Equity funding strategic advisory & implementation for SMEs

End-to-end tailor-made equity funding strategic advisory & implementation services to SMEs with emphasis on mergers & acquisitions (M&A). Helping SMEs from identification of problem or growth aspiration of business to analysis of available solutions, selection of suitable option, formulation of M&A strategy, preparation of fund requirement schedule, identification and approaching the equity funders, preparation of necessary M&A documentation, communications, valuation, contract drafting and negotiations, due diligence, closure of investing deal to handholding for six-month post disbursement.

Business is operational for last 18 months and we have developed our M&A services in last six months. Already got 4 Mandates signed and 7 are in advance stage. We also started realizing monthly revenue from these clients. 20 additional proposals are under discussion and we are planning to close minimum 12 mandates in a year. Which will give us fixed fees of $100,000 and success fees of $1,500,000. Deliver network is also ready.

Our focus is on MSMEs and in India only those are more than 20 million MSMEs in India. Even if we target simply 10 percent of them as our addressable market then will have 2millions as addressable market. If we target just 1% as our clients out of this addressable market we will have 20,000 numbers. Its a huge market to address.

Why do many businesses become stagnant or lose financial attractiveness over time? Why do some businesses become or look more risky? Why do some businesses suffer from financial distress? Why do some businesses even fail causing massive economic hardship to many? Well, not factors leading to financial owes are always in the control of the company management. But, do you know a very few companies are affected by the external factors & most of the companies fail because they didn’t manage well the factors within their control! Most distress situations & failures are avoidable!! Typically, you can see that the companies are led by very good technocrats with a great understanding of the market & a huge stakeholder network. They also may have history of overcoming technical, operational & market problems successfully in the past. we address Root Causes of Stagnation in Growth & Financial Distress for SMEs.
Their long experience too looks short when it comes to address business complexity, long term strategy, systems, risk mitigations, corporate functions, financing, investments, knowledge management, succession etc.

1. Mergers & acquisitions (M&A), growth funding, financial turnaround of distressed assets (NPA, ARC, IBC, etc.), equity funding, share transfers, asset transactions, succession planning, demergers, sell-side advisory, etc.
2. Strategic financial consultancy services for excellence in financial performance, higher profitability, higher rate of return on investment, financial growth through financial plan, financial risk management, capital structuring, dividend policy, financial models, financial contracts, etc.
3. Corporate management consultancy services to have a stable, harmonious & efficient management through professional corporate group structures, legal forms of business entities, professional constitutional documents, careful agreements between shareholders, directors & other key stakeholders, performance and award mechanism for board of directors, corporate governance & corporate policies, etc.
4. Business strategy consultancy to evolve a clear common path to work upon through a preparation of a business plan, financial model, corporate structure, contract structure, project strategy, revenue structure, financing plan, joint ventures (JVs), risk management, exports, overseas investment (ODI).
5. SME entrepreneur Counselling services for above decision making (hourly fees basis)

As of now, there are about 6000 consultancy firms in metropolitan cities including Delhi (25.7 percent) followed by, Mumbai (25.5 percent), Chennai (12.1 percent) and Kolkata (9.1 percent).
Due to constantly increasing demand, the industry is estimated to grow at a compounded annual growth rate of 30 percent to become a Rs 27,000 crores industry by 2020, as per the reports of The Associated Chambers of Commerce and Industry of India (Assocham).
The type of services we provide has very limited players in India. Most of them are from USA. Hence, they target the top companies in India. Our target market is the companies who do not afford the services from those premium strategic consultants.
Also, the consultants in this discipline provide compliance and professional consulting, so they cannot be considered as competitors, as their services are different. They could be tier 2 service providers to Apohan.

Apohan is not a mere consulting company but also it believes in its recommendations & action plans.
Hence success fees & profit sharing would be the key elements in the long-term engagements.
Unlike most other M&A service providers, Apohan has in-house or outsourced expertise of all related professionals under a single roof be it chartered accountants, company secretaries, business lawyers, MBAs in strategy, MBAs in finance, MBAs in marketing, investment advisors, investment bankers, engineers fr om various disciplines, technocrats, valuation experts, resolution experts under IBC, deal brokers, sector experts, etc.
Apohan is not a broker but carries out a wide variety of scope of work in M&A engagement. Apohan is connected to a wide variety of investors with a wide variety of preferences for investment ticket sizes, sectors, time Horizons, risk appetites, locations, expectation of rates of return, terms of engagement, etc.
We are very choosy when we select a business for equity funding services as otherwise investors will not make an investment wasting everyone’s resources. We help the businesses where the management has a record of financial integrity; the company has sound competence in its technology, products, services, markets & competition & the trends in them; where there is a priced demand for the products that can create sustainable and handsome profits, wh ere there is marketing capability & marketing infrastructure in place.

In consulting the cost of human resource is calculated on a daily basis, and these resources are expensive, however it gets reduced if the engagement is long-term.
Based on this, the revenue model we carry is bifurcated into various types of remuneration patterns. The assignment with any client starts with
1. Advance fixed fees - Average $2,000/- per mandate
2. Periodic Monthly Engagement Fees - Average $5,000/- per mandate for 6 month period
3. Milestone based fees.
4. Success fees - Average $60,000/- Each successful mandate
This makes the foundation of revenue generation, to keep the revenue cycle moving. We club the foundation with success fees based on the nature of assignment.
This investment of $1Million will take Apohan to clock revenue of $2Million in year one and also a projected revenue of average $400,000 per month from year two with monthly burn of $150,000. Apohan will be self-sufficient from year two and accruals will be invested in business for expansion. Additional $150,000 from initial investments will be used for capex for immediate future. Post this from business accruals we target to reach revenue of $20 millions in the fifth year.

Apohan is a B2B consulting company. We have adapted a long-term association strategy for our engagements and hence we use hybrid business model. Mix of inhouse consultants along with pool of individual experts coupled with long term solution and engagement.
As the engagements are long-term in nature, we use models such as revenue sharing, profit sharing, profitability sharing or any combination of the above.
Instead of charging clients for hours spent, we charge clients for objectives achieved, aligning major component of fee with the successful achievement of pre-defined goals throughout the consulting process and the success of investing in client company. Hence, the risk for clients is considerably reduced, as they only pay if the output of our work is successful.

20% Product/services Development / Capex
10% Marketing/Sales
50% Operations including salaries
5% Existing Debt
15% Other

We can offer upto 26% of stake but it will depend on the deal structure, what investors are brininging on table, contribution in business, value addition etc. Unless we get toknow each other it will be difficult to work out a clear offerings. There are lot of things which are necessary to know before any offer. Being a M&A consultants and experienced professionals, we can assure a good win win offering for investors with value and benefits.

Major risk for our business is debt funding as most of the SMEs are not much aware about equity funding and even if they are aware, they very hesitant to offload stake.
Another risk is from competitors, there are small time players and brokers who only focus on their commission and hence agrees to work only on success fees. They did not spend much time in finding suitable partner, their only focus is getting funds only.
Large players too play risks as a brand, but as our focus is SMEs we see this as an opportunity.
Some technology players are also competition as they promise the services at lost through networking.

Being experienced corporate professionals and from M&A backgroung with nore than 240 deals, we have capabilities of incubator and we are suppport COEP Pune incubator.

Not participated in comprtitions as were buidling up services.