Benchmark International is pleased to announce Bidvest Branded Products Holdings' acquisition of Green Home Products. For over a decade, Green Home Products has blazed a trail in introducing environmentally friendly, compostable food packagings solutions, such as bagasse and plant-based bioplastic products, to the Southern African market. Established by Catherine Morris, the company has earned a reputation as an industry pioneer, leveraging a strong brand, high-quality products, and an experienced workforce to meet growing demand. Its strategic location and established supplier and customer relationships facilitate the prompt delivery of goods and services to its broad clientele. With an emphasis on social responsibility and sustainability, the company has remained at the forefront of the industry.READ MORE >>
Benchmark International is pleased to announce that Cire Airos (Pty) Ltd. has successfully acquired controlling interest in Northridge.READ MORE >>
Benchmark International is proud to be a part of the 2020 OCFO Founders Conference, taking place virtually, during Global Entrepreneurship Week on 19th November 2020.
As part of the event, Dustin Graham, Managing Partner of Transactions for Benchmark International's South African offices, will be speaking on the topic Building Your Business For Sale.
Topic: Building for Sale, 14:40–15:00 – Dustin Graham
Event date and time: 19th November 2020, 13:00–16:00
Location: Virtual event
Link to register and ticket sales: https://zcu.io/1od4
Link to event agenda: https://www.foundersevents.co.za/agenda/
OCFO Founders Conference Annual Event
The annual Founders Conference normally takes place in the heart of beautiful Cape Town during Global Entrepreneurship Week. However, in the light of Covid-19, It was decided to host the Founders Conference as a virtual event this year.
The conference brings together top business people, investors, and entrepreneurs in South Africa for powerful networking, learning, and inspiration. The Founders Conference is one of the biggest gatherings of entrepreneurs on the African continent—not to be missed by any serious founder. Speakers include some of the most successful founders around the globe and investors who have raised and invested billions.READ MORE >>
Benchmark International’s industry agnostic approach has proven to be informative during the Covid-19 epidemic. Interest in most of our client base has not declined and we are receiving queries from a wide range of parties.
Who are these interested parties and what is their investment approach? Analysing the data provides an interesting insight and some understanding of the shifting approach amongst these different categories of buyers.
• Listed Companies with their robust balance sheets are compelled to continue investing to meet forecast performance targets and stakeholder objectives. Generally, their acquisition mandates are governed by their investment committees where risk is a dominant factor. Turnaround and distressed assets are typically less attractive unless fulfilling a defined strategic need.
• Foreign Corporates from the Western to Eastern hemisphere still see South Africa as a stable foundation to expand through to Sub-Saharan Africa. South Africa’s well-developed IT and broadband infrastructure, advanced legal and banking sectors, safe aviation record, and access to a cost effective English-based labour pool facilitates business across the African continent. Themes of specific interest have emerged with a higher than normal volume of inbound enquiries for renewable energy, TMT, IT infrastructure and service as well as software businesses in particular.
• Private Equity in South Africa has grown and matured immensely over the last decade and remains one of the top acquirers/investee categories in the middle market for Benchmark international. Attached to the funds they raise are set acquisition criteria, investment limits and defined investment timelines where cash reserves must be spent. Similar to the listed segment, risk profiles are a key investment mandate consideration. During lockdown, Benchmark International has experienced a slight shift in the number of deals concluded towards those that have private equity components to them.
• Family Offices have shown resilience through the epidemic and continue to show interest in our opportunities. Their mandates are more flexible but are primarily based on where their strategic and financial input will maximise returns.
• Covid-19 has forced Large Private Companies to look at vertical integration of their supply chains. They also continue to seek to grow their market share through horizontal acquisitions and acquisitions of niche market opportunities.
• High Net Worth Individuals remain interested in growing their asset bases. They generally focus on opportunities in which they have existing investments and expertise and are able to achieve economies of scale.
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.
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.
