JOINT VENTURES AND PARTNERSHIPS

A lucrative way for minimizing the risk of company expansion is to pool funding options with your competitor and form a joint venture. It can typically last for either one project or a group of projects but depending upon your investment, a joint venture might bring greater ROI and will allow you to achieve your business goals more quickly so that you can take on larger projects. Typically, at the time of expansion, most entrepreneurs face a dilemma: To differentiate themselves from their competitors, they should add a new product/service, a contract or a new market twice the size they have done before. But they require huge investment for such kind of business expansion, and there is no guarantee that this investment will pay off.

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It has been seen that joint ventures are a trendy way to allocate the cost of expanding the business into new territory. A joint venture (JV) is considered to be an incorporated entity, in which each organization which is participating primarily depends for the entity’s debts and actions. However, unlike a merger, a JV is short-term and often sold or dissolved on project completion that brings both partners together. At a time, it might happen that your friend can actually be your competitor or at least, an organization is related to the same business line like supplier. Many businesses that are expanding find pooling resources with either one or more partners for creating a JV is the best way for minimizing risk while assisting each partner to boost both revenues and expertise. In any partnership whether long-term or temporary, mutual trust and compatibility might make or break the deal.

 Pros of JVs

• The combined ROI from both venture partners is anticipated to be greater than the ROI they will be getting independently.
• For independent small organizations, joint ventures make help them in participating on larger projects.
• Resources from different organizations might help in achieving objectives and goals more effectively and quickly than resources from one.
• Venture partners can get information about adopting each other’s best practices.
• JV partners can get control on each other resources and technologies.

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 Cons of JVs

• JV partners can get control on each other resources and technologies.
• Entering into a JV needs the resource diversion from one’s current business.
• There are failure risks due to compatibility problems and liability for mistakes done by partners.
• JV is unlikely to succeed if both the partners are not committed deeply to the joint operations.

Now the question arises which comes first: the opportunity of business expansion, or the JV that will help in expansion? The situation varies in either of the conditions. You may already have product prototype but cannot afford hiring technical experts required for refining that product. Or you can also form a JV for conducting R&D activities in order to reach prototype stage. Often, organization that are involved in infrastructure projects build up a JV ahead of contract bidding, so that they can market the collective strength of venture. In an event, the JV partners fail to win the contract; they may still chase other projects together. Some rising market economies need that foreign companies build JVs as a method of giving employment, training and transferring technology. Moreover, plan on achieving the same owing diligence for a merger or acquisition. So, before signing a formal contract, both the partners must prepare the ground for that contract by drafting an agreement letter that might be formalized later into a legal contract. 

About ALCOR Mergers and Acquisitions

Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory, Private Equity,  Debt Financing and International Business Development. These Services  leverages insights,   relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company ,Complete the Enquiry form One of our representatives will contact you within one business day.  

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Paytm Acquires Nearbuy and Little, to Merge both - Expect A Busy 2018 On The M & A Front

Paytm on Wednesday announced the acquisition of Nearbuy and Little, two deals platforms that focus on local restaurants as well as commercial establishments. In a statement, Paytm said it arranged a merger of the two well-funded start-ups and made a “strategic” investment in the resultant entity for a majority stake. Sequoia Capital India, a large investor in Nearbuy (formerly Groupon India), continues to be a shareholder in the merged entity. Paytm did not say whether Sequoia sold a part of its investment in Nearbuy to Paytm Nearbuy, which was founded as SoSasta, was acquired by NASDAQ-listed Groupon Inc. in 2011.The company was later renamed as Groupon India, in 2013.In 2015, Sequoia Capital India and the current chief executive officer (CEO) Ankur Warikoo bought a majority stake from the US-based parent of the firm and named it Nearbuy.Little app (Little Internet Pvt. Ltd), on the other hand, was launched in 2015 with initial backing from Paytm, which wanted to test the waters in the hyperlocal deals business.The app started with a $50 million investment from Paytm, SAIF Partners and Tiger Global Management (SAIF is also a large minority shareholder in Paytm).

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After a somewhat choppy 2017, many experts are calling for a busy 2018 in the M&A space. The Predictions and Reports suggests that the pace of M&A activity will increase in 2018, based in large part on “a combination of gradual acceleration in global economic growth, low inflation in advanced and emerging economies, buoyant asset markets and low-interest rates that continue to bolster the M&A markets.”  While there are concerns that could impact the potential increase in deal flow (such as a rise in economic protectionism or a global equity sell-off) the prevailing view is that the positive conditions for M&A activity will continue to rule the day and drive increasing deal making.

One of  M and A Experts says “The State of the Deal-M&A Trends 2018” report takes a similar view. The report, based on a survey of business executives, notes that a significant majority of respondents expect M&A deal flow to increase over the next 12 months, while deal size is expected to increase as well.  The report cites acquiring technology, expanding customer base in existing markets and expanding/diversifying products and services as the leading drivers for M&A deals.  Among other positive factors, the report notes that cash reserves are up significantly at potential acquirers, and that the primary intended use of that cash is for acquisitions.

