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Business Advisory Services – ACCTPRO Advisory Services LLP

Business Advisory Services

ACCTPRO Advisory Services LLP > Business Advisory Services

Fundamental to a Small and Medium Enterprise’s (SME’s) growth journey is the cycle of Planning for Growth, Implementing the Growth Plan, and then planning again for the next cycle. While Annual Plans are made every year and take the colour of Annual Budgeting which organizations usually tend to do internally, periodically organizations may want to do an exhaustive Strategic Planning exercise where each and every aspect of their business is examined and the organization goes through a self-inquiry. The process is challenging as it involves looking at the organization from an outside-in perspective which requires trained advisors and consultants. In such an exercise, our experts can supplement your internal knowledge of the business with an external perspective, research, analysis, best practices, and analysis of future trends. As one of the top strategy consulting firms operating in the SME space, we bring extensive experience in advising SMEs to not only stay relevant but also thrive in the ever changing marketplace.

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SMEs and corporates alike face several challenges in implementing their growth plans. Mere planning is not enough and the planning could go adrift for a variety of reasons. There are several elements that go into successful implementation of the Strategic Plan. First and foremost, alignment of the internal stakeholders to organizational goals is necessary. Secondly, the organizational goals have to be drilled down into individual’s goals. Further, adequate role clarity is a must at every level and so are governance, processes, technology, and information flow. If growth depends upon successful entry into different segments, people’s skills could also determine whether the organization can successfully enter new segments. When our experts come in for assisting you in Implementation of Growth Plans, we bring a holistic perspective in aligning everyone to the overall goals, putting organizational mechanisms in place, and upgradation of the people skills to ensure the organizational goals are met.

For larger firms with surplus cashflows, organic growth alone may not be adequate to meet the growth aspirations; inorganic options like mergers and acquisitions could come into play. Inorganic growth options are more riskier as external entities, external financing, and a whole bunch of legal agreements come into play. Synergies may not be realized due to lack of detailed planning and inadequate Due Diligence could result in exposing to unknown risks. The different cultural factors of the two entities that merge bring in their own risks as integrating the two different cultures brings its own challenges. Our experts could guide you in all aspects of such merger and acquisition activity and help you not only to identify the risks but also advise you on adequate risk mitigation mechanisms.

Our Business Advisory Services are organized as three groups viz., Business Growth Planning, Business Growth Enablement, and Inorganic Growth.

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Business Growth Planning

Business Growth Planning or Strategic Planning is all about elaborate planning to encash the market opportunities, in the wake of your own strengths and weaknesses, and in light of your growth aspirations, external threats, and in order to create shareholder value.

Topline growth is important, not just in absolute numbers but in relation to the market growth. If you do not grow at least as per the market growth rate, you are shrinking to become an irrelevant player in the market!! Within the overall market, different segments of the market may have different industry dynamics, different competitive scenarios, and as a result, have different growth rates and profitability.

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Due to the activities of industry players, some new segments are constantly emerging and some segments may merge or cease to exist. Strategic Planning is about making conscious choices about the market segments you choose to participate in, considering your own unique strengths and circumstances in the market, in order that you continue to grow. The bottom-line growth and investment levels are important too because these determine returns to shareholders which should be above your cost of equity. Sustained competitive advantage is necessary to sustain your profit margin, which is in turn necessary for return on investment to be above the cost of equity. The challenge of Strategic Planning is to grow above-market growth rate, while at the same time ensuring that there is a source of sustainable competitive advantage, so as to offer continued shareholder returns in excess of the cost of equity.

a) Market Strategy: Whether you are an SME or a Corporate, your Business Growth Strategies may revolve around New Products for existing markets OR New Markets for Existing Products. In both cases, you need to study the product-market fit thoroughly before you evolve your Product Market Strategy. Our customized Market Strategy services are based on in-depth market intelligence so that our clients can make the right decisions about market entry, value proposition, product offerings, price points, alternate channels, and develop implementable, goal-orientated strategies. We work with our clients to cover all aspects of designing a market entry roadmap, from initial market overview to implementation, with every step backed up by concrete market intelligence. We enable them to navigate complex and previously uncharted territories and execute business strategies that are aligned with their overall corporate goals and strategies.

