Et, 20-6-2007, Page 5
Valuations of Indian BPO firms, among the most expensive globally, have undergone a correction since beginning of the year making them more attractive to PE players looking for BPO buys in the country.
WNS, India's largest third-party BPO after Genpact, is currently valued at 44 times its earnings, at a significant discount to the price it used to command six months ago.
Valuations peaked in February this year. current valuations are between 2.5 to 4.5 times the sales, and 15-20 times the EBDITA depending on the size, margins and growth prospects. Other factors that determine the valuation are voice and non-voice mix and domestic and international BPO business mix.
Wednesday, June 20, 2007
Acquisition and Divestment of a Different Type
Mumbai based IT company GTL has enterred into an agreement with ICICI Bank and Spanco Telesystems to lease out its BPO assets for 25 years for Rs 253 croes. GTL has two BPO facilties with a combined capacity of 1500 seats and 1.5 lakh sq ft area. As it is a lease agreement, GTL will keep its real estate and also will continue to provide instrastructure management, telecom services, facilities management and offer other professional services to these BPOs.
Tuesday, June 19, 2007
Seeds of a credit crunch growing a global LBO loan market
The Economic Times (ET), 20-6-2007, Page 10
Earlier banks used to finance LBOs/buyouts mainly with loans on their balance sheets. But they are now packaging and selling those loans to investors using instruments called 'collateralised loan obligations" (CLOs) that group various loans together to diversify risk.
In the old days of relationship banking, banks relied on credit quality control and huge balance sheets to ride out any problems, but CLO investors may be more short-term oriented and will dump their securities in case of underperformance and problems.
Collateralised Debt Obligations (CDOs)a broader classificationo of the structures, have been especially voracious buyers of CLOs. Total CDO sales grew to more than $300 billion, a record doubling in size in less than two years.
Anthony Schultz, a portfolio manager at Mendon Capital, says you're clsoe to the peak of the cycle and for new CDOs coming to market, the end buyers are going to say, 'Ijust took a loss on these things and you want to sell me more?'. The credit crunch will begin then.
Earlier banks used to finance LBOs/buyouts mainly with loans on their balance sheets. But they are now packaging and selling those loans to investors using instruments called 'collateralised loan obligations" (CLOs) that group various loans together to diversify risk.
In the old days of relationship banking, banks relied on credit quality control and huge balance sheets to ride out any problems, but CLO investors may be more short-term oriented and will dump their securities in case of underperformance and problems.
Collateralised Debt Obligations (CDOs)a broader classificationo of the structures, have been especially voracious buyers of CLOs. Total CDO sales grew to more than $300 billion, a record doubling in size in less than two years.
Anthony Schultz, a portfolio manager at Mendon Capital, says you're clsoe to the peak of the cycle and for new CDOs coming to market, the end buyers are going to say, 'Ijust took a loss on these things and you want to sell me more?'. The credit crunch will begin then.
Include marketing expert in merger negotiating/process team
Mint June 20, 2007, page 21
Article by Dr. Richard Etteson, Professor, Thunderbird School of global Management, Glendale, Arizona and M.r Jonathan Knowles, founder and CEO of type 2 consulting in New York.
Our research with managers involved in 200-plus M&As shows that companies don't think much about how to present the merged company to customers, employees and investors. Including a senior marketer at the M&A table will address this blind spot-and also generate three benefits for the negotiating team.
Selling the brand: marketer helps to ensure that the new entity's corporate brand is chosen based on strategy rather than expediency and would explicitly consider how the company can communicate the benefits of merger to customers, employees and investors.
Finding key assets: A marketer in the merger team would look at "relational assets" that drive cash flow, such as corporate reputation, goodwill and the brand itself-vitally important factors that often get overlooked in a merger deal.
Looking beyond deal breakers: A senior marketer can look at "deal makers" - factors that will enhance the chances of success after merger, such as the strategic use of the corporate brand. the marketer would focus attention on ways in which the new company could deliver more value to customers.
Article by Dr. Richard Etteson, Professor, Thunderbird School of global Management, Glendale, Arizona and M.r Jonathan Knowles, founder and CEO of type 2 consulting in New York.
Our research with managers involved in 200-plus M&As shows that companies don't think much about how to present the merged company to customers, employees and investors. Including a senior marketer at the M&A table will address this blind spot-and also generate three benefits for the negotiating team.
Selling the brand: marketer helps to ensure that the new entity's corporate brand is chosen based on strategy rather than expediency and would explicitly consider how the company can communicate the benefits of merger to customers, employees and investors.
Finding key assets: A marketer in the merger team would look at "relational assets" that drive cash flow, such as corporate reputation, goodwill and the brand itself-vitally important factors that often get overlooked in a merger deal.
Looking beyond deal breakers: A senior marketer can look at "deal makers" - factors that will enhance the chances of success after merger, such as the strategic use of the corporate brand. the marketer would focus attention on ways in which the new company could deliver more value to customers.
Friday, June 15, 2007
deal book research
Mint 15-6-2007
Page 1
Merrill lynch invests in copal partners, a M&A research outfit based in UKbut maintaining a research staff of about 540 near New Delhi. Merrill outsources work to this firm. Copal is now diversifying into stock research in non US markets and credit research.
Raj Khosla, CEO and paertner Joel Perlman started the firm
Page 1
Merrill lynch invests in copal partners, a M&A research outfit based in UKbut maintaining a research staff of about 540 near New Delhi. Merrill outsources work to this firm. Copal is now diversifying into stock research in non US markets and credit research.
Raj Khosla, CEO and paertner Joel Perlman started the firm
Sunday, June 3, 2007
Book - The Art of Negotiating - Gerard Nierenberg
today I completed reading the book The Art of Negotiating by Gerard I. Nierenberg. This is one of the 22 books that I plan to read to support my teaching of M&A.
The contents of the Book are
I. On Negotiating
II. The cooperative Process
III. People
IV. Preparing for negotiation
v. Hidden Assumptions
VI. What Motivates us?
VII. The Need Theory of Motivation.
VIII. How to Recognize Needs
IX Negotiating Techniques
X. Life Illustrations
The chapter VIII How to recognize needs? is an interesting chapter. Some interesting statement of the authors are:
"To know what your opposer is thinking and striving for, youmust turn detective, you must apply various methods and techniques to your primary objective of recognizing his needs."
Ask questions
Make affirmative statements
Machiavelli offers sound advice on how not to use statement: 'Ihold it to be a proof of great prudence for men to abstain from threats and insulting words towards any one, for neither...diminishes the strength of the enemy; but the one makes him more cautious, and the other increases his hatred of you, and makes him more persevering in his efforts to injure you."
Become a good listener
Observe and understand nonverbal communication
The contents of the Book are
I. On Negotiating
II. The cooperative Process
III. People
IV. Preparing for negotiation
v. Hidden Assumptions
VI. What Motivates us?
VII. The Need Theory of Motivation.
VIII. How to Recognize Needs
IX Negotiating Techniques
X. Life Illustrations
The chapter VIII How to recognize needs? is an interesting chapter. Some interesting statement of the authors are:
"To know what your opposer is thinking and striving for, youmust turn detective, you must apply various methods and techniques to your primary objective of recognizing his needs."
Ask questions
Make affirmative statements
Machiavelli offers sound advice on how not to use statement: 'Ihold it to be a proof of great prudence for men to abstain from threats and insulting words towards any one, for neither...diminishes the strength of the enemy; but the one makes him more cautious, and the other increases his hatred of you, and makes him more persevering in his efforts to injure you."
Become a good listener
Observe and understand nonverbal communication
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