Inside Complex M&A: Structuring, Regulation and Risk Management

Every M&A transaction has its challenges. But some deals, like Cobra’s strategic investment from Alterra Capital Partners, demand an extra layer of technical precision and strategic guidance. Behind the headlines of a successful close lies months of careful planning where structuring, regulatory navigation and risk management all play a decisive role. 

Structuring for Success 

In Cobra’s case, the deal could not proceed until three separate operating entities were consolidated under a single holding company. This required a Section 42 restructure, a tax-efficient mechanism under South African law that allows for the transfer of assets between companies within a group without triggering immediate tax consequences. 

While these restructures are often unseen by those outside the deal room, they are critical to aligning corporate structures with investment requirements. Without it, Alterra’s investment would not have been possible. Structuring correctly at the outset doesn’t just make the deal viable. It creates a foundation for growth, clarity and future capital participation. 

Navigating Regulatory Approvals 

Major transactions often require approval from the Competition Commission, particularly when international investors are involved. These processes can be complex and time-consuming, but they are essential to ensure fair market participation and compliance with South African regulation. 

In Cobra’s transaction, early preparation and proactive engagement with the relevant authorities were key. By anticipating regulatory questions and aligning documentation early, the parties were able to avoid unnecessary delays, which is a crucial advantage in competitive deal environments. 

Managing Risk Through Warranty and Indemnity Insurance 

One of the most valuable yet least understood tools in modern M&A is Warranty and Indemnity (W&I) Insurance. This insurance bridges a key gap between buyer and seller. For the seller, it limits exposure to future claims once the deal has closed. For the buyer, it provides comfort that if undisclosed liabilities arise, they are covered. 

By using W&I insurance effectively, Cobra and Alterra were able to negotiate with confidence, focusing on growth potential rather than potential pitfalls. It also ensured that both sides were protected and the deal could progress smoothly to completion. 

Simplifying the Complex 

For many business owners, the thought of navigating a transaction with multiple entities, regulators and risk considerations can feel daunting. But with the right team and process, complexity can be managed and value maximised. 

At DLI, our role is to simplify the complex. We bring together financial, legal and strategic expertise to structure deals that work, guide clients through the regulatory landscape and manage risk with precision.  

The result: transactions that don’t just close successfully, but create lasting strategic value. 

About Deal Leaders International

Deal Leaders International (DLI) is a boutique sell-side M&A advisory firm specialising in helping business owners and executives, with a business EBITDA between R20 million and R300 million per year, engineer their growth-to-exit journey.  

We go beyond traditional advisory services, partnering with our clients to design, execute and optimise strategies that achieve maximum value when selling their businesses.  

Our mission is to empower our clients to achieve outcomes that align with their financial, professional and personal goals while positioning their businesses as highly attractive to the right buyers.  

As the Africa representative of the Pandea Global M&A Network, we offer our clients both local and international expertise and experience. With 69 offices in 34 countries, and over 2500 successfully completed transactions with a combined deal value over €30 billion, DLI offers deep market insights, practical expertise and a results-driven approach to prepare and successfully execute on business growth and exit strategies.