SMERGERS Blog

In this post we explain the fundamentals of M&A, we describe specialists who are part of the M&A process, and we highlight 12 most common jargons used during an M&A transaction. M&A stands for Mergers and Acquisitions. M&A is a process where companies sell and buy each other. There can be instances where even individuals invest or buy small businesses. When an entrepreneur decides to sell his business, the reasons can be many. He may want to retire, relocate to a different city, focus on another business or simply move on from the business and receive a lucrative offer to buy a beach property.

 

Is your business set for profit or value? Modern day technology and fewer entry barriers in most industries have changed the business landscape around the world. Starting a business now is easier than ever before in human history. However, starting is just the first step. Convincing people to work for your business or product idea, convincing customers to buy your product and most importantly convincing investors to put money into your business are the most challenging aspects for a business owner. Once you have put a strong business foundation and created an interesting product people want to buy, you will need to raise funds to grow or sell your business. Convincing a buyer is as challenging as convincing investors to invest in your business.

Buying a business is generally cheaper than starting one. And what’s also important is that there are huge advantages that you get when buying a business rather than starting it from scratch. Entrepreneurship through acquisition, or buying a business gives you the added advantage of existing customer base, working marketing strategy, already hired employees, easy financing, avoiding delays of compliance and regulatory approvals, etc. But if you end up buying a business without proper due diligence it may cost you much more time, money and energy that what you would have spent starting one. Hence it is important to check the below listed aspects before you take the plunge.

In most countries, of all the registered companies only 60-70% of them are actively in business. Some businesses fail in their planning phase, some are declared dormant and some just run out of money.  For most of the young entrepreneurs out there, this is a harsh reality. You might think that your idea is good, but if not executed properly, it can be one of the worst mistakes you do in your life. A bad business will have heavy consequences and will drain your financial resources and time.

As an entrepreneur you’ve have spent a lot of time, money and other resources to build and grow your ecommerce business, that you want to sell now. But, how do you proceed with the sale?  Pointers below will help you to prep-up for the sale of your eCommerce site. 

Entrepreneurs with surplus funds often like to start a franchise business. It may not be their primary source of income but it can lend them a great deal of profitability because the business model is already proven successful and is led by a strong existing and recognised brand.

If you’re a small business owner, a franchise can be one of the best ways to build your business. Many entrepreneurs dream about exponentially growing their business and making their brand a household name, but typically lack the growth capital required to get to such a stage. Franchising your business ensures a low cost scaling model, though it requires diligence and a laser focussed execution strategy.

As an entrepreneur, the eventual exit from the business, however successful, can be made sour unless the tax structure of the sale is optimized. Many business owners have paid over 40% of the sale amount to the Government as taxes, merely due to bad financial planning. In this article, we’ll attempt to decipher some of the less understood points about the taxes incurred while selling your business.

Every business owner has to exit their business at some point – be it for personal or professional reasons. Though selling the business can be a challenge, attempting to sell it quickly poses a unique set of problems. The aim of this article is to educate small business owners on how to sell your business fast.

Though every sale transaction is unique, a well-run business generally takes around 90-180 days to be sold. Most business owners prefer a quick sale, but it makes the acquirers nervous as they like to have enough time to do their due diligence.

For those who’re ready to take the entrepreneurial leap, starting a business from scratch might not be the only option. When you build a business from ground up, there’re many challenges in the same including initial set up, finding early customers, hiring key employees, managing cash flow, etc. These issues are negated when you choose to buy a business which has a proven track record of customers, internal processes, revenue and profit. If you’re asking yourself ‘How can I buy a business?’ this article is for you

Business Brokers

Jun 13, 2018

Selling a business is never an easy task so you can always enlist the services of a broker to sell your business. They are intermediaries between a business owner who’s selling their business and an acquirer who want to purchase it. They play an important role in sale of businesses in providing expertise needed to get the sale done, a trait most small business owners lack. Also, selling a business takes time, so working with a broker allows the business owner to focus on operating the business while the broker does the leg work required to complete the sale.

"Price is what you pay. Value is what you get" - Warren Buffett

 

Calculating how much a business is worth is a complex financial subject which is difficult to cover in one article. In this article, let us look at the basics of valuation and what are the typical methods and drivers for valuation of a business. To begin with, it is first important to understand the reason behind why one would like to value a business

Buying an existing business from an owner who’s retiring, relocating or cashing out is a great way to become an entrepreneur. Buying is particularly interesting as most of the legwork is already done by the existing business owner. Plus, you don’t have to go through the long process of figuring out a business model that works, monetization techniques, etc. and go straight to expansion and growing profits.

