1. Building Initial Capital Support for Franchise Expansion

2. Structure the Transaction Carefully and Evaluate Funding Options:  Equity Shares  Preference Shares  Debentures  Combination of Debt and Equity Looking For External Funding - Can PE be a Good Option

3. Grant of Rights to the PE Investor:  Nomination on Board of Directors  Affirmative Voting Rights and Reserve Matters  Minimum Quorum Requirements  Anti-Dilution and Pre-emptive Rights  Rationalization of Board Nomination; Quorum and Reserved Matters in case of Dilution by Investor

4.  Undertakings and Covenants of the Promoter Group  Reporting Requirements  Achievement of Milestones agreed under Business Plan Complex Issues in PE Funding

5. Exit options available to the Investor:  Public offering  Buy-back of shares  Put options  Strategic sale with ‘drag-along’ rights  Investor mandatory put options Complex Issues in PE Funding

6. Transfer of Shares to Third Parties  Lock-in on Transfer of Shares  Right of First Refusal  Co-Sale  Drag Along Rights  Subsequent Sales Complex Issues in PE Funding

7. Event of Default and Post Termination Rights:  Put Options at Pre-agreed Exit Price  Call Option at Pre-agreed Discounted Price  Liquidation/winding up of the Company Complex Issues in PE Funding

8.  Indemnification Rights  Non-Compete  Non Solicitation Complex Issues in PE Funding

9. 9 What are the right reasons for Acquisitions?  Inorganic growth  Minimize lead period for market penetration  Ability to use pre-existing marketing, distribution and sales channels  Use the workforce, systems, processes and products offering Acquisitions - The Right Reasons

10. 10 Choosing the Right Partner  Brand  Revenue Model  Management Team  Viability of existing business models  Strategy for and commitment to growth  Alignment of interests  Competitive advantage Purpose of Due Diligence  Identify and value assets and business model  Uncover hidden liabilities and risks  Determine level of corporate governance Acquisitions – What comes before

11. 11 Aspects of Due Diligence  Organizational and operational matters  Capital & management structure  Board/General meetings  Corporate compliances/filings  Compliance with law including corporate, labour, taxation, education, charity  Standard contracts with services providers, employees, vendors  Internal policies, including HR policies, privacy policies, data protection  Ownership of/rights to use intellectual property  Title to/right to use immovable property including tenure in cases of lease  Litigation Acquisitions – What comes before

12. Seema Jhingan, Partner LexCounsel, Law Offices C-10, Gulmohar Park, New Delhi – 110049 Tel: +91-11-41662861 Fax: +91-11-41662862 E-mail: info@lexcounsel.in