T: +27 (0) 21 300 2055
Get Your Business Showcased At The Local Industry's 'Must Attend' Event
Benchmark International is pleased to announce that we will be contributing material to the attendees’ welcome pack at the SAVCA Southern Africa Industry Conference from February 25th-27th at the Spier Wine Farm.
In 2019, the SAVCA Conference attracted 437 Private Equity delegates and 195 Venture Capital delegates who represented local and international institutional investors, fund managers, advisors policy makers and entrepreneurs.
Would you like to be showcased to these industry leaders with strong, acquisitive appetites? We will be including a limited number of client investment profiles in the flyers which will form part of the delegate bags. Contact us now to ensure your business is included.READ MORE >>
Determining the value of your business is not as simple as looking at the numbers, applying tried and tested formulas, and concluding. Were it that straightforward all business valuations would be virtually identical. The fact that they are not is sure proof that valuation is not a science, it can only be an art.
If Mergers and Acquisitions (M&A) was as straightforward as calculating the theoretical value of a business, based on historical performance and using that to determine market value I would need something more constructive to do with my time.
Valuation is not as primitive as we have been led to believe. Whilst transaction values are commonly represented as a multiple of earnings this is merely the accepted vernacular used to report on a concluded transaction and almost never the methodology used to arrive at the value being reported.
The worth of a business is often determined by the category of buyer engaged. Financial buyers can add significant value to a business in the right stage of its life cycle but may not assume complete ownership, thereby delivering value for the seller simultaneously with their own. The right strategic acquirer for any business would be one that can unlock a better future for the business, and is willing to recognize, and compensate, a seller for the true value the entity represents to them.
Comparing the experience of so many clients, over so many years, and avidly following the outcomes of all the transactions published in South Africa there is little dispute that businesses are an asset class, like any other, and that the best value of all asset classes are only ever realized through competitive processes irrespective of whether the acquirer has financial or strategic motives.
1. The itch of business valuation
Simplistically, for the right acquirer - one seeking an outcome that extends past a short-term return on their initial investment - valuation is more a function of the buyer's next best alternative, than it is a businesses’ historic performance.
It would be naïve to think that the myriad of accepted valuation methodologies have no place in the process but identifying, engaging and recognising the benefits of the acquisition for a variety of strategically motivated buyers is essential in determining value in this context.
Considering a variety of appropriate valuation metrics, the parameters applied and then being able to balance these against the alternative investment required to achieve a similar outcome is where the key determinant of value lies. This is a complex process that unlocks the correct value for buyer and seller alike and it is a result that is rarely achieved without engaging with a wide variety of different acquirers and being prepared to "kiss a few frogs"
The most valuable assets on the planet are only ever sold through competitive processes where buyers have the benefit of understanding and determining value in the context of their own motives, having considered their available alternatives. It is for this reason that when marketing a business, it should never be done with a price attached.
2. An aggressive multiple
Whilst conventional wisdom is firm on industry average multiples, case studies abound, and the business community is regularly astounded by stated multiples achieved when companies change hands.
Beneath the glamour, the reality is that multiples are rarely used as a determinant of value, but almost without exclusion applied to understand it. Multiples represent little more than a simplistic metric that reflects an understanding of how many years a business would need to reliably deliver historic earnings in order for the acquirer to recoup their investment.
In the same way as a net asset value (NAV) valuation would unfairly discriminate against service businesses, multiples discriminate against asset rich companies. For strategic acquirers, with motives beyond an internal rate of return - measured against historic earnings - valuation is sophisticated. It relies on an assessment of whether the business represents the correct vehicle to achieve the strategic objectives, modelling the future returns and assessing risk. Valuation in these circumstances will naturally consider it, but places little reliance on the past performance of a business constrained by capital or the conservatism of a private owner to formulate the future value of such investment.
Whilst there are Instances where the product of such an exercise matches commonly accepted multiples, there are equally as many valuations that, on the face of it, represent unfathomable results.
