For medium and small enterprises (SMEs) unable to sustain their business and looking for a quick exit, Ahmedabad-based start-up IndiaBizForSale is coming to the rescue. Launched in January 2014 with only 50 businesses for sale listed on its platform, the website receives more than 100,000 monthly visits. More than 6,000 business opportunities for sale as well as for purchase have been listed on the platform.
Co-founders Bhavin Bhagat and Haripriya Bhagat came up with the idea for an SME listing platform in India after their attempts to sell their father’s pharmaceutical unit in Uttarakhand via traditional methods met with little success but received good response after listing it on a website in Canada.
“About two million SMEs close down in India each year. Sometimes there are management issues or even succession issues ,” says Haripriya Bhagat, explaining the idea behind IndiaBizForSale. “We started off as a discovery platform but over time, realised that the factor we believed in was only partially right. We realised there was a huge amount of work to be done even after a match is made, to ensure a successful transaction.”
Since then, IndiaBizForSale has evolved into a one-stop solution for SMEs looking to sell their units, right from getting the unit “marketing-ready” to preparing paperwork and conducting financial checks like business valuations. It has also started listing businesses looking for investment partners or those looking to expand through joint ventures and mergers. Currently, it has start-ups from the Internet of Things (IoT) space on the platform, who are looking for franchise partners. Last year, it started providing transaction advisory services.
“It’s like shaadi.com for businesses. A lot of connections are made. We originally started by targetting companies whose turnover ranges between a few lakhs of rupees to a few crores. Investment banks are usually not interested in such companies because the fees they get paid really don’t justify such small-ticket transactions. Several start-ups on our platform have products and clients and are looking to exit the business, and several have grown in size and are now looking for partners for further expansion,” explains Bhavin Bhagat.
Listing a business and receiving the first few enquiries are free. After that, IndiaBizForSale charges a subscription fee ranging between R2,000 and R25,000. For every successful transaction, it charges a success fee of 1-3%. The duo claims that six to nine months is the average time it takes for a business on the platform to be bought or sold.
“The curation happens in-house. Contact details are verified, if there are any gaps in the information, we ask questions and give them time to furnish us with those details. If they don’t reply, the listing is simply not shown on the website,” says Bhavin Bhagat. “We don’t share the contact details or even the identity of the business or its owner to prospective buyers. Only details of the business are displayed. Non-disclosure agreements (NDAs) are also available.”
When the start-up first began operations, a majority of the listings were from Delhi, Mumbai and Bengaluru. Now, it has listings from tier two and three cities. Most of the businesses listed on the website are in the manufacturing sector, which includes units in the pharmaceutical, healthcare and chemical industries; followed by units in the IT & ITeS sector and the hospitality sector.
The start-up has also noted the trend of international businesses looking to enter the Indian market. While 85% of the site visits are by Indians, the second highest number of visitors are from the US. It now plans to start operations in four other countries by the end of this year.