Services , Advisory , Joint Ventures , WORBUS JV Process

WORBUS JV Process

Negotiations and Bidding

Strategy Formulation

Targets and Buyers

Transaction Structuring

Valuation Models

Strategy Procedure
The process of making an inorganic growth decision involves the following steps :
Identify the saturation of your organic growth capabilities SWOT Analysis for your organization Identify weak areas, which require focus Identify preferential areas of growth Research for the growth possibilities and the geographical target area Value the opportunity and prepare a thorough business plan Identify a target Evaluate the target company Evaluate synergies of the association Structure the deal Chalk out the investment plan and the mode of consideration Legal procedures

Business Valuation
Valuation is used to estimate the attractiveness of an investment opportunity and to evaluate the potential for investment. A company that is aiming to partner with another company must determine whether the association will be beneficial to them. In order to do so, they must ask themselves how much the project is really worth. What is the investment that they need to put into to reap the proposed returns? Naturally, both sides of an M&A deal will have different ideas about the worth of a target company: the party with investment idea will tend to value the company as high as possible, while the buyer will try to get the lowest price possible. Hence, it is utmost important to have a fair valuer to value the investment proposal. The challenge to valuing an opportunity is to obtain a thorough understanding of the business dynamics of both the parties, rationale for the investment, industry dynamics, resulting synergies as well as likely risks of the transaction in order to ensure that the valuation is a win-win for both the parties and is financially viable.

Capital Structuring
Capital structuring is a crucial aspect when it comes to considerations for the proposal. The identified investment needs to be broken down into the payment structure in terms of the type of investment, the amount to be brought in by both the parties.

In case of equity sharing, the shareholding of each partner is to be calculated In case of a technology transfer, the terms of royalty payment are to be frozen In case of a licensing agreement, the fee structure is to be worked out

Due Diligence
Once the wheels of a strategic alliance are turning, it becomes difficult for senior managers to step on the brakes. You need to know your road before you start he journey for a strategic alliance. Most successful alliances view due diligence as much more than an exercise in verifying data. They view it as an investigation into four basic questions:

What are we really buying into? What is the target’s stand-alone value? Where are the synergies - and the skeletons? What is our walk-away price? How much value will we receive over the next 5 years? What will be the change in our enterprise value?

Legal Documentation
Any association you do with the support of WORBUS is a legal association and done under a complete legal guidance of WORBUS’s legal experts. Right from the concept stage to the finalization stage, various legal proofs are created to safeguard all the parties’ alias, the partner with idea, WORBUS and the prospective partner. The various legal documents those are created throughout the process include:

Letter of intent Memorandum of understanding Joint venture agreement Formation of company Certificate of incorporation of company Memorandum and articles of association Technology transfer and royalty agreement Licensing agreement

Negotiations And Bidding
Top management can negotiate at a time with several identified short-listed companies suited to be prospective partners and pick up one which offers the most favorable terms. But there are certain precautions one should take before they go on the negotiation table :

Investigate the partner and his attitude towards the collaboration Explain the pros and cons of the proposal to the prospect Discuss the profitability and risk and returns of the proposal Seek prospect’s willingness for the proposal Preliminary consultation with prospective partner

Strategy formulation
Formulate the strategy to take the proposal through with the proposing as well as the prospective partner. The various strategies those can be applied for an inorganic growth opportunity include ...
Marketing, sales and distribution agreements License agreements R&D agreements Manufacturing / supply Supply and sourcing related agreements Financing and equity related agreements Product and technology development agreements Joint venture agreements Facilities management Guarantees Termination, restructuring and dissolution agreements Letters of intent, term sheets, shareholder agreements and MOUs Master agreements

Identification of Targets and Buyers
Identifying a target or a buyer or a prospective partner is utmost important in any inorganic growth strategy. To have the greatest synergies in your growth plans, both the parties must have a common vision and follow same philosophy. The synergy for any business starts from the synergy between the partners' vision. Your power sourcing of a partner should be able to assess the prospects attitude to collaboration. Failing to do this could damage a valuable relationship. For this you need to partner with an agency which gets in touch with the partner and performs a SWOT analysis of them for you. Today, there is only one firm which will source a partner for you, and that firm is WORBUS. There is only name with whom you can partner to source a partner for yourself. We take care of all the sourcing requirements and your need to go and close the deals.

Transaction Structuring
After lot of efforts in identifying an opportunity to negotiating, now comes the time to put down the discussion and understanding on paper. This involves a lot of thinking about all the terms that may affect the partners in some manner and in turn the business. The following are the key areas, which are to be carefully drafted in order to avoid any friction between partners in future.

Clearly defined business objectives Degree of participation and the management roles of each partner in the business Contribution of capital and ownership rights to property Division of the profits and losses Dispute mechanism to avoid management impasses that may produce deadlock or litigation Exit clause clearly mentioning termination/liquidation of the association and the buy-out provisions Confidentiality Indemnification

Valuation Models
A number of models are used to value a company considering. The most common ones are...

Asset-based valuation
Net adjusted asset value Intangible asset valuation Liquidation value


Earnings-based valuation
Discounted cash flow (DCF) Cost to create approach Capitalized earnings method


Market-based valuation
Market capitalization for listed companies Comparable company valuation


Discounted cash flow is the most common technique. DCF analysis uses future free cash flow projections and discounts them to arrive at a present value. A simple annuity is used to estimate the terminal value past 10 years for example. This is done because as time goes on, it is harder to come to a realistic estimate of the cash flows. WORBUS follows the same technique to value an investment opportunity taking into consideration qualitative factors like the credentials of the company and Indian market conditions.


Consideration
The consideration for the opportunity comes in the following ways:
From the western country partner - The consideration for the opportunity comes in the form of... Marketing orders Technology transfer Licensing Financial contribution From the Indian partner - The consideration for the opportunity comes in the form of ... Equity sharing Royalty Fees Management capabilities

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