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Businesses Are Just Like Classic Cars

Anyone who owns or has owned a classic car will attest that it’s a very special relationship and one not dissimilar to owning a business.

Classic cars and businesses are assets that relatively few have the privilege of owning, they take time to build or acquire, have personality, and generally represent a sizeable investment and very personal commitment for anyone.

At the outset of these relationships, our perceptions of what the experience will be like is dominated by excitement, passion and it is often a journey we have spent many years planning and saving for. The risks have been calculated and monetised yet despite knowing that as physical or metaphorical assets they do break, and cost money, we have an ingrained belief we’ll get through it and that value that will accumulate with time.

It is inevitable, unless one is fortunate enough to be able to pay a premium price for a pristine model, that the early stages of these ownership journeys are characterised by a series of unfortunate discoveries - usually requiring us to roll up our sleeves and invest both time and money to rectify. It’s something we readily do as this beast is now a part of us and with ownership comes responsibility.

Like classic cars, business ownership takes us on a rollercoaster ride of emotions that range from pride and joy to anger and despair. One faces a multitude of risks from accident to theft and even the collapse of a market for it. The sacrifices can be significant, yet from the outside others often perceive us as merely lucky and in viewing the finished product, do not have insight or appreciation for the all-consuming toil, sunk and personal cost that it has taken to get to this point.
 
 
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Driving the old stag was not possible without being approached by somebody wanting to acquire the car and whilst they’d all expressed an interest to buy, it was once the door to such a discussion was opened that they divert the negotiation from their motive and start to approach the transaction from a purely clinical perspective. It is at this point buyers begin quoting market-related metrics seeking to mitigate the risk of what will be their investment. Simply put, such an approach is common in business too as a seller the future value potential and emotional attachment can often outweigh the immediate cash consideration but yet we also fail to see the other side and balance the risk to a buyer. It is for this reason that the intangible benefits of a deal are often larger considerations than the price attributed.

Selling a classic car is a difficult decision. It marks the end of a very personal relationship and what has been an emotional journey - for some, it can be a process as difficult as picking a spouse for one of our kids might be. Price becomes important as it measures the worth we attribute to it, and the reward for the investment or sacrifices made. Equally, however in finding the right person who we can trust to nurture, protect, improve and care for our treasure, we’re achieving a value beyond compensation.

Central to the decision to sell a classic car is always the consideration of “what next”. If the transaction facilitates the acquisition of a more prized possession or the freedom to pursue a long-sought ambition, the decision becomes more palatable. The similarity in selling a business is that it is vital to plan for what comes next. For example, in the case of retirement, it’s key to have something to retire to, as opposed to from.

It is a commonly expressed view that anything is for sale at a price, but committing to the prospect of a sale is a fundamentally different process to being available to be bought. Knowing your asset, the buyer’s next best alternative, and the adventure you’d pursue next are all key to a successful outcome. Whilst experience, financial, analytical, and other corporate finance skills are minimum requirements for an advisor, someone who’s been there, done it, and who intimately understands the internal conflicts only a business owner experiences can certainly add value in navigating this journey.
 

Author
Andre Bresler
Managing Partner
Benchmark International

T: +27 (0) 21 300 2055
E: bresler@benchmarkintl.com

 

 

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Benchmark International Successfully Facilitated the Acquisition of Local Bulk Haulage (PTY) LTD by Leopard Line Haul (PTY) LTD Trading as Elite Line Haul

Benchmark International is pleased to have successfully facilitated the acquisition of Local Bulk Haulage (PTY) Ltd by Leopard Line Haul (PTY) Ltd trading as Elite Line Haul.

Founded in 1995 by Peter Scholtz and Len Pretorius, Local Bulk Haulage (PTY) Ltd is a logistics company delivering specialised primary chemicals and liquid bulk commodities from the point of supply to the end-user effectively and efficiently. LBH has grown into a significant asset over the years servicing an enviable customer based comprised of blue-chip chemical and commodity entities.

Elite Line Haul, a subsidiary of Elite Truck Hire, is an innovative logistics company servicing clients across South Africa. As an established Level 2 B-B BEE Contributor, Elite Line Haul specialises in both short-term and long-term local distribution and line haul contracts. Over the years the company has developed a strong presence in the transport industry, operating from its headquarters in Elandsfontein, and ancillary branches in Durban, Cape Town and Port Elizabeth.

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The transaction was strategic in nature and represents Elite’s diversification into liquid bulk haulage. As a consequence of the transaction, Elite Line Haul will now boast the largest fleet of Volvo trucks and trailers in South Africa.  

Commenting on this, Andre Bresler of Benchmark International South Africa said: “On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.”

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Benchmark International Has Successfully Facilitated the Transaction of Aquatic Foods (PTY) LTD and National Foods (PTY) LTD to Econo Foods Holdings (PTY) LTD

Aquatic Foods (PTY) LTD was established in 1996 to service leading restaurants, hotels, caterers and wholesalers by supplying live, fresh and frozen seafood on demand. After securing a broad customer base in South Africa and earning a reputation as a reliable and sustainable supplier, Aquatic Foods (PTY) LTD made the decision to expand their product offering to existing customers, using their established distribution network.

This led to the incorporation of National Foods (PTY) LTD in 2012, which distributes chilled and frozen products such as meat, dairy and pastry products.

Aquatic Foods (PTY) LTD and National Foods (PTY) LTD have successfully established themselves as a leading food services organization with a majority market share in the Western Cape. The company’s modern cold storage facilities and sophisticated stock control system enable it to hold significant inventory, thereby reducing stock risks and ensuring reliable and consistent delivery of high-quality products.