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Family-owned businesses should see an uptick in M&A interest as we move into 2018.

Buyers are always on the watch for well-run businesses with quality earnings and customer bases.  Family-owned businesses that are looking to grow should see an opportunity to acquire other businesses.  Those businesses that want to take advantage of a favourable market should start to take steps now to prepare, by working with management and advisors to get the business “in shape” for a transaction.  Several upcoming posts on this blog will discuss specific items that come up in almost every deal and steps business owners can take to prepare for a sale, such as dealing with financial statements, contracts management and HR/ERISA issues.

About ALCOR Mergers and Acquisitions

Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory,  Private Equity, Debt Financing  and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.

                                                                     

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Current Trends in Mergers and Acquisitions

Most of today’s Merger and Acquisition activity is conducted victimization processes that, whereas still adequate, don't profit of current technology. Whereas experience is very necessary, the dimensions and scope of today’s transactions need an elementary shift to a team approach with a comprehensive and repeatable M&A method utilizing a proper methodology. As always, the time to finish the dealing and absolutely integrate it into the corporate may be a compelling pressure. This component of timeliness is honeycombed against the additional extremely advanced transactions of current M&A activity. As such, the need for a proper, comprehensive M&A methodology and disciplined method has become more obligatory. Serial acquirers have to be compelled to implement state of the art tools and processes that give the M&A professionals suggests that to with efficiency conduct many, synchronic acquisitions and integrations. And therefore the multiple groups managing Associate in Nursing implementing the varied aspects of dealing need access to and an understanding of the full method, whereas acting on only 1 part or issue of a project.

A Secure Virtual information space provides a repository for trailing documents, worksheets, and comments. But, it doesn't give a strategy or method to be followed for the due diligence. The benefits of automating in depth due diligence method are currently being recognized. Today’s customizable, machine-driven M&A method systems enable the transfer of data and therefore the reviewer’s comments. Additionally, the technology ensures management of the method, and trailing of the transaction’s progress and resource utilization. Also, the cooperative side of those systems permits time sensitive info to be shared with internal and external team members for fast issue resolution.

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By implementing a classy M&A computer code, team members will master specific aspects of the method while not changing into specialists within the full vary of M&A problems and topics. Multiple M&A deals, at numerous stages within the M&A method, is also summarized, reviewed and managed additional completely and effectively. among these M&A systems, Gantt chart programming of resources is planned, monitored and changed as necessary. Personnel schedule coming up with and management of scarce resources area unit maximized. Critical, timely management reports on multiple transactions area unit expedited, with drill-down capability to specific issues areas or issues. The flexibleness of the system’s platform permits high quality for all team members, thereby providing the flexibility to be in constant contact with others appointed to the project. Outside professionals, money consultants and technical specialists are perpetually necessary to supply input to the M&A method. Secure M&A package systems enable every of those specialists to participate within the method by sharing within the deal’s confidential, personal communication network.

These new M&A package systems utilizing current technology enable the M&A professionals to extend the effectiveness and span of their data and talent. Team coaching is additional economical and in keeping with the company M&A methodology. The team member’s work will thereby be effectively managed against standards and timelines. And significantly, completed M&A comes is brought on-line quicker and among budget.

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Mergers and acquisitions tend to run in inevitable patterns. Within the early stages of the M&A market, mega deals area unit typically transactions that occur as a results of consolidation within the market during which the corporate competes. Valuations are at the start affordable, with the buyer’s objective of enhanced market share or dominance being the actuation. Even with high multiples on the seller’s business, consumers presently area unit able to secure debt at overrun 5 times Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA). Still, the Board of the acquirer can specialize in deal valuation. And, the strength of the business executive and Board’s business confidence, regulative pressures, economic and political patterns, growth in Gross Domestic Product (GDP), price of capital and equity market stability area unit all factors in deal activity levels.

In the past many years firms have veteran weak sales growth. This has diode to a spotlight on Mergers and Acquisitions as a method to re-engineer that growth. The rise in middle market deals indicates that acquirer’s is willing to speculate their benefit firms that might generate enhanced sales and profits within the long-run. On the converse, aspect firms area unit proactively optimizing their business portfolios. Supported major foreign and U.S. Equity Market indices, firms can feel pressure to deliver on growth expectations in each their stock worth and their price/earnings multiples.

About ALCOR Mergers and Acquisitions

Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory, Private Equity,  Debt Financing and International Business Development. These Services  leverages insights,   relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company,Complete the Enquiry form One of our representatives will contact you within one business day.  

  

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Setting Up a Joint Venture

Currently, World’s economy is growing very fast. But for the first time, stepping in any country the most preferable form is the Joint Venture for setting up a business entity. Also, in case the business and legal environment is not known, it is advised to form a Joint Venture. A Joint Venture is joint agreements among two or more parties come together and form business or contractual relationship for executing specific business model. There are two types of Joint Ventures: Contractual Joint Venture and Equity Based Joint Venture.

