Challenges in raising capital and lack of access to affordable financing is one of the key issues SMEs and, specifically family businesses, cite as a hindrance to scaling their businesses. It is against this backdrop that ISBI Institute @ Strathmore and I&M Burbidge Capital (IMBC) organized a 2-day Capital Raising Seminar on the 31st of October and 1st of November at the Strathmore Business School. The Seminar was carefully curated to enlighten entrepreneurs on alternative sources of funding as well as matters critical to raising finance. The seminar presented key insights into the capital raising process from leading industry and academic experts to a class of family business owners and executives.
The seminar kicked off with a session by IMBC’s CEO – Edward Burbidge on when, how and why to raise capital. He noted that entrepreneurs need to have insight and understanding of their business’ cash flow requirements in the short to medium term as it is detrimental to use short-term funding for long-term projects. The session then delved into the types of financing available on the market – debt, mezzanine and equity capital.
This was followed by a session on valuation where attendees were exhorted to always develop an understanding of the worth of their business, especially before going to market. Whilst Valuation is an art, the audience was introduced to the standard valuation methodologies. Jharna Kamdar of IMBC noted that businesses with good corporate governance, strong company growth, and steady financial performance will usually attract a higher valuation. This was further explored in a dedicated session on governance presented by Gauri Gupta, Director at IMBC and General Manager – Corporate Advisory at I&M Bank. In a complementary session, Paul Ouma of ISBI delved into the key considerations in succession planning.
Key to the capital raising process are legal and tax considerations. Sessions on these two key topics were presented by leading experts from Walker Kontos and PKF Eastern Africa. The session on legal considerations provided key insights into the nuances in legal due diligence and transaction documentation. Michael Kontos, Partner at Walker Kontos emphasized the importance of efficient structuring and governance. The tax session led by PKF partners Michael Mburugu and Darshan Shah explored the fiscal aspects of structuring a deal including discussions on emerging trends in taxation. It was emphasized that it is key to obtain excellent advice on tax and legal matters as they form the pillars that hold transactions and future relationships together.
Other sessions during the seminar included investor insights into private equity presented by Ascent Capital’s Marieke Geurts and Mezzanine capital presented by DEG’s Bella Musima. Arun Mathur, Director at IMBC, and former CEO of I&M Bank presented a crucial session on bank financing and enlightened participants on how to create a long term beneficial relationship with their bankers.
Participants also engaged in a spirited and practical negotiation scenario that enabled them to apply the concepts imparted during the dedicated session on Negotiation conducted by Dr. Robert Mudida of ISBI.
The seminar concluded with a panel discussion with investors and investees. The common theme in the discussion was that like any other relationship, the investor – investee relationship is dependent on the integrity and open communication. The event was crowned with a graduation ceremony followed by a sumptuous cocktail. Networking between the participants during the two intensive days formed just as an invaluable and informative part of the event as the sessions themselves.