Private equity involves various types of investments including venture capital, leveraged buyouts, and growth capital. When seeking private equity investment, preparation is key. Entrepreneurs should develop a business plan outlining their idea, team, market analysis, financial projections, and more. They should also identify potential issues or weaknesses in the business in order to effectively address questions from investors during due diligence. Finally, entrepreneurs need to consider valuation of the business and how to negotiate from a position of strength when discussing investment terms with private equity firms.

1. Private Equity Getting more than money into the company www. venture bean .com Anjana Vivek www.venturebean.com [email_address] Institute of Chartered Accountants of India: Bangalore Branch Study Circle Meeting: Jan 2010

4. What do you want from the investor? www. venture bean .com WHO ? WHY ? HOW ? WHEN ?

5. What do you want from the investor? www. venture bean .com To help you reach out for the sky… As you attempt to achieve your dreams? How do you proceed?

7. What do you want from the investor? www. venture bean .com Are you looking for More than money? * Readings: 1)Do your homework well before approaching a venture capitalist 2)VC funds, corporate VCs, or angel investors: whom do you approach? 3) Are you ready for VC investment?

8. Preparation is the key to success www. venture bean .com

9. BUSINESS PLAN The plan must have structure and include the following: - Business / idea - People behind idea/project - Market size expected - Marketing strategy - Competition - Financials - Other information which makes this complete www. venture bean .com

10. Business Plans www. venture bean .com Readings: http://www.slideshare.net/anjanavivek/preparing-a-bplan-for-equity-investment Forecast financials in a business plan

11. Identify key issues www. venture bean .com

12. DISCLOSURE Prepare for due diligence by identifying pitfalls upfront and taking steps to mitigate/de-risk to the extent possible www. venture bean .com Query? Would you disclose weak points ?

13. DISCLOSURE To trigger thinking If you do not disclose the negatives, the investor will not automatically assume that you do not have any negatives in your project/idea www. venture bean .com

14. www. venture bean .com What are the deal drivers?

15. DEAL ISSUES Every business has issues which are - deal drivers and - deal breakers Try to identify key deal issues from - your perspective and - the investors perspective www. venture bean .com

16. DEAL ISSUES This can help you plan on how you can leverage on your strengths This can help in negotiating a better deal www. venture bean .com

17. Preparing for due diligence www. venture bean .com - Technical - HR - Financial - Tax - Regulatory … etc

18. Preparing for due diligence www. venture bean .com Readings: 1) Valuation and deals: avoid throwing away value

19. Valuation www. venture bean .com Varies over time… An art and a science

20. VALUATION Valuation is based on: - intangibles and - tangibles Valuation can be computed in multiple ways, the popular methods: - multiples of revenue; profit etc. - multiples of key drivers, eg.user base - cash flow based www. venture bean .com

21. VALUATION Valuation may be driven by - the stake the entrepreneur is willing to give up at a particular stage of investment in the business and - the amount of money required by the business at that stage www. venture bean .com

22. VALUATION Different persons can value the same business differently because they may - use different methods of valuation - use variations in the methods - have different inputs in the methods Thus, valuation perceptions can vary, and we do have situations where there are divergent views on valuation www. venture bean .com

23. VALUATION Deals can sometimes be structured in such a way that the differences in valuation perception are factored, e.g. linking valuation to performance www. venture bean .com

24. VALUATION Valuation is also the outcome of negotiations, so it is important to identify one’s bargaining power in relation to the deal issues www. venture bean .com

25. Valuation www. venture bean .com Readings : 1) Some finer points in the valuation of a business 2) Valuation Basics … and.. some practical tips

26. Understand your bargaining power www. venture bean .com

27. Negotiations www. venture bean .com Readings: 1) Negotiations: A key element in growing your business 2) Negotiating Insights: From IIMB’s MPWE programme

28. To trigger thinking How will you prepare for private equity investment in the company that you are working for? www. venture bean .com

29. More information: www. venture bean .com Readings: www.slideshare.net/anjanavivek http://www.venturebean.com/resources.html

30. THANK YOU For your time and patient hearing www. venture bean .com