Takeover gambit

INTERVIEW

'Acquisitions bring customer relationships'.

Inorganic growth is often a smarter option. Amit Sheth, Managing Director, AurioPro Solutions Ltd., is out to prove that SMEs can acquire companies pretty much like MNCs.

In just two months he has acquired two US companies, which is in addition to the acquisition of Infobyte in Bahrain a year ago. He is continuously exploring the overseas market, especially the Middle-East, Asia- Pacific and the U.S.

As an SME, what are your advantages?

It is essential to create a certain level of comfort, by letting client know you have solutions for their problems. If clients have to constantly explain, then it's a clear signal that the message hasn't gone through.

In our case, our apex management and the project management team understand the BFSI segment very well and we also know the prevailing problems. Besides, we have a dedicated team to cover the technology front, and this combination gives us a clear advantage when we meet clients.

Can SMEs operate on price advantage?

Our experience makes us believe that the era has gone when people could frame different price structures.

Today, clients know exactly what they want and the disadvantages of awarding orders to the cheapest company. The cost of IT professionals is the same everywhere. We believe, that there is nothing like a low rate, the price is for the domain. If you are reasonable in pricing, you are here to stay.

Besides, SMEs have lower overheads, compared to big companies, which can be suitably leveraged.

Why is acquisition an attractive option?

Our acquisitions, both current and future, are part of long-term vision: We want to offer 'near-shore' benefit to clients anywhere. Collectively, these acquisitions bring customer relationships, breadth and depth into offerings.

They adds to the pool of talented, committed professionals in the management and operational cadres of the company. Our company continues to look for strategic acquisitions and is in talks with some interesting prospects.

Is it smarter way to grow for an IT-SME?

Acquisitions are one of the ways to grow for an IT-SME. Specifically when we know the domain and the given company/ productas growth potential.

Also, acquisition makes sense when we know that development of such a product would reduce our time to market, or to reach the customer.

How has venture capital helped SMEs?

We have never had any difficulty in getting funding. Our experience with VCs shows that they generally back project and potential of the people who run the organisation, size does not matter much. Although scalability is the issue which needs to be addressed.

How proactive are banks today?

Banks have been responding well to meet SME needs. As most larger companies anyway get loans at LIBOR-plus rates, banks have turned their eyes on mid-size companies. They see a potential to offer universal banking, since the loan customer also often becomes a wealth customer, a retail asset customer, a house loan customer, etc for them.

In fact, special focus is given to emerging companies and banks are coming out with structured offerings and helping companies grow by financing and advising them.

Banks might have to be lenient with their collateral norms as most emerging companies would be first-generation entrepreneurs, who may not have substantial collateral to offer. So some structured lending products are the order of the day.