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Private Equity in SME sector

Private Equity in SME sector. By: Shishir Jain, Managing Director, CX Partners Email – shishir@cxpartners.in , 022-67431009. Role of PE Investor. Why private equity. Enables growth Efficient and creative capital Brings insights, knowledge, expertise and relationships

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Private Equity in SME sector

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  1. Private Equity in SME sector By: Shishir Jain, Managing Director, CX Partners Email – shishir@cxpartners.in, 022-67431009

  2. Role of PE Investor

  3. Why private equity • Enables growth • Efficient and creative capital • Brings insights, knowledge, expertise and relationships • Organize the business better • Plays the ‘Challenger’, ‘Critic’ role • Helps expands management bandwidth • Improvement in corporate governance • Perception improvement

  4. What PE brings besides capital - strategic • Mid and long term strategy planning • Recruitment, retention and succession planning • Acquisition target / divestment strategy evaluation • Brand image • Corporate governance • Institutional approach to financial planning • Preparing for IPO / strategic value unlocking

  5. What PE brings besides capital - operational • Management information system • Marketing strategy • International expansion • Product costing / production flow analysis • External relationship management • Inventory and supply chain management • Internal controls

  6. What PE looks in • Promoter and management team • Ownership vs management • Track record of their dealings with business partners • Delegation / micro management • Accommodative to outside investors • Execution capabilities • Clarity in vision / mission • Business model • Sustainability of business • Margins • Value proposition • Innovation / growth potential • Differentiating factor • Position of the company vis-à-vis industry • Corporate governance • Transparency • Quality of reporting • Valuation • Handling of softer aspects

  7. Exit Modes • IPO • Divestment / Secondary buyout • M&A • Leveraged Buyout (LBO) • Buyouts • Management Buyback • Strategic Buyout

  8. PE may not be an appropriate solution for all situations • Capital provider vs business partners • Emotions vs objectivity • Perpetuity vs limited time horizons • Stage of industry / company vs global practices

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