b) Industry Research: If you are a Financial Institution, or an Investor, or a Corporate Strategy professional, you may want to get a quick overview of a particular industry in order to evaluate the industry prospects before investing further in that industry. Our Industry Research offerings are aimed at getting an overview of the Industry and/or getting feedback on specific aspects of the industry. Industry Research reports usually deal with macro factors influencing the industry such as key players, demand and supply situation, cost structure and profitability, regulatory and technological changes, etc. to analyze the external environment that influences the growth and business strategies of players in the industry or in the upstream or downstream industry. Our reports are customized to your requirement and equip you with intelligence and insights to make better business decisions.

c)Turnaround Strategy:Our customized Turnaround Strategy offerings are aimed at companies in distress, and that require investment and have a major restructuring of the debt or equity lined up, or a potential management/ownership change. Turnaround studies aim to independently question, examine, and re-establish the product-market fit, the cost structure, fixed costs, relevance of the technology, levels of automation, wage levels, competition, trends in the industry, capital structure, and various other factors that led to the distress situation. Our vast knowledge across many industries allows us to quickly determine the key issues and identify levers to come out of the prevailing distress situation and make the unit viable. At the same time, our independence and professional approach assures you that the real issues are identified and addressed.

d) Diversification Strategy: Diversification studies are usually aimed at SMEs and Corporates which want to diversify into a new product/service line and want to evaluate the various options available for them. In a Diversification Strategy study, we would evaluate several diversification opportunities in terms of various broad financial and non-financial parameters such as Capital Outlay, Profitability, Turnover, Return on Investment, Synergies with existing operations and existing customers, possible Market Share, alignment to overall Corporate Strategy etc. Based on a few shortlisted opportunities, for each opportunity, a more detailed evaluation could include evaluation of the current and future market size, identifying demand-supply gaps, studying customer behaviour, etc. For the zeroed in option, we can also provide necessary direction regarding the recommended Route of Entry, Marketing Strategy, Product Selection, and Target Customer groups and a Financial Plan with applicable Scenario Analysis. By hiring us, you benefit from an external professional view, and benefit from our vast experience in such studies, and ensure that the right analytical frameworks are used in such decision making.

e)Corporate Strategy:Whether you are a startup, or an SME, or a Corporate, or a Not-for-Profit Institution, or even a Regulatory Institution, you need to continuously look at yourself and examine your relevance to your stakeholders, and plan your path for the future. Our Corporate Strategy services help you take a holistic look at yourself against the backdrop of the changing external environment, your stakeholders and help you stay relevant and grow. What appears today on the horizon as a blip and an aberration could become a trend tomorrow and disrupt your industry and business model.

Corporate Strategic Planning exercise usually begins with a long term visioning exercise which clarifies your vision, mission, and core values. We help you envision the cherished future state of the company and define it with adequate clarity. The Path from the current state to the future state is the Strategic Plan or your Corporate Strategy. The Strategic Plan lays down details of the Initiatives, Investments, Programmes that need to be undertaken to reach the future state. In a multi-business entity, the Strategic Planning exercise would identify which businesses are providing returns above the cost of capital and those which are merely sucking cash from other businesses with low returns. The Strategic Plan also involves preparing a Financial Plan which assesses the quantum of investment necessary, sources of cash flow, and external investment to be targeted. For a profit-motive organization, the Strategic Plan will clarify the path to increased shareholder value through an increase in turnover and profitability. Similar relevant metrics could be worked out in the context of non-profit organizations or regulatory organizations. With our rigorous approach and methodology, you could rest assured that all your relevant stakeholders are consulted and their context is understood in detail so that the Strategic Plan is robust and implementable.

