Friday, August 01, 2008

Now for some Micro’hard’ talk

What had started as a good ol’ peaceful offer for merger, is now turning into a rather unpleasant war of words between Steve Ballmer and the Yahoo! board of directors.
Despite an elongated period of negotiations (since Microsoft put forward their proposal to buy Yahoo! at a 62% premium to the closing price on January 31, 2008, the day preceding the announcement), the stalemate continues. Steven A. Ballmer, CEO, Microsoft Corp. said in a letter on April 7, “The goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction.” But since speed is a pipedream still, Ballmer has threatened to take the battle to the shareholders and also that the valuation will be reduced significantly.

“Yahoo! is pulling out all the stops to try to prevent such an acquisition, primarily because I believe management really does feel that Microsoft’s $44 billion offer is too low,” feels Richard Dorfman, MD, Richard Alan Incorporated (a New York-based investment firm) and Chairman, TransMedia Institute. If first quarter numbers are good, it would signify Yahoo!’s best shot at gaining some power in negotiations with Microsoft ahead of its Saturday deadline to accept the software company’s nearly $44-billion takeover offer. A good Q1 would mean that Ballmer eats crow.

Even if a combined Microsoft-Yahoo! is unable to dethrone Google as the online advertising leader, the combined company would still be a very substantial player in this extremely profitable business. The present Yahoo! sentiment is tough to agree with but the situation shows it all. Others are equally getting vehement at the situation. “At the moment, Microsoft is mired in a three-dog fight to acquire Yahoo!”, reveals Marc Edelman, a New York law professor with an expertise in antitrust law. At present it’s competing against Google, which has tons of free cash flow and AOL, which presents lower antitrust risk. At least publicly, Microsoft is the only company that has submitted a formal acquisition bid. Plus, of these three companies, Microsoft may stand to benefit most based on synergies between Microsoft’s core business units and Yahoo!’s web-based capabilities. “Yahoo! will eventually sign a sale agreement with Microsoft but is using Google and AOL to try to convince Microsoft to both increase its bid price and incur the antitrust risk of regulators rejecting the deal on antitrust grounds,” adds Marc.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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Thursday, July 31, 2008

Kinds of funding

The second round of funding for the group, Consim Info, came from Mayfield Fund, (along with the existing investors) for a whopping $1,175 million. Whenever a company gets these kinds of funding it gives it a great boost. With capital at your disposal you can go out and grab each opportunity that awaits you, as money is no longer an issue to ponder about. Also your credibility in the marketplace increases as you have prestigious names that are backing you and your business ventures. All this helps in attracting good talent towards the organisation, as great minds would work with vigour when they know that their monetary needs would be well met by the organisation in both the short & the long run. More money in your hand also helps you to grow faster than the market.

Apart from all these, the fundings from these Venture Capitalists (VCs) have also helped the group in streamlining the business and putting proper processes in place. We also got more professional guidance and now are strengthening our top management further, through the support of our investors. We have been enjoying these fundings for a couple of years now and as one knows the average span of any VC is normally 3-5 years, so we have a couple of more years to enjoy these liberties and make our systems stronger before we are ready to test the markets through our IPO.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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A Yahoo! for BharatMatrimony

Fundings from Venture Capitalists not only bring in the much-needed capital and credibility, but also serve as a great lure for skilled talent-pool. The BharatMatrimony group has astutely reaped the benefits of VC funding.


Funding and capital are like oxygen for any organisation and it could not be any different for the BharatMatrimony group as well. The group kicked off operations in 1997, with BharatMatrimony.com as their first portal. Our online portal started to gain momentum from 1998 onwards, but in the initial stages, we did not look for many funding options because of the business model that we had adopted. We were very clear about that and from the day one itself we have followed a subscription based model, wherein we used to charge around Rs.300 for the subscription. Whatever money we were earning, we were ploughing it right back into the business.

