Once again, we are fast approaching the end of another calendar year. Just like 2020 and 2021, I have to say, ‘wow, what a year!’. Ironically, it isn’t within the context that you may think. It has been an incredible year for DLI once again. I use ‘incredible’ in that we have grown as a team and as a business, and we firmly believe that we are ‘moving the needle’ to drive tangible investment into our economy. Why is this important to us? We are passionate about South Africa and the part every one of us has to play in being a catalyst for growth and change.
2022 Reflections from Andrew Bahlmann
I reached out to André de Ruyter at the beginning of this year to get ‘reality on the table’ regarding questions we are being asked by our network of local and international buyers and clients. I was blown away by his willingness to meet with me, give remarkable insights, and recognise that the market we support is, in fact, a driving force behind our economy. Fast forward a few months, and we were fortunate enough to have a round-table with André, along with a small group of clients. We cover this in more detail later on in this newsletter. The one takeout that resonated with me was his message that we all have a role to play in driving change, developing and growing the economy, and becoming part of the power-grid solution.
We have been fortunate enough to be growing a brand trusted by business owners in both the mid and corporate markets. Having recently closed our biggest deal to date, we can demonstrate that our unique approach and partnership model delivers success for medium and large businesses alike. With the Corporate and Advisory team working on four large transactions with a combined transaction value of over R3 billion, we are incredibly excited to successfully get these across the line in 2023.
As a small team, we have punched above our weight division for the last couple of years. We've brought in some exciting new talent, which has been tremendously fulfilling for Rick and me. To be able to attract top senior talent to bolster our amazing team demonstrates what we have been able to build over the years.
I am excited for 2023 but can honestly say that 2022 has been a watershed year for us. I am writing this with a few weeks left before we shut down in December, and I have four deals that need to hit significant milestones before we can all take a well-deserved break.
2022 Reflections from Rick Grantham
2022 has been a fantastic year for DLI. We concluded our fastest (and close to largest) deal yet, in the mining equipment space. We delivered our first sale for a listed company (EOH’s sale of Sybrin), and our mid-market deals continued to flow. We have kept our focus on quality over quantity, thereby keeping a very sound reputation among top acquirers in South Africa and beyond. We will never sign up new clients “just for the fees” but rather ensure that we can deliver on clients’ expectations and quality businesses to the acquirer market.
In 2023, we expect to break our records once again, with some heavy-weight businesses going to market and, without doubt, a record number of deal conclusions expected: we have nine deals anticipated to close within the first few months of next year.
Lunch with Eskom CEO, André de Ruyter
We were privileged to host a lunch with Eskom CEO André de Ruyter and a small group of business owners. Mr de Ruyter led a frank, thought-provoking discussion where he put reality on the table and addressed some of the obstacles and opportunities of investing in South Africa and the future role of the state-owned electricity provider.
In response to the afternoon, one business owner summed up the general sentiment well: “I was grateful to have the opportunity to hear about the challenges and the plans that André is grappling with. While everyone knows that the task is not an enviable one, it was immensely valuable to understand the details surrounding why certain decisions are being made. It would be valuable to many South Africans to have sight of the plan. While it goes without saying that the vast majority would not be interested in the detail, it is always the case that the informed minority leads society's perception. Giving leaders a real picture and getting them to rally behind a plan can change the bitter rhetoric of a despondent nation.”
Mr de Ruyter does have a plan to move Eskom forward, but the issues are more complex than seen at face value. For example, acquiring new coal plants is not just a financing issue; there is no insurance available.
He said that one has to look to new technology solutions and innovation in the nuclear fusion space or renewable energy where Eskom is using land they own.
There is a masterplan in place to move to renewables, which will simultaneously drive economic stimulus. The answer may lie in partnerships with private enterprises involved in renewable energy. There are also many great Capex projects ready for approval, e.g. a R85bn hydro storage plan for 5gigawatts of power (5 x bigger than Drakensberg scheme).
