The ALN team sat down recently with Alpesh Patel, founder and CEO of mi-Fone. mi-Fone is the first African mobile device brand, and we discussed the recent acquisition of a controlling stake in the business by a major, publicly-traded South African corporate. While the $4bn acquirer provides new growth perspectives for the company, Alpesh and his team are still directly involved in building the mi-Fone brand, as well as new, synergetic businesses in the mobile ecosystem. “We have always been a David amongst many Goliaths, but now with this muscle behind us, we are well placed to be a Goliath amongst Goliaths over the next 5 years,” says Alpesh.
Some thoughts from the CEO on business, the transaction, and what’s next for him and his team:
You’d be amazed at what you can accomplish on your own. When it comes to selling a company—or even just in day-to-day operations—entrepreneurs often believe that they need a large corps of advisors to get things done. And these advisors generally demand cash or equity in exchange for their support. But mi-Fone was able to close its sale without advisors, translating into significant savings. According to Alpesh, the company has had strong internal processes throughout its seven years of operations, and that’s a key reason why doing the deal “lean”—without outside assistance—was possible.
The financial profile of a company in its early days matters, but so does governance. Alpesh notes that he would have secured a higher valuation for mi-Fone if the company had been more focused on creating financial value in its early days, although he emphasizes that the business was revenue-positive from “day one”. But he also observes that the incoming investor was impressed by the company’s standards of governance, which uplifted the valuation. For mi-Fone, good governance has meant having a board that meets regularly, formalizing company decisions through board resolutions, and maintaining clearly documented, arm’s length relationships with key suppliers and clients. There were never “short-cuts” to growth for mi-Fone.
Selling to a corporate means firepower to grow the team, but hustlers pass to the front of the queue. The backing of a large corporate means cash for salaries to attract the best, most qualified talent in Africa. But it’s not mi-Fone’s intention to hire costly graduates of prestigious MBA programs, or people in search of a “9-to-5.” Even if mi-Fone is now a division of an established corporate, anyone it hires needs to think, act, and live like an entrepreneur!
mi-Fone needed an investor that was bringing more than just money. mi-Fone’s acquirer brings shared services (including functional support in finance and HR), enhanced governance, internal mentorship, and a track record of successful acquisitions. Alpesh and his team had discussed extensively with private equity and venture capital funds, but ultimately decided the best partner would be a corporate, which better aligns with mi-Fone’s long-term approach to returns. And Alpesh is especially proud that the transaction keeps this African champion in “African hands”!
Alpesh Patel is a member of African Leadership Network. Our members automatically qualify to attend our Annual Gathering, which is hosted in various African cities. This year’s Gathering, #ALN2015, will take place in Morocco in November. If you’re an African leader and would like to attend — whether or not you are currently an ALN member — please apply here.
Photo credit: Frost & Sullivan