Steve – Client
Steve van Rensburg, MD of a company which last year disposed of two subsidiary companies in a deal brokered by Deal Leaders Africa (DLA), had initially attempted the disposals without a professional adviser, but to no avail.
“We realised this was not the way to go and began the process of finding professional help. As part of our research, DLA were referred to us by a business contact who had previously dealt with them,” says Van Rensburg.
Following up on the initial contact with DLA, Rick Grantham and his corporate finance team visited the company and took the management team through the DLA methodology, how their process works and describing their international networks.
“A number of factors impressed me about DLA, firstly that they are well known and respected in the industry. They have a well thought out process and do substantial research, gathering detail and number crunching.” The process starts with a due diligence, research and them gaining an understanding of the business. Van Rensburg was pleased with the extent of the regular two-way discussion regarding each step of the process, and the final professional information packs created for marketing the businesses.
“In the meantime, based on figures of our past and present performance, and future projections, they made a detailed assessment of our operations from which a number of useful recommendations were presented to us as to how to improve the business and present it in a more marketable manner. From that process DLA developed financial models used to project future performance as well as explain current and past financial performance with which they went to the market for a possible buyer. This was done in a thorough manner which left no possible stone unturned,” says Van Rensburg.
The process, if anything was almost too thorough, says Van Rensburg, canvassing foreign buyers who he felt would have no interest in acquiring such a domestic business. “From my point of view it was going overboard, but that is their modus operandi – to blanket the entire field and look at every angle as to who could possibly buy, and I couldn’t fault their energy. If I had to do another similar transaction I would go through the entire process with DLA exactly as we did before”
Initially, ‘teasers’ are sent out and Van Rensburg and his team had to give the go-ahead before any interested buyers received more detailed information packs.
Van Rensburg says DLA’s flexible fee structure was also a positive feature of the experience, which forms a ”small part of the total transaction value”. This is also based on the initial valuation of the business, which aligns interests to a considerable degree.
“I would highly recommend DLA to anyone else, and indeed we always do so because I believe they are a fantastic organisation who look at both sides of the transaction,” says Van Rensburg.
Jansie – Client
One moment an entrepreneur is feeling the emotional highs of excitement and thrill of satisfaction, while the next moment feeling the lows of loss and an emotional vacuum.
For many owners, the emotions experienced around the sale of your business start with excitement, exhilaration, and pride in the fact that there is a buyer for the business, that you’ve created something of value and that your IP is in demand. That can soon turn to a feeling of loss. No two businesses sales are ever alike, of course, but there are some common emotions business owners are likely to feel as a part of the process of selling their business after long years of building it.
In the case Jansie Moolman, the emotional roller coaster of selling his share of the business he started in partnership was soothed by the number of new business ideas he came across during the sale process brokered by Deal Leaders Africa (DLA).
Having seen reference to DLA “somewhere”, Moolman attended one of their client presentations a few months before the transaction for the sale of his shares, which happened last year. “I was interested in selling the shares in my company, and realised if I did the transaction myself I would most likely have one or two parties interested such as my co-owners, but through DLA the business would attract a far wider audience through DLA’s extensive local and international network,” says Moolman.
“I opted for DLA because of the arms-length character they brought to the transaction. As a result of this I was introduced to new people and this in turn has opened up new prospects for me, which otherwise might not have occurred.
“I wanted a cash pay-out, no complications with earn-out clauses or undertakings that could have come-backs in a year or two – I wanted a clean deal. Through the DLA process this filtered out any other type of buyer or the possibility of complex guarantees.”
Moolman was introduced to Andrew Bahlmann and Rick Grantham, and the process rapidly got under way with data gathering. From this a valuation of the business was arrived at, which he describes as “north of what I had in mind at the beginning”.
“I had a figure in mind and managed to get that in the end, what DLA had valued it at. What made the process easier was that DLA brought all the interested buyers to me, so I didn’t have fly all over the country.”
Although all such parties except one were domestic buyers, Moolman says DLA’s international network still had an influence in the competition for this business. “It makes one more aware of what’s happening in the global market. It was also intriguing to find international interest in a small South African business – it shows that international opinion regarding South Africa is sometimes better than the opinion we have of ourselves. They see something we are perhaps blind to.
“The whole process was a pleasure and a positive exercise. They are a nice team of people who made the experience much smoother than I had expected. I had their full attention throughout and I always felt they had my interests at heart, even if occasionally they were telling me something I didn’t want to hear.
“By following their process, it takes the hit-and-miss character out of a sale. It gives you comfort, as you know exactly where you stand throughout the whole process through the constant feedback they give. I was given more than sufficient one-on-one time with potential buyers, as well as all the information I could have wanted.”
However, Moolman described the fee structure as “a bit rich, and one that I would have taken a harder line on was I going through a similar procedure again”.
“Was I satisfied that there were enough checks and balances on their side? Maybe that’s something they could look at. I overlooked certain things at the time because everything else was so positive. When you’re selling there are a lot of unknowns and a lot of emotions involved from both the seller and buyer point of view. People don’t like to sell something they’ve invested years of themselves into.
