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Internet emerging as simpler, faster platform for M&As

Internet emerging as simpler, faster platform for M&As
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First Published: Wed, May 30 2007. 10 15 PM IST
Updated: Wed, May 30 2007. 10 15 PM IST
New Delhi: Investment bankers have found a new rival in executing merger and acquisition deals in the form of the Internet, which allows sale or purchase of a company at the the click of a mouse.
Marking a significant coming-of-age for the e-commerce industry, online auction platforms like eBay are no more just about selling or buying consumer goods. In fact, entire companies are being sold and acquired on these websites in a simpler, faster and cheaper way than the traditional methods involving a plethora of investment bankers and advisors.
The trend is catching up fast in India as well after a number of successful deals in the US and other countries.
A Lucknow-based telecom firm is seeking bids for 25% stake in the company on eBay India website, a retail outlet in Kharagpur is on sale for a minimum of Rs18 lakh, while another electric vehicle manufactruing firm from the country is also soliciting potential buyers on the website.
Besides, an operational job portal Alphacareer.com, based in Bangalore, has also listed itself for sale on the eBay USA website and is seeking buyers from across the world.
Another e-commerce website focussed on sale and purchase of a business, Biz Buy Sell, has a US-based company seeking buyer for its fully-staffed Indian software developement subsidiary in Mumbai at a base price of $500,000.
When contacted, eBay India spokesperson told PTI from Mumbai this was a new trend emerging in online auction market. Indians always had a highly developed entrepreneur instinct for capitalizing on new trends and mediums, she said.
“Companies have also listed themselves for sale and even a retail outlet in Kharagpur is tapping the online market,” the official said.
The US-based firm seeking buyer on Biz Buy Sell says its Mumbai unit has been operational and profitable for four years and has fully audited records for all four years.
The 25-employee strong unit has a “five-year inexpensive lease in one of the most desirable locations in Mumbai and has one officer’s cabin, one conference room and 60 cubicles, used for software development in day and call center at night”.
The US-based parent, which has not disclosed its name, also says the Indian unit is eligible for going public on the Indian stock exchange as it “is profitable for three years”.
“A US company with $10 million plus revenues could buy this subsidiary, do a reverse merger and potentially go public on the Indian stock exchange. US company is willing to indemnify the new owners for any issues that could crop up prior to the sale,” it claims.
The site also has a number of Indian restaurants in the US for sale, while an Indian supermarket in Massachusetts is seeking bids for at least $1,19,999.
Back in India, a real estate portal based in Gurgaon is seeking buyers for a minimum bid of Rs2 lakh at eBay.
The “business ready and developed job portal” AlphaCareer has fixed a starting bid of Rs5 lakh in its eBay listing.
The Lucknow-based value added cellular service provider, which has not disclosed its name, has fixed a minimum bid of Rs25,000 and claims to be in the business for seven years.
The 400 square feet retail outlet in Kharagpur is also offering a no-bid direct sale option for a price of Rs20 lakh, besides an annual rental of Rs10,000 to the Railways.
Claiming to be based in “the heart of Kharagpur”, it says: “Located in the most renowned Gole Bazar market in the town, it is place that every businessman longs for. Just visit the shop once and you can’t deny to buy this out.”
While the response has been subdued for Indian listings so far, a number of such deals have been closed successfully in the US through their listings on the eBay website.
This include about a dozen dot-com firms, such as search engine DigForIt, which was sold for $25,400 this month.
Online callender website SynapseLife was also sold for $60,000 despite a warning about having “no ad revenue”.
Unlike traditional takeovers that stretch into months, SynapseLife sale was closed within a few weeks.
Some of the unique businesses on sale at eBay include a Ski Resort in New York, for an initial bid of $3 million, which is inclusive of real estate and all existing assets.
A retiring dentist is selling his 30-year dental lab business along with the building it exists in. It claims to be one of the largest dental laboratories in New York state.
The Swedish pop band Rednex, famous for its song “CottonEye Joe” is also on sale on eBay, while an entire town, Bridgeville, California was sold for about $1.75 million, the company says.
Market experts believe prospects for such deals in India should improve further, given the growing number of Internet users and increasing awareness about such websites.
According to web traffic tracking firm comScore, India is already one of the ten most populous countries in terms of Internet users and is growing at a sharp rate.
The eBay India official said there are over two million registered users in India trading on the website, while each month another 2.5 million people visit their India website.
The company’s worldwide website has a separate category for websites and businesses for sale with over 4,800 listings.
The company says eBay invests in marketing the products and attracting the buyers, while seller completes the transaction by accepting payment and shipping the product, making it a great proposition to sell on eBay.
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First Published: Wed, May 30 2007. 10 15 PM IST
More Topics: Corporate News | MAs |