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A lot of businessmen would have raised money or are planning to raise money from a <keyword id="34499" type="POSITION" weightage="100" keywordseo="private-equity">private equity</keyword> investor to expand their business. I am giving below a list of points to watch out for as you go through the list of potential investors. 
 
Remember that a Private Equity investor is the business of making money from money and therefore his interest will be primarily in getting a substantial return in as short a period of time as possible. He is as interested in doing a deal as you are. You need his money and he needs your company to get a return on his money. 
 
1. What do they bring to the table other than money 
 
It is very important for you to select a PE player who brings more than simply money to the table. PE players specialize in industries and you should expect them to get you introductions to other players in your business as well as in the circles that may influence your industry. Watch out for “spreadsheet” specialists who will pound away on their computers to deliver valuations to themselves and you! 
 
 
2. Do your own due diligence 
 
Just like a PE player will conduct a due diligence on you and your business before he makes the investment. Make sure that you also do your own diligence on the background of the PE player as well as the investments he has made. If you can talk to one of their investee companies, you must do so to understand from a counterpart on their experience with the PE player you are contemplating to give a piece of your business 
 
3. Study the term sheet terms very carefully, you will be in a hurry to get the investment 
 
Most promoters do not read the fine print of the term sheet. It is only later when the conditions of the term sheet start to be implemented does the promoter realize what he has signed up to. By then it is too late. 
 
4. Use a lawyer you trust to get your agreements done. The detailed agreements are critical 
 
The PE player will generally work with the big law firms. Use a lawyer you trust who can guide you through the maze of the legalese in all the agreements. Understand how multiple agreements are linked together as well as all the terms you are signing up to including guaranteed IRR’s, tag along, drag along, QIPO and similar such conditions. 
 
5. Don’t get pushed into growing your business at a rate that your PE investor wants 
 
Finally, make sure that you grow your business at a rate that you can manage without putting stress on the business or your management team. If your PE player pushes you to grow faster than you believe you can, it is better to push him back earlier than to get caught in a difficult business situation. 
 
 The author Ashutosh Garg, Chairman of Guardian Pharmacies and a member of <keyword id="3778330" type="UNKNOWN" weightage="20" keywordseo="ypo-delhi">YPO Delhi</keyword> and the author of the bestselling books, Reboot. Reinvent. Rewire: Managing Retirement in the 21st Century; The Corner Office and The Buck Stops Here. 
 
 (YPO is a global community of chief executives dedicated to becoming <keyword id="2479132" type="UNKNOWN" weightage="20" keywordseo="better-leaders">Better Leaders</keyword> through Lifelong Learning and Idea ExchangeTM. The YPO platform provides more than 24,000 members in more than 130 countries. For more information, visit www.ypo.org.)

Selecting a Private Equity investor

Fortune magazine released its annual “40 Under 40” list in October and four of the coveted spots went to YPO members, each working in fields divergent in purpose, but ultimately similar in mission. 
 
 
 
Nate Morris, 33, made the coveted list with his first foray into business,Rubicon Global, a waste management company that brings an Uber-like approach to garbage by matching multinational clients with local haulers. 
 
“My background is in policy, I had never started a company or worked in the private sector before,” says Morris, who joined the YPO Bluegrass Chapter in 2012. “I’m learning a lot as I go and YPO has been helping to educate me – it’s kind of been like grad school.” 
 
Rubicon’s innovative model of democratizing waste management is augmented by its mission to help recycle more, while reducing costs. 
 
“I believe the environmental movement can be led through the free market as opposed to more regulation and more government, says Morris. “I think waste is a gateway issue into a larger discussion of how we can help the planet.” 
 
So was it moxy, faith or a combination thereof that allowed him to max out his credit cards in order to launch? 
 
“We’ve never been shy about being bold and going out on a limb. We were big dreamers in the beginning.” Morris laughs, “It’s kind of good to paint yourself in a corner. It’s gotta work!” 
 
 
 
For Julie Smolyansky, 39, president and CEO of Lifeway Foods, making the list was a big surprise. 
 
