options

18 Investment Process

19 Approach the Private Equity Firm Approach Enquiries/ Negotiations Due Diligence Completion Exit Approach the Private Equity Firm/ Evaluate the Business Plan Company Company and Private Equity Firm Private Equity Firm Reports/ Documents 1. Appoint Advisers 2. Prepare Business Plan 3. Contact Private Equity firms 1. Review Business Plan Business Plan

20 Enquiries and Negotiations Approach Enquiries/ Negotiations Due Diligence Completion Exit Initial Enquiries and Negotiations Company Company and Private Equity Firm Private Equity Firm Reports/ Documents 1. Provide additional information 1. Meet to discuss Business Plan 2. Build relationship 3. Negotiate outline terms 1. Conduct initial enquiries 2. Value the business 3. Consider financing Structure Offer Letter/ Term Sheet

21 Due Diligence Approach Enquiries/ Negotiations Due Diligence Completion Exit Due Diligence Company Company and Private Equity Firm Private Equity Firm Reports/ Documents 1. Disclose all the relevant information/ Documents 1. Liaise with accountants 2. Liaise with other external consultants 1. Initiate external Due Diligence Consultant Reports Accountant Reports

22 Final Negotiation/ Completion Approach Enquiries/ Negotiations Due Diligence Completion Exit Final Negotiation/ Completion Company Company and Private Equity Firm Private Equity Firm Reports/ Documents 1. Liaise with Legal Advisers 2. Liaise with Consultants 1. Negotiate final terms 2. Document constitution and voting rights 1. Draw up completion Documentation Disclosure Letter Warranties and Indemnities Memorandum and Articles of Association Share Holders Agreement

23 Monitoring and Exit Approach Enquiries/ Negotiations Due Diligence Completion Exit Monitoring and Exit Company Company and Private Equity Firm Private Equity Firm Reports/ Documents 1. Provide Periodic Management Accounts 2. Communicate regularly with Investors 1. Seat on Board? 2. Monitor investment 3. Constructive Input 4. Involvement in major decisions Management Accounts Minutes of Board And other Key Meetings

24 About Continental Capital Advisors (CCA) Investment Banking firm with network partners across the globe Overseas Listing/ QIP/ Placements Team of Expert PE advisors and Corporate Finance Specialists Promoter and Acquisition funding, Mergers & Acquisitions Raising Private Equity, Corporate and Business Advisory Services ECB s/ Buyers Credit/ Suppliers Credit Project Finance and Working Capital Loans

25 Communications Any clarifications can be addressed to the following: Mr. Shailendra Jindal Continental Capital Advisors 204 B, Town Centre No.2 Andheri Kurla Road, Andheri (E) Mumbai, India Tel: Fax: shailendra@continentalcapital.in

26 Thanks for your patient hearing and Participation C A Shailendra Jindal