1. Private Equity in SME sector
By: Shishir Jain, Managing Director, CX Partners –

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 Buyouts
Leveraged Buyout (LBO)
Buyouts
Management Buyback
Strategic Buyout
India has provided many successful exits for various private equity players through the IPO route Biocon, Patni computers, Bharti Airtel, Shoppers Stop, Suzlon, HT media, Fortis healthcare and the recent Idea cellular, Binani cement to name a few.
M&A is the best option exercised by overseas companies to exit via a strategic investor. LBO’s of today are different from that of the 1980’s
India has not seen much buyouts as compared to US & UK. Buyouts are coming up with ICICI Banks venture of Renuka Ramnath who is responsible for raising the India Advantage Fund, India's largest private equity fund till date with a corpus of US$230 mn

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