Although some business owners may settle for sufficient growth to keep pace with inflation, others are driven to see their life’s work achieve its full potential. These individuals attain success by reinvesting profits or raising loans at strategic intervals to upgrade equipment, embrace new technologies or finance marketing campaigns to increase sales. However, even the most successful businesses will often reach a point where finding a strategic growth partner may be the only way to finance the next step.
Finding the right company to partner with can be a lengthy and frustrating exercise, more so because local interest in mergers and acquisitions has waned in the wake of the pandemic. Fortunately, the African Continental Free Trade Area launch has attracted increased interest from Africa’s traditional overseas trading partners. However, they won’t be posting adverts in a “businesses wanted” column. In practice, it takes a well-connected and experienced intermediary to identify and negotiate a successful deal with a suitable strategic growth partner, whether with a local or overseas company.
A business broker might look at your share price, profits costs and similar data to arrive at a price for a percentage of your business, but the actual value of your business lies in the benefits it offers the investor and is likely to be substantially higher. By contrast, a mergers and acquisitions advisor will seek out and negotiate with those clients who have the most to gain – thus ensuring the maximum financial return from your deal and a strategic growth partner with all the necessary qualities and facilities to help achieve your ongoing business goals.
While your motivation for considering a merger might be to penetrate new markets or raise cash for a research and development project, companies interested in mergers also have sound reasons for their interest in partnering with another company. Perhaps a business is experiencing supply chain problems and needs a captive manufacturer to guarantee adequate stocks of crucial components. In some cases, a suitable strategic growth partner could open the doors to a previously inaccessible market sector. This prospect is responsible for the growing interest in Broad-Based Black Economic Empowerment (B-BBEE) deals from South African companies. One of the most significant benefits of attaining B-BBEE certification is access to lucrative government tenders, leading to preferred supplier status.
Over the years, numerous examples of hugely successful partnerships have seen share prices rocket to new highs. For instance, since its merger with Coca-Cola in 1955, one can’t buy a burger at McDonald’s without the offer of a Coke to complement it. The established beverage manufacture proved to be the perfect strategic growth partner for the equally world-famous fast-food chain.
It only takes two companies with the necessary resources to meet each others’ needs to form the basis of a perfect partnership. However, you won’t find a compatible business by searching the yellow pages, especially in the light of dwindling local interest. On the other hand, many South African companies have been highly successful in their quest thanks to the professional assistance of Deal Leaders International. Given they have achieved close to R1 billion in deals over the last six months alone, who could be better qualified to find you your perfect strategic growth partner?