What role can we play as business leaders? Simply put – not to add to the negative narrative. Instead, let people know there are solutions so that we can create a groundswell of positive opinion.
In truth, if Mr de Ruyter can’t fix it, no one can, BUT he needs political support and probably a political player at his side. As another attendee said: “Very insightful engagement with Mr de Ruyter. Corporate citizens don’t fully comprehend the mammoth task of navigating both business and political interests to get our state-owned enterprises back on track.”
The Pitfalls of Going it Alone When Trying to Sell Your Business
Rick Grantham - Deal Leaders Mid-Market CEO
Many business owners approach Deal Leaders only after being unsuccessful in selling their businesses independently. The scenarios are all the same:
The businesses are trading extremely well.
They have been approached by acquirers and have also approached specific acquirers.
In some cases, an Information Memorandum had been prepared but was largely inaccurate and inadequate. In most instances, there was no structured presentation of the business.
Price and deal structure is always an issue that does not get resolved, with the main problem usually being the ability of the acquirers to come up with appropriate funding.
Our initial discussions with business owners in these situations follow a common theme. In all these cases, the business owners believed they’d followed the correct process and done everything possible towards achieving a sale and that the failure to secure a buyer was ‘proof’ that a deal could not be done.
However, what each case lacked was the following:
A comprehensive presentation of the business, its benefits to an acquirer, a clear presentation of differentiators, growth opportunities, etc.
A broad and thorough analysis of the buyer ecosystem, including international acquirers.
A structured engagement – knowing when to share what information, when to get the acquirer to sell themselves as good acquirers, when to ask for offers and on what basis.
A workable strategy about price and structure. Far too much “take it or leave it” and not enough formal offers, which would lead to common ground and a platform for deal-making.
Meet the Newest Members of our Team
We wanted to use this newsletter as an opportunity to introduce some of our newest team members – all highly qualified and experienced to do what we do best – find the right buyers for our clients and do great deals.
Ariella holds an Honours degree in Finance and Investment. Coming from a private equity background, she has a deep understanding of what buyers are looking for and expect.
Transaction Associate: Corporate & Advisory
Rella holds a B. Bus. Sci. with honours in Finance and has passed all three CFA exams. Her experience as a sector-agnostic equity analyst in the asset management industry provides her with strong research and financial analysis skills and a deep understanding of business models and industry trends across various sectors and geographies.
Systems Support Analyst
Nikolaas holds a Bachelors degree in Financial Accounting and an Honours degree in Management Information Systems. He has worked in a variety of business functions, from start-ups to multinationals. He believes in implementing business process improvements through innovative technologies to allow organisations to become the best they can be.
Senior Financial Analyst
Taryn is a qualified Chartered Accountant and holds a B.Bus.Sci degree with honours in Finance and Accounting. She has more than ten years of auditing and financial reporting experience in South Africa and internationally. Her experience and skills equip her to understand and interpret technical accounting matters, perform robust financial analyses, and review complex consolidations, valuations and financial models.
Our Deal Activity for 2022
Deals waiting final conclusion
Deals at term sheet stage
Clients' businesses taken live to market
In The Press
Visit our In The Press page for the latest Mergers & Acquisitions news.
Deal Leaders Book Club
Part of our values and culture at Deal Leaders is curiosity and the desire to keep learning. In this spirit, we have our very own Deal Leaders Book Club, where a staff member gets a turn to choose a book that we all read and review. The latest book was Jeremy Maggs’ WIN - Compelling Conversations with 20 Successful South Africans.
Maggs chooses the best he has interviewed over his 30-year career and succinctly captures their business challenges, failures and secrets of their trade to ultimately reach their goals.
We highly recommend you add this to your holiday reading list.
WE'VE MOVED OFFICES
We recently moved to Illovo. Our new address is:
Suite F4, First Floor, 23 Fricker Road, Illovo, Sandton
We wish you and your loved ones a safe and relaxing holiday, and all the very best for 2023.
Rick, Andrew & the Deal Leaders team