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Newsletter, Volume 24 | August 2021

Finding calm in the chaos…

Is it time to reframe our outlook on what the business world looks like and accept that we will need to navigate a very different landscape moving forward? The answer is a resounding yes! As a business we review a book a month and have recently finished the book Legacy (James Kerr) that is a brilliant read unpacking what makes the All Blacks the most successful sports team in history. In Chapter 2, Kerr refers to the military acronym of VUCA: Volatile, Uncertain, Complex and Ambiguous. If ever there was a time to integrate this acronym into your business DNA, now is that time.

We could go on ‘ad nauseum’ around the uncertainty we all face and the laundry list of challenges that we need to consider as part of our daily ritual. The question is then, ‘to what end?’. Business was tough for all of us before COVID-19. It was even tougher if you are a South African business navigating an extremely tough economic outlook both pre-, and post, lockdown.  With so much up in the air, there is only one logical place to start…you must identify what your options are based on your current reality.

Wishing you success and resilience

Andrew & Rick

Putting reality on the table…then doing something about it

(By Andrew Bahlmann CA(SA) – Chief Executive: Corporate and Advisory)

One of my mantras in business, and life, is to ‘put reality on the table’. At times like this, opinions can be dangerous. The process of ‘putting your reality on the table’ is fuelled by asking, and answering truthfully, some tough questions. Then, you need to take action.

‘Don’t wait until you are ready to take action. Instead, take action to be ready.’ (Jensen Siaw)

In our world of mergers and acquisitions (M&A), we always ask our clients one question?

DO YOU WANT TO SELL YOUR BUSINESS?

There are 3 possible answers to this question:

  1. Yes
  2. No
  3. I don’t know

Seems straight-forward enough, right? The next step is the most important step, and that is to delve to the next level down on each of the answers above:

   1) Yes:
  • Do I want to sell 100% of my business?
  • Do I want to sell only a portion of my business to ‘de-risk’ and keep growing my business with another partner?
  • Am I prepared to stay in the business?
  • Have I got a succession plan in place?
  • Am I and my business ready to sell?
  • How much is my business worth?
  • Is there an active market for my business?
  • What are buyers looking for?
   2) No:
  • Do I have a growth and exit strategy?
  • Should I have a growth and exit strategy?
  • Do I want to look at growing my business over the next few years by acquiring more business?
  • Do I want to consider taking some value out of my business balance sheet and placing it in my personal portfolio based on the current volatility and uncertainty in the market?
  • Would I consider using a strategic partner’s balance sheet to grow more aggressively and increase the value of my business in a much shorter period?
  • Are there strategic investors or partners out there that would look at my business?
   3) I don’t know:
  • What are my options if I do or don’t sell?
  • Is there a market out there that is looking at acquiring a business like mine?
  • Is there opportunity to grow my business through acquisition?
  • Should I consider taking some value off the table to de-risk my personal exposure to my business?
  • Do I have a growth and exit strategy?
  • Should I have a growth and exit strategy?

The list of questions for each category of answer could go on and on. Obviously, there are no right or wrong answers, but rather a mind-map of relative questions and answers that become exponentially complex without knowing the realities from the market.

What makes the decision to sell your business particularly challenging is that the decision must be taken in absolute terms. It is a ‘yes’ or a ‘no’. Your business is either in the market looking for a buyer, or it isn’t. Unfortunately, the only way of finding out whether there are buyers out there for your business, what the value is and the degree to which you can de-risk can only really be ascertained by taking the bold step of engaging the market.

Based on the pressure behind this big decision, DLI has created a solution for large private clients, Private Equity Firms and Listed Entities with the launch of its Corporate Evaluation and Marketability Assessment (‘CEMA’). The CEMA creates an accurate and market-aligned playbook from which our clients can make calculated decisions around their growth and exit strategies.

Our Deal Activity Over the Month of August

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New Offers Received
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Offers Received This Quarter​
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Meetings With Acquirers​
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Information Memorandums Reviewed By Acquirers​
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