f)Project Report/ Project Feasibility/Financial Feasibility::A Project Feasibility Study is undertaken when significant investment is to be made, and there is a need to understand all relevant details of the investment before the investment decision is made. A project feasibility study first establishes, through a rigorous market study, that there is the adequate market potential for a particular product or service. Once the market feasibility is proven, the project is financially assessed through a financial model. Initial capital outlay, incremental revenues, and incremental costs are analyzed in the financial model to understand whether the project offers adequate returns to the equity and debt holders. A detailed analysis of the financial model is done to arrive at the optimal debt/equity structure and the optimal CAPEX configuration. Also, if the investment is phased over a period of time, the sensitivity of the investment schedule on the project IRR/NPV etc. is analyzed. We have significant capabilities in assessing the market/sectors as well as in financial analysis and are well placed to answer queries of all your stakeholders who may need a Project Report from an Independent Consultant.

g)Business Plan:A Business Plan is usually made by a Promoter in the context of equity investment, OR by the CEO in the context of getting buy-in from a Board of Directors, OR the parent company or by an SBU head to present to his/her management. In a Business Plan, the market opportunities are assessed and the financial projections are prepared just like in a Project Report. However the emphasis in a Business Plan would be on the entity as a whole and not on a specific investment project as in a Project Report.

Also, though the terms Business Plans and Project Reports are sometimes loosely used interchangeably and the overall approach is the same, there are nuanced differences. While Business Plan focuses on returns to equity shareholders, Project Reports are prepared to assess whether a specific project has adequate cashflows that can repay the principal and interest of the debt capital in a timely manner. In a startup context, Business Plans are usually insisted by equity investors who want to know the various aspects of your business model, what is the problem being solved, whether the problem being solved is large enough, your differentiators, your competitive advantage and sustainability of the same, scalability, uniqueness, the future roadmap, the promoter pedigree, etc. Debt is usually out of consideration as no debt is generally available for such entities. Further, for such investors, cashflow returns from the business are not usually possible; the investors look at what potential capital gain could be made when they sell the stake to another investor.

We understand the informational needs of various types of investors who seek a Business Plan from you, and you could rest assured that our professional independence and rigor in making such Business Plans would meet the requirements of the most demanding investors.

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Business Growth Enablement

Once the Business Growth Planning is done, and the broad direction of growth and objectives are established, Business Leadership should focus their attention on enabling the business growth by building an organization where the priorities and growth levers are understood, clear ownership is established, and the processes, informational flows, monitoring mechanisms, metrics, etc. are laid out to set the growth path on a sound trajectory. Through our Business Growth Enablement services, we clarify and assist our clients in building such organizations. In such engagements, some amounting of training/coaching and skill-building/knowledge transfer element is usually involved.

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Our Business Growth Enablement Services/ Strategy Implementation services include:

a) Operating Model Design: Operating Model Design services are usually targeted at the Business head/CEO/MD either when they feel that the organization is not delivering together as a unit, OR when the organization has become too much dependent on few people, OR when the organization is being created afresh, OR when there is a major corporate event such as merger/acquisition/divestiture etc. Operating Model Design services essentially revolve around making sure all the organizational mechanisms are in sync with each other and aligned to the overall strategy to enable the organization to achieve its growth objectives and function as a unit. These mechanisms include

  • Organization Design
  • Processes
  • Information flow
  • Technology
  • Customer Delivery Channels
  • People Skills
  • Governance and Reporting

A Target Operating Model can also be designed for an organizational unit instead of the whole organization. In case of an organizational unit, the customers could be internal customer e.g. an HR or a Finance Help Desk for an organization which has a large number of employees. To develop a Target Operating Model, a loose agreement on the overall direction of the organization is necessary though a formal business planning/corporate strategy exercise preceding this exercise is ideal to fix some of the organizational parameters. Our experts have significant experience in Operating Model Design and can quickly identify the key Operating Model imperatives for the strategic path chosen, and quickly zero down on potential options. Our experts can also quickly identify the potential problem areas where some formalization of mechanisms, structures, etc. is not only essential but have been the cause of conflict and stress in the past.