The first round of funding in the Consim Info Pvt. Ltd. (which houses brands like BharatMatrimony.com, clickjobs.com, indiaproperty.com) came from Yahoo! and Canaan Partners, which invested $8.65 million in the group. In this case, it was Yahoo! who approached the group. We welcomed the move as Yahoo! is a global player and we felt that this association would fetch us a lot of recognition. Also in this case, Yahoo! was not just getting money and capital for us, but also becoming a strategic partner in the business. The matrimonial and property services offered by Yahoo! are all powered by the BharatMatrimony group.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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Private equity is a creative mode of financing

Private equity is a creative mode of financing and investors invest with the aim to exit to earn profits. Ajay Kapur (CEO, SIDBI Venture Capital) adds, “The investors values the investee on comparable multiples and more so where the investee company is likely to witness growth by the time the investor wishes to exit. A clear exit strategy and possible mechanism are prime considerations.” There are few ethical investors who do not invest in companies, which in the near future, might compete with their existing investments. This stands out to be an important parameter for selection of startups. The investments are often followed by efforts at streamlining to revive the loss-making companies or substantially improving the performance of profit-making ones. Since private equity companies derive their returns from the appreciation in the value of the acquired asset or company, they ensure that they offer much more than financial assistance in terms of the offering they bring on the board. These efforts are aimed at adding value to the investments before the private equity investors can exit.

However, after the dotcom bubble, and given the risks, hard work and patience to earn returns, there is some form of reluctance on the part of the investors to invest in a start-ups. Many analysts are of the opinion that unless there is an overcrowding in the PE space or else the pricing becomes unattractive, most investors are not likely to revert to early-stage deals.

The industry certainly thrives on a disparity of views, but nevertheless it’s continually growing. In the present financing scenario, it is all the more important than ever to have a business plan, pitch and value proposition even before the investee companies hold talks with potential investors. Any investee company with a potential, a committed and experienced management with sound track record, capacity and organisational skills to implement business plans into actions can easily grab the attention of the PE biggies. The investors on their part gain exposure to specific markets by being specialists.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
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Wednesday, July 30, 2008

Golden handshakes

Get savvy about the biggest private equity deals over the last year, the biggest dealmakers and what Venture Capitalists look for when zeroing in on potential start-ups! Also in this package, meet the stalwarts at Saif Partners and Bessemer Venture Partners to get a grip on their India strategy. Plus, columns by entrepreneurs who made it big with timely PE investments...


Remember the March 2005 $560 million Warbug Pincus – Bharti Tele-ventures deal? In total, Warbug Pincus infused $300 million into the company and by the time the Private Equity (PE) firm exited Bharti Tele-ventures, it had mopped up a staggering $1.3 billion. Overnight this deal thumb tacked India as a Mecca for global PE investments. Not that PE players did not operate in India before this, but Warbug’s bulging back pocket at the time of exit did take the lid off India as a hot PE destination. If the proof of the pudding is in the eating, merely glance at how the value of PE deals skyrocketed between 2005 and 2007. From $2,183 million in 2005, total value of deals jumped to a staggering $17.4 billion in 2007 (see table), an increase of a jaw dropping 744%.

Interestingly, while PE investments and Venture Capital (VC) funding are clearly demarcated propositions in the USA (where VC funding only refers to investments in early stage and expanding companies); in Europe, VC funding covers all stages. Traditionally, PE players can be described as firms that invest in companies, which already have some revenue base and have future growth potential via restructuring or bringing in new products, services and technology.

However, a cross-section of market watchers opine that in emerging markets like India, the distinction between the two is increasingly blurring and both these terms are used synonymously and as proxies. According to Harish H V of Grant Thornton, “In India, PE is understood as capital being invested typically through a LP (Limited Partnership) structure by domestic and international institutions to take reasonable stakes in unlisted and listed companies through private placement and also buyouts.” For the purpose of this listing of the biggest deals in India over the last year, we will use the term Private Equity to describe the industry in its entirety.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
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