Franchise strategy development for your business. Exit strategy was a sweepstake for Havmor.

Written by Sparkleminds

Franchise Strategy Development, Exit strategy, deal

The right time to consider an exit strategy is when your business is developing. The best value for your brand is realized when you start franchising development with exit strategies in mind. There is a significant investor interest in the franchise industry. Beginning from 2010 dozens of mergers and acquisitions franchising transactions have closed and the trend is increasing. Private equity groups have more than 800 billion in cash and strategic buyers have more than 4 trillion to invest. It creates a potential demand driving prices to rise. Small business financing may be problematic at times but the availability of bank financing for large acquisitions enables private equity firms to use leverage while paying high prices for best quality franchisors.

Havmor is an ice cream shop that started in 1994 in Karachi. It moved to Ahmedabad within 3 years following the partition of India. A large number of ice cream shop owners and small entrepreneurs tied up with Havmor as franchisees. It grew to be a prominent brand with more than 40000 outlets across India by 2016. The brand has been growing at a CGAR of 23-25%. It had a turnover of about 250 crores in 2012 and its turnover was about 450 crores during FY 2015-16. In 2016 Havmor had expected its sales to double by 2020. It had aimed to increase its sales to 1000 crores.

Lotte confectionery is taking a lion’s share in Korea’s ice cream market and its’ turnover has been constantly increasing. Lotte confectionery was looking to enter the Indian market for expansion. This turned out to be the right opportunity for Havmor. Havmor signed a deal by selling 100% of its homegrown ice-cream brand for Rs 1020 crore in an all-cash deal. The deal values Havmor at more than 2.5 times its 2016-17 turnover of Rs 400 crore. Ankit Chona will continue as the CEO advisor to the brand and will see through its merger with the maker of Lotte Choco Pie.

Configuring the best strategy has proven to increase the value of the brands significantly. It is important to consult experts to choose the right deal and get the best benefit from it. At Sparkleminds we can help you find the best exit strategy to suit your needs.

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