“I would recommend DLA to anyone looking to sell their business,and encourage them to look more closely at the international options in such a transaction,” he says.
Anton – Client
When Anton and his family were considering selling a portion of their 20-year-old family-owned business, they chose Deal Leaders Africa (DLA) to assist them.
According to Anton, as part of his research into the possibility of selling the business he subscribed to various broker newsletters and was particularly struck by DLA’s suggested ideas. “They would offer tips and ideas for consideration by people like myself thinking of selling a portion of one’s business or looking for an investor. Many of these comments and viewpoints resonated with me.”
He RSVP’d to DLA’s next presentation. When he had to cancel shortly beforehand, partner Rick Grantham instead invited him to for a cup of coffee. “He took me through the DLA methodology, how their process works, how they align interests and their international networks. It made sense to me. When we decided to proceed, and we spent the next couple of months building agreement with the roll-players and getting their buy-in, an important prerequisite to selling a family business.”
What impressed Anton in choosing DLA, he explains, was “how well thought out their process was”. Furthermore, when they finally met Anton reports there was a personal chemistry in terms of alignment of interests. He felt they could work well together with the entire team, of whom Tamryn was their day-to-day contact go-to person.
“DLA has a well thought out and methodical process they follow. It starts with a due diligence, research and them gaining an understanding of the business. From that process DLA developed financial models used to project future performance as well as explain current and past financial performance. From that, highly professional investor information packs and teasers were put together.”
These ‘teasers’ are an important component of the process and of DLA’s success. There are a large number of players in the M&A space, and the information-light teaser gives just enough information to stimulate interest, without getting lost in the information overload corporate finance professionals suffer from. Teasers are sent to a large number of companies that are either potential buyers themselves or represent buyers.
At that point Anton and the other shareholders had to approve the delivery of further information packs to any potential buyers that would request it. This was followed by pandemic-era online meetings with all parties including buyers and buyer representatives, to discuss at a high level the potential to take it forward. For the parties where the online meetings went well, they would do a site visit and in person meeting.
The deal at the time of interview was poised mid-transaction, with a number of such meetings having been hosted by DLA and with three parties having expressed firm interest. The next phase was for the three to put forward non-binding offers explaining how they value the company, and ultimately for the shareholders to assess them for a final decision.
He lists the only downside to the deal as brokered by DLA as being the length of time it took, the uncertainty as to what the future held and not knowing what the ultimate deal would be, “though this is the nature of M&A involving a private company rather than any fault of DLA. It is the nature of the beast”.
“The valuation of a privately held company varies from investor to investor. In fact, Rick cautioned me that the price from minimum to maximum can vary as much as three to four times. The valuation is quite subjective: it depends on whether it meets their plans and whether there’s synergy. That’s why it’s important to speak to a lot of companies and find that unique win-win.”
From meeting with Rick to having a completed transaction Anton expects it to be two years. Nine months to getting buy in and signing the mandate, three months of due diligence and then a year for market engagement and nailing down a term sheet that everyone can agree with, then concluding the buyers due diligence and settling the transaction. “It is a time-consuming process, but each step has to be methodically done. Two things could have sped up the process: not having a Covid pandemic; and being better prepared in terms of streamlining the structural complexities within the company, having a simple structure that is easier to understand makes it easier for a potential investor to get buy-in.
“DLA advised us on improvements, often based on the market feedback, such as where our structure was too complex.”
DLA’s flexible fee structure helped them secure the mandate: an initial fixed monthly charge enabled DLA to meet overheads, but thereafter reverted to a reasonable percentage of the transaction value. This is also based on the initial valuation of the business, “which aligns interests to a considerable degree”.
“It was particularly this fee structure which reassured me that they were incentivised and motivated to get a good outcome for us. I would highly recommend DLA to anyone else, and other parties to the transaction similarly expressed satisfaction with the process and information flow of DLA.”
Renier – Wealth Manager
I am delighted to recommend the high quality and professional service of Deal Leaders. Not only is Deal Leaders playing a critical role towards our client service offering, but also contributing immense value to our existing and future client relationships of a very high level, thus bolstering reciprocal confidence and trust.
Deal Leaders is thorough, precise, highly analytical and extremely knowledgeable. Their research is the best I’ve seen and they spend weeks understanding businesses, researching companies and building their vast and extensive global network. Their problem-solving skills speaks of their creativity and expertise. Deal Leaders is reliable, trustworthy and transparent and their unique approach is a true differentiator. Deal Leaders thrives on excellent and professionalism whilst building lasting relationships with mutual clients and acquirers.
It is an absolute pleasure dealing with Deal Leaders and I strongly recommend them with confidence and pride.
Kerry – Wealth Manager
Rick and his team have been very professional in assisting my clients to sell their business that they started 30 years back. This is a very emotional experience, as it is a lifetime of hard work, relationships, stress and responsibility that they entrust to the Deal Leaders team. Deal Leaders have introduced a number of buyers to the table and handled the negotiations with the utmost professionalism. My clients have always felt confident, knowing that Rick and his team have their best interests at heart. The deal is getting closer and my clients have full faith that Deal Leaders will find a solid home for the business, so that it will continue to support all the old and new families that are integral to the success that the business has become today.