Contractual Joint Venture

Wherein two or more individual or companies comes together and forms an agreement/contract for working jointly but no individual entity is build for executing the business contract. The main features of contractual joint ventures are described below:

·         Two or more organizations comes together into an agreement with a similar intention of project execution

·         Each organization or individual brings its own roles, shares and responsibilities are accordingly decided to depending upon each one’s field of expertise

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Equity Based Joint Venture

In this an individual legal entity is formed which is owned by two or more individuals who are working jointly with a similar intention.  And also decides to equally participate in the equity of entity that is newly formed. This newly incorporated entity may be in the form of LLP, Partnership firm, Company etc. In general, in this type of joint venture, the benefits as well as losses of entity that is owned together are distributed among the all the individuals or parties based on the capital ratio contributions made by them. The key features of equity-based joint ventures are as follows:

·         Shared rights by the individuals/companies involved

·         Shared management of together owned entity

·         Shared benefits and losses based on the agreement

Benefits of a Joint Venture

Two or more individual’s ownership in an organization and each and every person contribute different aspects having long-term profits in their mind. Fundamentally, everyone has found it essential to have a business partner. Likewise, in the US, business partnerships must be done legally along with proper government documentation. This process includes registration and building of a partnership agreement, describing business objectives, responsibilities, and legal liabilities of an individual. Often, business associates always want to be exposed themselves with the liabilities and risks associated with an unlimited general partnership. A limited partnership agreement might mitigate such kind of issues. Also, in limited partner’s case, both individual don’t have same no. of control over a business practices, and also don't have same level of debt exposure of the business. The specific rights along with business responsibilities of these partners should be laid out in the agreement of partnership. However, the business formation laws having limited partnerships, varies state to state.

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Joint Venture- A Good Fit for Successful Business

Joint ventures combine two or more separate business entities for undergoing on a business idea or specific project with mutual decision for successful functioning of both the businesses. In this way, both the entities only give their daily business operations rather giving whole control over their business. Both the business entities continue to function independent of each other, except the specific idea or project they have decided to run together. Every member does capital investments and put their resources, and takes the risk involved in that process. On the whole, a partnership which is in general form couples two or more persons in a permanent business relationship. In this venture, there is no operation or functioning separation neither there is any kind of limitations on the any activities or projects taken together to work for.

About ALCOR Mergers and Acquisitions

Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory,  Private Equity, Debt Financing  and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  

                                                                     
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Mergers and Acquisitions :: Door to Global Opportunities

Mergers and acquisitions (M&A) can accelerate a company's growth probably more than most other means within its arsenal. This is particularly true of larger deals. Mergers and Acquisitions have one common goal that they are all meant to create a synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved. To effectively identify, value and integrate smaller strategic targets, companies need to:

1) Develop an M&A vision that aligns with the dynamics of their industry in the face of disruption and convergence.

2) Adapt the criteria and decision frameworks for evaluating their portfolio and acquisition targets to fully understand a deal’s impact on their portfolio - and how it will enable them to redefine their business model.

3) Accelerate their overall M&A decision making to move at the speed of the market and avoid missing out on key opportunities to acquire vital capabilities.

Mergers and Acquisitions (M&A) are a great way to grow your business without having to wait years for your marketing and sales strategy to pay off. When you need immediate growth for your business, this can be the best option for you that provides the instant result. The primary goal of a company interested in a merger or acquisition is to secure an opportunity that will either achieve the objective of growth or provide an area of expansion that will add to the product/service line in a market that is currently not served by the company. The motivation behind this pursuit is that the resulting combination of products, key people, and existing pipeline will allow the business to operate in new markets and offer new options to their existing market.

Pursuing mergers and acquisitions does not come without challenges. Combining two business results in many new issues that did not actually exist before, this includes: operating a company with a presence in multiple markets, a larger and more diverse customer base, a more complex product and services portfolio, and a high level of people and operational complexity. Another issue is the cost reduction goals can conflict with revenue growth opportunities.

The challenges of making a merger and acquisition work illustrate why deals intended specifically to enable growth fail to yield the desired growth objective. Although mergers and acquisitions can be a real path to growth, the decision to make the deal is only the first of many decisions that will affect its ability to be successful. This makes you wonder if a merger and acquisition will work for your business. Therefore, you want to understand your odds of succeeding and if the challenges are worth the effort.

The goal driving many business acquisitions involve synergies. When companies are choosing to merge together, the desire is for the whole to be greater than its individual parts.  The synergies involving marketing and economies of scale are clear benefits for why a merger and acquisition should be an option for growth. Also, there are typically opportunities involving production, volume discounts in purchasing, and reduced overhead expenses.

If you are in the position to acquire a business, you may want to pursue this growth strategy. You know that the business environment presents challenging factors, such as competition and acquiring market share. Therefore, acquiring your competition and gaining their markets and customers will put your business in the position to reap significant rewards. You will find that they will start investing more when you are able to show how this acquisition will immediately pay off, instead of taking a time to produce results. This is why you should seriously consider acquiring a business if you want your business to experience growth.