b) Programme Management: A desirable outcome of Business Growth Planning/Business Strategic Planning exercise could be a list of strategic projects to be undertaken. Our Project Management Services are aimed at such situations for SMEs, Corporates, Not-for-Profit Organizations, or Regulatory Organizations. Programme Management could be necessary even when there are a large number of initiatives, projects with multiple stakeholders and initiatives involved. We help clients clearly define the project plans in terms of clear objectives, activity lists, thread ownership, stakeholder dependencies, critical path identification, performance metrics, and governance mechanisms. Once the Project Planning is done, we use project management techniques to help track the projects to stay course and deliver the programme objectives. The key aspects of our Programme Management Services are clear communication channels, meticulous planning, chalking out interdependencies, and clear tracking of activities on the critical path so that slippages on one thread do not derail the overall programme.

c) Enterprise Cost Reduction: If you are a CEO/CFO/SBU Head and you are worried about your low profitability and/or think that there are opportunities hidden in your cost structure that could potentially improve your profitability but embarking on such cost improvement journey could entail risks, and you need professional help to mitigate such risks, Enterprise Cost Reduction services are meant for you.

An Enterprise Cost Reduction exercise is about fundamentally rethinking an enterprise’s cost structure and acting on the underlying cost drivers to reduce costs. Developing Strategic Vendors with long term contracts could potentially increase the control of the supply of input materials and services while reducing the costs. Fundamental rethink on make vs. buy decisions could also affect cost reduction. Simplifying the fixed costs could potentially reduce the overheads. Our Enterprise Cost Reduction approach is customizable and enables our clients to improve their cost reduction suiting their own reality. Our services take a totally independent, objective view of the company’s costs to identify significant cost savings in areas that are not so obvious. Our proven methodologies work on the cost drivers rather than the costs thereby preventing relapse to old cost structures as soon as the attention shifts.

d) Procurement Excellence: If you are the Chief Procurement Officer or the CEO/CFO, and believe that your procurement function has areas of improvement in supporting your strategic objectives; OR just want to benchmark your procurement function with global best practices; OR if the procurement function in your organization has changed drastically due to a corporate restructuring event such as merger/acquisition/divestiture, our Procurement Excellence programme is for you. We help our clients in developing best-in-class procurement capabilities with our knowledge on leading procurement practices to design and deliver transformation programs that help align procurement function with the strategic goals of the organization. We will rapidly evaluate the organization’s current procurement capability, and conduct a quick spend analysis to structure and scope further diagnostics. By appropriately classifying the procurement spend and having appropriate strategies for each of the spend categories, we help our client organizations to build internal capability to deliver sustainable improvements in procurement performance, savings opportunities across major spend categories and improve the procurement metrics. Our deliverable for the engagement would be the Target Operating Model for the procurement function plus several insights and lots of knowledge transfer. Significant hands-on experience in procurement plus a deep knowledge of financial controls and risks involved in procurement in addition to business priorities gives our experts the ability, edge and the confidence to create procurement programs tailored to your industry and needs.

e) Activity Based Costing: If your fixed and/or semi variable costs are high, and you have been allocating your costs to products on some basis, it is likely that you may not be accurately pricing your products. When this happens, your sales team could be selling more of your unprofitable products (because you allocated lower costs to them) and selling less of your more profitable products (because you allocated more costs to them). If you are the CEO or CFO of such a company, you would need professional expertise in implementing Activity Based Costing at your organization.

Activity Based Costing is a method of allocating secondary costs to products and services by identifying the cost of each activity involved in the production process and assigning these costs to each product or service based on its consumption of activities. The Activity Based Costing approach allows one to see how the cost builds up for products and services as compared to the traditional cost allocation methods which are more opaque. Activity-based costing gives you a more accurate assessment of costs when the fixed costs are high as in the service industry but the method has universal applicability where it is difficult to allocate indirect costs to products/services. An added soft advantage of implementing the costing methodology would be to be able to keep a tab on the real cost drivers and think of measures to control costs. With significant expertise in Activity Based Costing, our experts give you tools and templates and cost classification systems to follow to arrive at accurate costs on an ongoing basis.