For business owners, a great way to retain their business but still get some liquid cash is through selling a part of the business. That’s right – selling a business doesn’t mean you have to sell it completely. You can always sell a portion of it while holding onto the rest. The cash can be used for further growth of operations or get some liquidity. Selling a part of your business might be a better option for you and the business, if you plan and execute the strategy well.  Let’s start by exploring the use cases for selling a part of the business. 

Different entrepreneurs have different motivations for starting and running a business. Some do it to escape the monotony of working for a corporate outfit, while others do it to pursue a passion. Whatever the reason an entrepreneur has for pursuing a business, eventually he/she would think of selling the business to realize its full potential. There are several reasons why one would want to sell the business. It could be retirement, absence of succession planning, no legal heir, mental fatigue for the entrepreneur or simply, to cash out for the right offer. In this article, we’ll explore different steps one has to take before putting up a running business for sale.

If you’re a business owner with a great firm and are wondering why you aren’t able to attract buyers/investors, perhaps you’re committing some of these classic mistakes (with easy fixes) we’ve seen hundreds of businesses commit.

Industry Watch
Fuel additives are fuel-soluble chemicals added in small quantities to enhance the properties of the fuel, improve fuel handling and fuel performance. The rapidly increasing demand for hydrocarbon fuels from transportation and power industries have
Facility Management (FM) refers to the use of a third-party service providers to maintain a part or entire building facility in a professional manner. It is increasingly gaining popularity amongst commercial as well as residential clients driven by
Nutraceuticals (also called health supplements) are specially processed or formulated foods designed to satisfy particular dietary requirements and/or provide medicinal or health benefits. They generally contain extracts from plant & animal sources,
The Indian healthcare market is expected to reach ₹ 24 lakh crore by 2022 from ₹ 9 lakh crore in 2016 growing at a CAGR of 17.7% driven by rising incomes, greater awareness, prevalence of lifestyle diseases and increasing penetration of medical
Automobile industry facing a tough time as vehicle demand is sluggish. Valuations of companies on the lower end. Autocomponent industry is also expected to witness a flat growth this fiscal because of weak automobile demand. The industry will remain
Fitness industry in India is worth Rs.4,500 crore and is growing at 16-18% annually and is expected to cross Rs.7,000 crore by 2017. The industry is fragmented with majority of the market dominated by unorganized and independent gyms outlets. The
Low utilization rates and weak demand from realty and infrastructure sectors is driving consolidation in the Indian cement industry. More mergers & acquisitions are expected in the medium-to-long-term as valuations are attractive to buyers and
Demand for electronics hardware in India is projected to grow at 25% compared to only 15% growth in production, expected to create a demand supply gap of Rs.14.8 lakh crores by FY20. This creates a unique opportunity for electronics companies
The ecommerce space in India is still evolving and companies have limited history. Many of them function at negative operating cashflows and are dependent on investments from venture capital firms. Using traditional valuation methods like DCF
The food processing industry in India is getting a shot in the arm with increased focus from the governement and policy makers, higher involvement of scientists to help increase food processing productivity, and establishment of mega food parks
The Staffing Industry includes companies which list employment vacancies, place applicants in employment, supply temporary workforce and all other employment related services. Market size of the Indian staffing industry was INR 26,650 crore in 2014
Global acquisitions by Indian IT firms rising with a majority of the transactions happening in Europe and North America. Primary reasons driving these acquisitions are increasing local presence in the US and Europe, acquiring employees with a
Advertising spends in India are expected to grow 12.6% year on year to Rs 48,977 crore for the year 2015. The ad spend in 2014 was Rs. 43,490 crore, which reflected a 12.5% increase over 2013. Firms in the advertising industry prepare advertisements
The worldwide ERP software grew by 6.4% in 2014 to reach $27B market size. The segment is anticipated to garner $41 billion in sales by 2020 with a CAGR of 7.2% during 2014-2020. ERP software is second fastest growing segments within Enterprise
It is widely believed that India has not fully leveraged its strength in the Manufacturing sector in the last decade, but the sector is expected to emerge stronger in next decade as companies innovate and adopt new business models. To support this
Pharmaceutical industry seems to be entering a growth phase after a muted growth over the last few quarters. Valuations of pharma companies fairly high as they are expected to perform. Indian Pharmaceuticals industry is the world’s third largest in
The Indian restaurant industry is highly unorganized and fragmented but is getting rapidly organized with Quick Service Restaurant (QSR) segment leading the way. Private Equity and Venture Capital firms have shown increased interest in this sector
The salon industry in India is largely unorganized but is getting organized at a fast pace. The average per person spending on salons in India is a miniscule of spending in other countries such as the US, China and Malaysia. Even a small growth in
India is world’s second largest producer of textile and apparel after China. China is slowly reducing its focus on textiles and this has had a positive impact on the Indian textile and apparel industry. But not everything in the garden is rosy as