Saturday, February 16, 2013

"Built to Last" and "Built to be Sold" Companies


Built to Last: Successful Habits of Visionary Companies is a book written by Jim Collins and Jerry I. Porras on October 26, 1994. While there are companies that are built to last, there are numerous examples of companies, which are built to be sold. Heard of term called Serial Entrepreneur? They build companies fast, take it a level of being lucrative for some or many and then get it sold. Not sure, how does it work?

I read a few days back in Deccan Herald (precisely Feb 6, 2013) that travel services firm Thomas Cook (India) inked a pact to acquire 74 per cent stake in Ikya Human Capital Solutions in a deal valued at Rs 256 crore. Which is $47.14 million. IKYA was started in 2007 and they celebrated 5 years in 2012. Effectively, it took IKYA 5 years to be sold 74% at ~USD 50 Mn. Great value created by Ajit Issac, the CEO of IKYA.
AZB & Partners advised British travel major Thomas Cook’s erstwhile Indian subsidiary in buying a 74 per cent stake in upcoming Indian staffing company Ikya Human Capital Solutions for Rs 256 crore ($47.6m). Ikya was advised by Amarchand Mangaldas.

AZB & Partners Mumbai partner Ashwin Ramanathan with senior associates Nandish Vyas and Bhavi Sanghvi acted for Thomas Cook (India) and Canadian investment company Fairbridge Capital which had acquired the Indian subsidiary from the UK’s Thomas Cook PLC in May last year.

This, according to the Economic Times, was Fairbridge’s first acquisition after the Thomas Cook buy.
Amarchand Mangaldas Bangalore partner Reeba Chacko with principal associate Akshay Bhat acted for Ikya.


9 years back Ajit was the CEO of PeopleOne Consulting and in 2004, they sold 67% stake to Adecco SA, Switzerland based firm, for undiclosed amount. Remember PeopleOne had reported revenue of USD 6 mn in 2003-04. PeopleOne was started in year 2000.

Both PeopleOne and IKYA Human Capital Solutions have same business and services.
Interestingly, it appears that , it was actually built once and sold twice!
Not sure what value does Thomas Cook, a travel company sees in a Staffing company. Any guesses?

What Mr.Menon, MD of Thomas Cook India says is worth listening to. Here he what he says,

"...Ikya's wide range of HR services and sterling reputation, offer us a wonderful opportunity to extend the bouquet of travel, financial and HR services we offer to corporates across India," Thomas Cook (India) Managing Director Madhavan Menon said.

Not sure, if you are convinced but he has his own way of looking at this investment!
Not sure, how the 2004 deal worked out for Adecco?

And now, listen to what Ajit Issac, the CEO of IKYA says about this deal,

Ikya CEO Ajit Issac said the company was born with a vision to be the leading player in human resources across the emerging global markets.

"This strategic partnership with Thomas Cook (India) and in turn their promoters at Fairfax Financial offers Ikya a platform to enable us to realise this vision sooner," he added.


For some more details, you may refer to links below-


http://www.deccanherald.com/content/310279/thomas-cook-acquire-74-pc.html

http://articles.economictimes.indiatimes.com/2004-09-22/news/27369299_1_majority-stake-adecco-sa-hr

http://www.legallyindia.com/201302113429/Corporate-/-MA/azb-amarchand-sell-hr-ikya-to-thomas-cook-fairbridge-for-47m

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