f) Enterprise Digitalization: Enterprise Digitalization Services are aimed at mature organizations that want to take the next step of their transformational journey to digitalization of their enterprises. If you are the CIO of such an organization, you may be continuously under pressure from the user departments on how the enterprise-wide ERP and a suite of applications implemented leave gaps in meeting their information requirements for decision making. You may want to consider our Enterprise Digitalization services in such a case. Enterprise Digitalization is all about finding where the data resides in the organization and using appropriate software to capture data so that the data can yield insights that can help timely and improved decisions. Digitalization ensures that all the functions are working together seamlessly, and inefficiencies and delays at the handoff points are eliminated. We help our clients in transition from traditional processes to digital processes with improved efficiency, increased data security and integrity, data portability, to improve customer experiences, improved decision making leading to improved operational and financial performance. With significant functional expertise across functions, ability in process mapping, and deep knowledge of strategic, tactical and operational decisions to be made, our experts can help quickly gauge the digitalization needs that interface with your enterprise-wide IT infrastructure and help your decision-makers make faster, improved decisions leading to a competitive advantage.

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Inorganic Growth

Our Inorganic Growth Services include Mergers and Acquisitions assistance both on buy-side as well as sell-side, Strategic Partner search, and Fund Raise (for equity and debt). In our experience, building the Deal Rationale and negotiation is central to any successful deal where funds and/or equity stake is transferred. A sound Deal Rationale, thorough due diligence support, and a sound understanding of the deal issues can help appropriate valuation and help draw up the necessary deal covenants to facilitate closure. With our significant strengths in Corporate Strategy and in Corporate Finance backed by industry research and financial modelling skills, we are able to arrive at the right rationale and value for the deal. Our experts will help you identify critical issues upfront to evolve the right deal structure. From raising or restructuring capital to buying or selling a stake in a business, we provide objective advice to our clients, challenge conventional wisdom, and employ creativity and skill in structuring and executing the deal.

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a) Fundraising:If you are the CEO/CFO of a startup or a SME, you would often require funds for the next level of growth. If you can offer collateral and your business is generating good cash flow to cover the principal and debt repayments, debt is usually the first option. If you want to conserve your cash flow to fuel further growth, and/or there isn’t much collateral to offer, as in a startup, equity would be preferred. We will help you decide the appropriate mix of debt and equity financing and how to achieve that financing in a way that best enhances the company shareholder value. This would be after considering the company’s stage of growth, leverage, goals, risks, and collateral available. We help you to assess the amount of external financing required at each stage of growth after assessing the internal accruals.

A key aspect of equity fundraising is to assess the promoter equity stake to be diluted as consideration for the funds infused. This necessitates a thorough review of the overall business plan of the company and assessment of the capital infusion that is necessary at each stage and the plan for the dilution. Similarly in debt funding, the collateral, debt coverage, and the purpose of use assume significant importance. We work through our vast network of Angel Investors/ Angel Networks/ Venture Capital Firms/ Family Offices / PE firms / HNIs/ Banks/ NBFCs/ Financial Institutions to provide equity and debt capital for your growth.

b) Strategic Partner Search: When you are a SME or a larger corporate entity and are looking for a Joint Venture partner that can bring in certain strengths and complementarity in business, technology, geographical presence, clients, or any other parameter, we can assist you in Strategic Partner Search. While choosing Strategic Partners, minimal overlap with the client’s business is desirable to be a perfect match. With significant research skills, expertise, proprietary frameworks to assess synergies, and networks to reach the right partners, we are strongly placed to find potential Strategic Partners for you. We maintain utmost confidentiality in conducting such searches to ensure that only a few parties, after initial screening and your approval, and signing of necessary confidentiality agreements as necessary, get to know who is seeking the partnership. Thereafter we could assist you in coordinating with the advisors of the other party during the due diligence exercise, and advise you on signing the necessary Joint Venture Agreements through our associate law firms. We could also help you with post-deal synergy realization programs through our Programme Management offerings. We could thus be your partners in the entire partner search programme.

