The Deal Leader
Nov / Dec 2023 | Volume 36
Reflections and Learnings from 2023, and a Glimpse into 2024
As we approach the end of another eventful year, it's a fitting time to reflect on the trends and experiences that have shaped the mergers and acquisitions (M&A) landscape in 2023.
In this special edition of our newsletter, we'll delve into some of the key highlights and provide a preview into what 2024 might hold.
1. Sectors Grabbing Attention
One of the most notable aspects of 2023 has been the keen interest in certain sectors. International companies have shown remarkable interest in the mining services space. The electrical and power sectors have also continued to draw strong attention. These sectors have dominated the deal landscape, with international mining services businesses gaining global traction. This highlights not only the allure of South African mining but also the rich skills residing within local businesses, making them attractive on the international stage.
2. Caution Among Sellers
Throughout 2023, we've observed a sense of caution among sellers. Many were hesitant, fearing they might not get the deals they desired. However, there has been a turnaround in this sentiment in the latter part of the year. We anticipate a rise in M&A activity in 2024. It's important to note that while sellers may be cautious, buyers remain eager, continually presenting offers for the businesses we represent. Quality businesses continue to attract top tier acquirers.
For more on this, read our feature article.
Feature Article:
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Unlocking Confidence in M&A: 6 Compelling Reasons to Pursue a Successful Business Sale in 2024
3. DLI Business Confidence Survey Preliminary Findings
The preliminary results of our recent Business Confidence Survey provide an encouraging snapshot of the current business landscape. The data reveals a positive trend, with 66.6% of businesses reporting growth over the past three years, and a remarkable 83% expressing optimism for further growth in 2024.
Notably, the survey also highlights the increasing prevalence of businesses being approached by potential buyers, with 58% reporting such encounters, and 66% considering selling their businesses within the same timeframe. The driving forces behind these considerations encompass a wide range of factors, including growth strategies, risk mitigation, diversification, BEE initiatives, and the desire to attain more personal freedom.
4. Interest from International Acquirers
In the quest for the best deals, we've seen an 80% value uplift in offers from international acquirers when compared to local offers. This emphasises the value of finding the right international partners. Our extensive network of acquirers and research capability to find the right acquirer is one of the things that sets us apart. Acquirers trust our ability to connect them with quality companies.
5. Our Newsletter is an Investment in You
Our monthly newsletter has played a pivotal role in educating business owners on the M&A landscape. By reading our newsletter regularly, you become better acquainted with us, our values, and our expertise. We believe that this familiarity may pave the way for considering your options when the time is right. In 2023, we've worked diligently to provide valuable content and information, and the feedback suggests that our clients are more informed and better prepared as a result.
We’re pleased to report that 75% of business owners who participated in our recent Business Confidence Survey said they read our newsletter regularly and find the topics useful and insightful.
6. Going Straight to Market
One of the key takeaways from this year has been the realisation that the Business Market Assessment (BMA) – DLI’s unique marketability consulting exercise – doesn't fit every situation. For some clients, going through an extensive consulting exercise upfront is not necessary.
Several clients have opted to proceed directly to market. This approach involves closely collaborating with our team who craft the Information Memorandum (IM), refine marketing materials, and curate a list of potential buyers. It's an efficient strategy that accelerates the selling process.
We've also adopted a more direct approach when we are well-versed in the sector, such as a recent example involving a landscaping business. Having met with the landscaping business owners a year ago, we had a wealth of information about their company. When they returned, expressing their intention to proceed with a sale, we recognised that a BMA was unnecessary because we were well-informed about the business, the market and potential buyers.
7. Growth Accelerator Program
Our commitment to quality means we won't take just any business to market. For clients looking to grow their businesses or increase their value to ensure the best possible deal, our Growth Accelerator program can help prepare them for a successful sale. We're dedicated to honesty and integrity throughout the process, ensuring that our clients understand the realities of their deals.
The first step in understanding what your business is worth and how to build value is taking our complimentary Sellability Assessment to get your score on the 8 Factors That Drive Your Company’s Value.
8. Corporate & Advisory
In 2023, we've continued our growing trend of attracting large privately-owned businesses with EBITDAs now ranging between R150 million and R220 million. In addition to attracting business owners with this level of profitability, we continue our 100% track record in getting these larger deals ‘across the line’. This is testament to the DLI model and approach working for all sizes of quality businesses.
An incredibly exciting milestone that has recently been achieved is that of securing our first South American mandate that we will be taking to market early next year. DLI’s ability to offer world-class capability in a very competitive M&A advisory market has made us extremely proud of this achievement. We believe that this will be the first of many ‘overseas’ transactions that we will be focusing on in the coming years.
Read the room: Emotional intelligence in M&A
Whether it’s called people skills, empathy, or self-awareness, emotional intelligence is now firmly established as a critical component of business success. Hard to measure but easy to recognise, a team with high EQ is better equipped for the emotional rollercoaster of a business sale.
High EQ makes things happen. Read this CAPEQ article by Mark Sapsford to find out how.
At DLI, we are unwavering in our commitment to our clients' success. We prioritise your needs and interests, ensuring that the power remains in your hands. If something isn't right, we're flexible enough to pause and reassess. Our investment in your understanding and readiness is a testament to our dedication.
If you'd like to engage in an informal and obligation-free exploratory conversation with Rick Grantham, we invite you to click on the calendar to schedule a 15-minute call.
We are excited about the opportunities 2024 will bring. Thank you for joining us on this journey, and we look forward to a prosperous year ahead.
We hope you enjoy this issue of The Deal Leader.
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Warm regards,
The Deal Leaders Team
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