“I’ve been aware of the list since I was in my twenties but had given up thinking I was going to make it,” she says. She joined the YPO Chicago Chapter in 2003. “You do your work every day but when you wake up and someone says, ‘Hey we want to recognize you for your work,’ that’s really an honor.” 
 
The honor has given Smolyansky a sort-of “reset of her career,” compelling her to consider how to push herself even further. 
 
“It made me think, ‘what else can I do, where can I scale my career and really have lasting impact? What does it mean for me that I have this platform that can help me realize the things I really care about?’” 
 
Aware of the age-old struggle women endure, thinking they can’t be a good mother if they’re working or vice versa Smolyansky says, “As a leader, one of the best things I can do is to show that a young woman, a non-traditional leader, can run a company and have a family. I believe that will help other women feel the same way. If we can create female titans, the world will be a better place.” 
 
 
Rahul Sharma, 37, hit US$1.2 billion last year in revenue with his consumer electronics company 
 
Micromax Informatics Limited, a scale that has the potential to expand even further thanks to a deal with Google to make sub-US$100 phones for the Indian market. 
 
As co-founder and CEO of the 10th largest mobile phone player in the world, Sharma is helping pioneer the democratization of technology in India by offering affordable innovations and removing barriers for large-scale adoption of advanced technologies. He joined the YPO Delhi Chapter in 2013. 
 
Similar to the way in which the Internet has helped promote increased citizen advocacy and government transparency, communication technology is one of the most important driving forces of modern civilization. Sharma’s disruption of the “digital divide” has the potential to lead to increased global connectivity, increased communication and transparency and access to information. 
 
 
 
It comes as no surprise that Michael Patterson, 39, likes spy novels. While in the U.S. Navy, Patterson helped plan the military’s first drone-enabled strikes back when drones themselves couldn’t carry missiles. He left the Navy shortly before 11 September 2001, but returned to the military briefly to assist in retargeting the drones after the attacks on the World Trade Center. 
 
In 2007, Patterson co-founded Highbridge Principal Strategies, one of the first hedge funds to focus on direct lending. With US$7 billion currently in his funds – the majority made up of loans to distressed low-profile, mid-sized companies – Patterson has become the go-to guy for companies in trouble, or, as he puts it, “companies that need help with complicated problems.” He joined the YPO New York City Chapter in 2010. 
 
When Fortune asked what he would tell his 20-year-old self, Patterson said, “Construct your own definition of success, don’t let the world do it for you. Just because someone puts a carrot in front of you doesn’t mean you have to chase after it.” 
 
(The author of this article is Deborah Stoll from Young Presidents’ Organization (YPO)). 
 
(Image: Thinkstock)

YPO: What Drives the 40 Under 40?

Chairman and Managing Director of <keyword id="2723447" type="UNKNOWN" weightage="20" keywordseo="Cremica-Food-Industries">Cremica Food Industries</keyword> Limited and founder of YPO’s Punjab Chapter, Akshay Bector‘s (WPO Delhi) family were some of the most prominent members of commodity trading houses in India going back to 1880. One hundred years later, in the 1980s, new laws forced the family out of trading and into the world of food production. 
 
“We started off in the food Industry at a time when India was breaking off from License Raj (a system of central controls regulating entry and production activity across Indian states) and regulated economy,” says Akshay. “The initial years were tough and there was very little trained manpower – nothing like you see today. Having a history of many generations and ingrained values helped to form the guiding principles that developed the brand.” 
 
Akshay took what had previously been his mother’s hobby (cooking) and in 1987, established a modern bread plant. He followed this up by opening a world-class biscuit plant and soon thereafter, his efforts led to a joint venture with Quaker Oats Company (USA) for manufacturing ketchup, mayonnaise and other liquid condiments. On a roll, he created partnerships with EBI Foods (U.K.) for manufacturing battering and breading pre-mixtures and with McDonald’s, becoming one of their biggest suppliers in India. 
 
Under Akshay’s leadership, Cremica has become no. one in mayonnaise production and no. three in ketchup production in India, maintaining one of the highest growth rates in the industry. A key factor of the company’s exponential business growth has been Akshay’s focus on quality and innovation. 
 