c) Acquisition Assistance:If you are a large corporate and have decided to grow through Mergers and Acquisitions, you would have sized up what type of companies you want to acquire. Our Acquisition Assistance team could help you identify such companies that fit your description and profile them for you based on public information as a first step. We also provide a tentative valuation range for the deal at this stage. Thereafter we reach the key personnel at the target through our networks and set up an initial meeting and take the deal forward. Critical to such deals are confidentiality, early sizing up of the deal issues, building the deal rationale, and setting the right valuation expectations. Our significant experience in deal-making space helps us to keep both parties in discussion until a conclusive stage is reached. Our services thereafter include due diligence support, deal structuring, revised valuation, and negotiation until the definitive documents are signed to close the deal.

d) Commercial Due Diligence:Prior to taking an acquisition decision, the acquirer may want to assess the industry of the target in terms of market size, growth potential, industry structure, competitive positioning of players, supply chain issues, and several regulatory, economic, technological, environmental, social/demographic, political other trends related to the target market and geography. This is usually required if the acquirer is from different geography and may not know all relevant aspects of the target market. Such commercial due diligence provides answers to many questions as to whether the decision to acquire the target makes deal sense. More importantly, it will give insights into what could be the sources of synergies and the value creation due to such synergies. A detailed Commercial Due Diligence scope may also include assessing the synergies and the extent of incremental revenues that can accrue to the acquirer and the cost structure rationalization that can be achieved post-acquisition. A thorough Commercial Due Diligence report paves the way for firming the deal rationale prior to taking an acquisition decision.

e) Due Diligence Support:: In any transaction, the quality of Due Diligence determines the chances of success of the deal and post-closure litigation and friction. In a Buyer Due Diligence, the purpose of the exercise is to ascertain whether the representations and warranties made by the target present a true and fair position and no material facts have remained undisclosed. In a seller Due Diligence, the same process is followed but the objective of the exercise is to avoid responding to repeated information requests by each individual suitor, and also to prepare the target for queries that the potential investors may have and prevent surprises.

We offer Accounting, Secretarial, and Legal Due Diligence services along with our associate firms and specialists in this area. Our dedicated team of experienced professionals assists in providing the highest quality due diligence support that contributes significantly to decision making by the management on either the buy or sell-side of a transaction. A Due Diligence exercise helps the acquirer structure the deal covenants after taking into account the findings of the Due Diligence and helps the acquirer in shielding itself from any post-closure liabilities that may arise. Similarly, a thorough due diligence exercise also helps both parties either re-confirm or adjust/refine the terms agreed upon at the term-sheet stage.

Legal Due Diligence:Legal due diligence would involve going through the contracts entered into by the target and ascertain the financial implications when this is material. Similarly, the exercise involves ascertaining whether the ownership of IP, know-how, assets lies with the target. Similarly, all material cases filed by the company and against the company are reviewed to assess what could be the potential liability, if any, and a legal opinion is provided on the defensibility of the target’s position.

Accounting Due Diligence:Accounting Due Diligence reviews the quality of the information in the books of accounts and ascertains whether the financial picture presented in the books of account is fair. Focus in such accounting Due Diligence is to uncover any hidden liabilities, statutory or employee dues not paid, other liabilities not acknowledged as debts, and ascertain the likelihood of contingent liabilities crystalizing on the company.

Secretarial Due Diligence:Secretarial Due Diligence reviews the compliance on various statutes and identifies if any compliance matters have not been attended to and need to be regularized.

f) Financial Modelling and Business Valuation:When an equity stake in a business is being sold or acquired, either partly or fully, a sense of how much is a good consideration to acquire/sell the stake is necessary. This could be for a startup that is raising equity funds or for a SME/Corporate that is either acquiring a business or is being acquired. This could also be required when a division/SBU of a corporate is being hived off, and being acquired by another entity. Business Valuations are done using a combination of several methods, most important being the DCF method for entities where cashflows are visible. We believe that different circumstances warrant different methods; and that methods have to be judiciously.

Our detailed DCF Valuation Financial Models will not only help you do the necessary number crunching but also go beyond to help you understand the source of the value. Capturing all the value drivers is a hallmark of our DCF valuation models and this helps you in performing a reasonability check on the assumptions and how the valuation could change when the assumptions are changed under various scenarios. Armed with our financial model, our clients could have a clear understanding of the value drivers while negotiating with the acquirer/target and be able to close the deal on what could be reasonable and fair value for the transaction.

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