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M&A Outlook for 2024

As we step into 2024, we find ourselves amidst an ever-evolving business landscape that presents both challenges and opportunities. At Deal Leaders International (DLI), we are excited to share insights and forecasts for the year ahead, specifically tailored to South African business owners like you. 

 

According to a recent KPMG Report, there is a notable uptick in mergers and acquisitions (M&A) activity anticipated for the next two years. This forecasted growth in activity is poised to reshape the business landscape, providing compelling opportunities for growth, expansion, and strategic partnerships. 

 

One of the key macro issues influencing the business environment in 2024 is the upcoming elections. The elections bring about a climate of anticipation and potential policy changes that could impact various sectors. As a result, business owners must remain agile and proactive in their strategies to adapt and capitalise on emerging opportunities. An interesting insight from our own experience at DLI is that the impact of an election on M&A activity has never affected the buyers’ market appetite despite the perceived uncertainty that many business owners may feel.

 

The South African M&A landscape continues to exhibit resilience and dynamism, offering prospects for consolidation, diversification and market entry. In sectors such as technology, renewable energy and infrastructure, we anticipate heightened M&A activity, driven by innovation and evolving consumer demands. 

 

At DLI, our team remains committed to assisting you in navigating this changing landscape and seizing the opportunities presented. Whether you are contemplating a strategic merger, acquisition or seeking advisory services, our experienced professionals are here to provide tailored solutions aligned with your business objectives. 

Key considerations for South African business owners in the realm of M&A for 2024: 

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Strategic Alignment: We evaluate how potential mergers or acquisitions align with long-term business goals and vision. We also identify opportunities that complement and strengthen existing operations or offer entry into new markets. 

Due Diligence: We ensure thorough due diligence to assess the financial, legal and operational aspects of any potential transaction. This process is vital in mitigating risks and ensuring a smooth transition post-deal closure. 

Agility and Adaptability: We help business owners stay agile and adaptable to swiftly respond to market changes, regulatory reforms and emerging trends. Flexibility in strategy is crucial in capitalising on evolving opportunities. 

The following key factors are poised to influence M&A activity in South Africa in 2024: 

1. Economic Growth

It is assumed that higher GDP growth tends to stimulate M&A activity as companies seek expansion opportunities. This is not the case. Investors want to invest in growth in particular businesses and industries. Investors or acquirers do not invest based on GDP averages. Despite a very pedestrian GDP outlook for South Africa, business performance in many industries remains extremely attractive to local and international investors alike.    

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2. Interest Rates

Lower interest rates can make financing more accessible and affordable, encouraging companies to engage in M&A transactions. Favourable borrowing conditions may lead to an increase in M&A deals as companies take advantage of cheaper capital.  

3. Political Stability

Political stability fosters investor confidence and encourages long-term planning, positively impacting M&A activity. In emerging markets, however, investors want certainty of the political environment so that they can price the risk accurately.

4. Currency Fluctuations

Fluctuations in the local currency could impact the attractiveness of South African assets to foreign buyers. A weaker local currency may make acquisitions more appealing for international investors, potentially increasing inbound M&A activity. This is particularly true when the South African company can export goods and services in hard currency, while operating a ZAR-based overhead structure.

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5. Industry Trends and Regulations

Changes in regulations, technological advancements or shifts in consumer behaviour can drive M&A activity in specific sectors. Industries experiencing regulatory changes or technological disruptions may witness increased consolidation as companies seek competitive advantages. 

6. Global Economic Conditions

 Global economic trends and geopolitical tensions can influence investor sentiment and cross-border M&A activity. We have seen this following the Ukraine-Russia war, where Eastern Europe became significantly less attractive to acquirers due to the risk.

Understanding the above factors and their potential impact on M&A activity in South Africa can assist business owners in making informed decisions and strategies in 2024.  

Feature Article: 

The Difference Between an Offer and a Deal 

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Our feature article this month breaks down the critical difference between an 'offer' and a 'deal.' Read this insightful piece to grasp the significance of offers as the gateway to negotiations and successful deals. Gain crucial insights into the intricate M&A journey, empowering you to navigate this complex landscape with confidence and clarity. Whether you're a seasoned entrepreneur or exploring M&A opportunities for the first time, this article serves as an invaluable guide to mastering the nuances at play. 

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Meet Our New Team Members

We are thrilled to introduce you to three new team members - John Powell, Cameron Maingard and Roxanne Doble. These individuals embody the values and dedication that define DLI, and we are confident that their contributions will play a pivotal role in shaping our clients' future success. 

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John Powell - Transaction Executive, Buy Side

John is a Chartered accountant, CA(SA) and Chartered Global Management Accountant, CGMA. His list of qualifications is impressive. He has an Advanced Diploma in Management Accounting, a Post-Graduate Diploma in Applied Accounting Sciences, an advanced Diploma in Accounting Sciences, a Post-Graduate Certificate in Advanced Taxation, and a Bachelor of Commerce in Law.

 

With over a decade of hands-on experience, John has seamlessly navigated the intricate landscapes of audit, management, financial and tax consulting. His multifaceted background and breadth of knowledge also extends to venture capital, private equity and CFO consulting, showcasing his ability to drive financial strategies and lead organisations to success.

A proud member of esteemed professional bodies, John holds memberships with the South African Institute of Chartered Accountants (SAICA), the Chartered Institute of Management Accountants (CIMA), and is recognised as a registered Tax Practitioner with the South African Revenue Service (SARS). His commitment to staying at the forefront of industry standards underscores his dedication to professional growth and staying abreast of the latest financial developments.

 

John’s rich tapestry of skills, education, and experience positions him as a dynamic and trusted financial professional capable of navigating the complexities of today's business landscape.

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Cameron Maingard - Corporate Transaction Analyst

Cameron completed his articles at Deloitte in 2023, laying the foundation for a promising career. Eligible to register as a Chartered Accountant (CA(SA)), he holds a Bachelor of Accounting (Honours) degree, showcasing his commitment to academic excellence.

 

In addition to his impressive academic background, Cameron has achieved a significant milestone by successfully passing his CFA Level 1 Exam, highlighting his dedication to continuous learning and financial expertise.

 

With three years of invaluable experience gained during his articles, Cameron has honed his skills in auditing across diverse industries, including asset management, manufacturing, retail, financial services, and treasury. His exposure to these sectors has equipped him with a well-rounded understanding of financial practices and challenges.

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Roxanne Doble - Executive Assistant: Corporate & Advisory

Roxanne is Executive Assistant to Corporate & Advisory CEO, Andrew Bahlmann. Armed with a Bachelor of Business Administration in Marketing Management and a Paralegal Certificate, Roxanne has a solid academic foundation that complements her professional journey.

 

Boasting an impressive seven years of experience, Roxanne has served as a Legal Secretary and Personal Assistant. Her unique skill-set and diverse background make her a proficient and adaptable professional, well-suited for the challenges of the corporate and advisory landscape.

We understand the importance of staying informed and prepared for the opportunities that lie ahead, so keep an eye on your inbox for our monthly Deal Leader newsletter which promises to provide you with comprehensive insights in the year ahead. 

 

Should you wish to explore potential opportunities, please don't hesitate to reach out to our team. Here's to a prosperous and successful year ahead! 

 

Warm regards, 

The Deal Leaders team 

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Get in Touch. Let's Chat.

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