 “More than three decades of quality and innovation have helped the Cremica group to become more relevant and important in India,” he says. “And, Cremica continues to introduce customers in India to new tastes. Since the beginning, we have been associated with bigger food chains coming to India and have helped identify global recipes that fine tune flavors for an Indian palette.” 
 
As India’s economy grows, Cremica is poised for a phase of aggressive growth. 
 
 “We are investing in rapid expansion of distribution reach and strategic investments in backward integration,” says Akshay. “As more and more women start to work in the hinterland, there will be more demand for the food – far higher than national growth – and Cremica will continue to add exceptional value to the market.” 
 
According to “Economic Times,” “As the success stories of Indian entrepreneurs are celebrated, more people in the hinterland are being emboldened to try their hand at starting up.” 
 
 “India is a very vast and varying country with diverse taste preferences,” says Akshay. “Thedemographics are pointing towards huge dividends for organizations.” 
 
 “Demographic dividend,” a phrase coined by demographer David Bloom, proposes that when young, working-age adults comprise a disproportionate percentage of a country’s population, affecting the national economy in positive ways. According to “strategy business,” the country most likely to be affected by demographic dividend is India. 
 For his many contributions to the growth of India, Akshay has been awarded “Entrepreneur of the Year” by Entrepreneur India 2013, in the 3rd National Convention on <keyword id="107737" type="ORGANIZATION" weightage="20" keywordseo="Entrepreneurship">Entrepreneurship</keyword> 2013. This event has become the marquee entrepreneurship event for enterprising entrepreneurs in India, attracting over 300 leading entrepreneurs and members from the Indian investor community together with CEO's and professionals leading growth-oriented organizations. 
 
A testament to his business leadership, Cremica received “McDonald’s Asia Pacific Award for Innovation” in “McDonald’s APMEA 2013 Supplier Business Forum.” 
 
Of significant help to Akshay on his journey, has been the support of YPO and specifically, the Food and Beverage Network. 
 
 “YPO has been an exceptional experience starting with founding the Punjab chapter,” says Akshay. “The exposure to a vast network of friends adds a new dimension to one’s business and professional life.”

Thinking Globally; Acting Locally: Akshay Bector Fine Tunes Flavors for an Indian Palette

Recognized as a Global Leader for Tomorrow by the <keyword id="69007" type="ORGANIZATION" weightage="20" keywordseo="World-Economic-Forum">World Economic Forum</keyword>, bestselling author Ashutosh Garg worked in the corporate sector for 25 years before the entrepreneurial bug bit him and he founded Guardian, India’s fastest growing chain of health, wellness and beauty stores. 
 
Below, he outlines five issues to pay attention to when planning to raise money from a Private Equity (PE) investor to expand your business. 
 
1. What do they bring to the table (aside from money)? 
It is very important to select a PE player who brings more than simply money to the table. PE players specialize in industries, and you should expect them to introduce you to other players in your field as well as in circles that may influence your business. 
 
2. Do your own due diligence 
Learn about your PE’s background and the investments they have made. If possible, talk to one of their investee companies and gain a counterpart’s perspective on the person you are considering giving a piece of your business to. 
 
3. Study the term sheet terms carefully 
Most promoters do not read the fine print of the term sheet – it is only later when the conditions are implemented that the entrepreneur realizes what he has signed up for, and by then it is too late. 
 
4. Use a lawyer you trust to get your agreements done 
Find a lawyer who can guide you through the maze of the legalese in all the agreements. Understand how multiple agreements link together as well as all the terms you are signing up to including guaranteed IRR’s, tag along, drag along, QIPO and other similar conditions. 
 
5. Grow your business at a manageable rate 
Make sure you grow your business at a rate that does not stress the business or management team. If your PE player pushes you to grow faster than you believe you can, it is better to push back early rather than get caught in a difficult business situation. 
 
 
(The author of this article is Deborah Stoll from Young Presidents’ Organization (YPO). Ashutosh Garg joined the Young Presidents’ Organization Delhi Chapter in 1994. This article is brought to you by YPO’s Deal Network, a global business network, which brings together more than 6,600 members for education and deal support/transacting) 
 
(Image: Thinkstock)

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