Michael Niese, founder and shareholder of both Aquatic Foods and National Foods, commented on the transaction saying, “Considering the transaction size and the respective intricacies thereof it was concluded exceptionally well without any difficulties. This I attribute to the skill and productivity of Benchmark International and the spirit of Econo Foods.”

The acquirer, Econo Foods (PTY) LTD boasts a nationwide chain of 18 outlets specializing in frozen and chilled food products. With over 100 refrigerated trucks operating among their five distribution centers, they successfully supply the wholesale and foodservice trades with frozen, chilled, and grocery lines throughout the Free State, Gauteng, Northern Cape, North West, and Lesotho regions.

Pleased with the outcome, Henk Smith of Econo Foods (PTY) LTD said “It was a pleasure to work with the Benchmark International team.”

Tiaan Smit, Transaction Director at Benchmark International added, “Throughout the process, both our client and the acquirer were exceptionally responsive, thorough, and professional, resulting in discussions progressing quickly and delivering a fantastic and timely result for both parties. I am delighted that our client was able to monetize the great business he has built while handing the keys over to an organization that will carry on his legacy as Econo Foods grows the business to the next level.”

On behalf of everyone at Benchmark International, we would like to wish all parties every success for the future.

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Benchmark International is proud to be a part of the OCFO Founders Conference 2019

Benchmark International is proud to be a part of the 2019 OCFO Founders Conference, taking place on November 7th at the Ideas Cartel in Cape Town, South Africa, during Global Entrepreneurship Week.

The conference aims to bring together the top business people, investors and entrepreneurs in South Africa for an evening of meaningful networking, learning and inspiration.

As part of the event, Dustin Graham, Managing Partner of Transactions for Benchmark International's South Africa offices will be speaking on the topic of preparing one's business to go to market and extracting its true value.

We wish the hosts and attendees well during the event.

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Benchmark International (South Africa) Closes 9 Deals in 9 Weeks

Benchmark International’s South African office has experienced a sharp increase in deal flow and activity. The company reports having received 51% more non-disclosure agreements from interested parties and a 71% increase in the number of offers received for client businesses than in the corresponding period last year.

The volume of transactions concluded by Benchmark’s South African office confirms the positive trend identified in the recently published Intralinks Deal Flow Predictor, which relies on early-stage transaction forecasts compiled from data on M&A due diligence activity in virtual data rooms. The predictive models for the second half of 2019 suggested an increase in the number of deals to be announced in the order of 5% for the EMEA region.

Benchmark International—demonstrating this trend—is pleased to have facilitated the following transactions in recent weeks:

  1. The investment by way of share subscription in Shift South (Pty) Ltd, trading as SweepSouth, by MIH Holdings, trading as Naspers Foundry

  2. The sale of a majority interest in Counterpoint Trading 439 (Pty) Ltd to Shave and Gibson Packaging (Pty) Ltd

  3. The merger of two undisclosed prominent e-commerce companies

  4. The disposal of Groupline Projects (Pty) Ltd by Wonderstone Ltd who are in turn owned by the JSE listed group Assore Ltd to Mokoena Holdings (Pty) Ltd

  5. The sale of Muffin Mate Coastal (Pty) Ltd to Ekuzeni Supplies (Pty) Ltd

  6. The sale of Jordan Human Resources to Vinton Holdings (Pty) Ltd

  7. The sale of an undisclosed mining equipment manufacturer to an undisclosed Canadian equipment supplier

  8. The acquisition of Ciba Packaging (Pty) Ltd’s non-core flexible food assets by Lampac CC, trading as Packaging World

  9. The sale of Nology (Pty) Ltd and Nology Distribution (Pty) Ltd to a multinational technology holding company

Commenting on the transactions, Andre Bresler, Managing Partner at Benchmark International’s South African office, remarked, “The range of transactions is a testament to the maturing M&A landscape in South Africa as well as the depth of the Benchmark team as these nine deals represent a very broad spectrum of M&A activity—from a capital raise to a merger and both partial and full disposals. There are private equity and trade-buyer deals, cross-border and domestic transactions, an acquisition, and even the disposal of a non-core asset of a listed entity. It’s certainly an exciting time for M&A in South Africa with no significant slow-down expected; we anticipate a number of additional transactions to finalize in the last quarter too.”

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Dustin Graham was interviewed by Business Day TV on “How to Value Your Business”

Benchmark International's Dustin Graham, Managing Director of the Cape Town and Johannesburg offices in South Africa, was interviewed by Business Day TV. The "How to Value Your Business" discussion can be viewed here: 

 

 

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Business Day TV is broadcast on Channel 412 on DStv and is available to over 10-million viewers in 9 countries across Southern Africa. It is one of three TV stations owned by The African Business Channel.

ABC is owned by SA’s leading financial publisher BDFM, publisher of Business Day and Financial Mail. BDFM in turn is owned by the Times Media Group, one of SA’s largest media houses. One of Business Day TV’s strengths is its access to content from this extensive network.

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Cape Town Named as Number One City of Opportunity in Africa

Cape Town has ranked in the top 31 opportunity cities, placing sixth out of 13 middle-income cities and as Africa’s number one opportunity city, according to a report by PwC.

Of the other middle-income cities on the report, nine of the cities are more than double the size of Cape Town and, aside from Rio de Janeiro, the other middle-income cities were either a capital of its country, or the largest city.

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