A wise man’s advice on PE deals! : Ankita MohnotIf we ask 1000 entrepreneurs what’s their biggest barrier in doing business, number 1 response will be lack of funds.At various points they feel a PE fund can help them. Not just with money but also with a broader outlook and the PE investor’s experience of helping other businesses.Now how to approach a PE fund?Before you go for the search, deDine it for yourself.Why do you want the money in the 7irst place?To get out of Dinancial stress or you need it for growth?There are mainly 2 types of PE Dirms • Stressed PE Firms • Growth oriented PE DirmsStressed PE 7irm: Are those PE Dirms which prefer investing in companies under stress, or declining proDits. Their professionals are experts in turning around such cases.They look to the stress but at the same time focus on the potential of the business. They will evaluate if they can convert it in a proDit making business.Their objective is to sell it at much higher value than it had purchased it on. This is a kind of very risky investment coupled with a big challenge.It’s a different kind of mindset altogether and you need to approach these investors with a clarity in your mind.Ask yourself: What is the true potential of my business? Why can’t we achieve it on our own strengths? Except funds what other factors are stopping us?Be ruthless with yourself. These questions will come up at some stage.
Growth PE Firm: These are PE Dirm which invest in companies already making proDit but they need to invest in the business to enhance their competitiveness in the marketplace.It might be for new technology, getting into new areas, or to achieve true potential of their business.Once you are clear on your need for fund, the next question is:How much do you need? Investors have their own parameters about minimum and maximum limit on funds. Your case might be strong but a fund which deals in millions of dollars won’t be interested in a deal of say some 20 crores.Knowing your needs will help you narrow down your search.Now, the next Dilter in your search will be: The industry.PE investors like to play in certain industries. Simply because they have expertise and experience in these industries. They know the best practices and bench marks. They also know the best partners who can compliment your strengths.It works better for you as well. Be very clear, more than even the money it’s their experience which counts. In a nutshell:Know why you need the money?How much you need?Apart from money what other expertise you are looking for your business?It will help you get a better PE deal for sure...............................................................................................................................................................
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