3. A better tomorrow for the buyer
It would be irresponsible to advocate that that return on investment is not a consideration when determining value - corporate companies and private equity firms typically all have investment committees, boards and shareholders that assess the financial impact of any transaction. It is rare that such decisions are ever vested with a single individual, or that the valuation is derived from their personal desire to own a company or brand.
The art of valuation requires a reliable determination of the synergies between buyer and seller and an accurate assessment of the risks and benefits of the investment. Risk and reward are inherently related and skilled negotiation is required to find solutions that mitigate, or de-risk a transaction for buyer and seller alike, in order to underpin the value
of a transaction.
Financial buyers can be very good acquirers, especially in circumstances where they are co-investing alongside existing owners, staff or management to provide growth funding. When seeking a strategic partner for a business the acquirer should always be unable to unlock value beyond the equivalent of a few years of historical earnings. It is for this reason that the disparity between valuations by trade and financial buyers exists, and why determining the appropriate form of acquirer for any business is a function of the objectives of the seller.
4. Passing-on the baton, or living the legacy
The motives for a sale can be varied and extend from retirement to funding and growth, from ill-health to a desire to focus on the technical (as opposed to management and administration) aspects, of the business.
Value for buyers and sellers comes in many different forms. For sellers it is their ultimate objective that determines whether they have achieved value in a transaction. For sellers it may be as simple as the price achieved or it could extend to value beyond the balance sheet as diverse as leveraging the acquirer’s BEE credentials, unconstrained access to growth capital or even to secure a future for loyal staff.
For both local and international buyers alike, the intangibles may be as straightforward as speed to market in a new geography who would otherwise not readily secure vendor numbers with the existing customers of the target business. An acquisition may be motivated by access to complimentary technology, skills or distribution agencies to diversify their own offering. Whatever the motives, an assessment of the future of the staff will always be an important aspect to both parties.
There are few, if any businesses, that are anything without the loyal, skilled and hardworking people that deliver for the clients of a business. The quality of resources, succession and staff retention are all factors that weigh on a decision to transact. Navigating the impact of a transaction on staff is a factor that cannot be ignored and the timing of such announcements can be meaningful.
T: +44 (0) 1865 410 050
READ MORE >>
Benchmark International is pleased to announce the sale of AVIS Forklifts (Pty) Ltd (AVIS) to Sky Investment Holdings (Pty) Ltd through its subsidiary Tailifts South Africa (Pty) Ltd (Tailifts).
AVIS is an independent forklift company, established in 1970. With over 40 years in operation, it is well recognised as a pioneer in the forklift rental industry. The company has grown to provide a comprehensive range of services regarding materials handling equipment including forklift hire, forklift sales, transport solutions and side lifter facilities. The company’s infrastructure is geared toward providing its customers with a cost-effective materials handling solution.
Tailifts prides itself on the manufacture and maintenance of tail lifts that can be fitted to column, cantilever, foldaway and retractable lifts suitable for any industry. In addition, Tailifts is the sole distributor in Southern Africa for Zepro, Waltco and Del lifts, market-leading brands in Europe, the USA and the UK respectively. The company boasts authorised service and fitment agents in all of the main centres within South Africa and engineering staff are trained and certified ECSA engineers as well as registered lifting machinery inspectors.
The transaction sets the groundwork for both businesses to leverage off of each other’s mutually advantageous basket of products and services while aggressively nurturing their newly augmented and combined national footprint.
Commenting on this, Andre Bresler of Benchmark Corporate South Africa said: “This is yet another transaction that demonstrates in such active sectors going to market in a competitive process unlocks real value beyond the balance sheet for buyer and seller alike. I could not be more pleased to see such uniquely suited entities joining forces, it has been a privilege for Benchmark to have been selected to advise such an iconic brand.”
On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.READ MORE >>
Benchmark International is pleased to announce the completion of a transaction between Logicalis South Africa (Pty) Ltd and the Clarotech group of companies including Clarotech Holdings (Pty) Ltd & Clarotech Consulting (Pty) Ltd. The deal was concluded by the transaction team based at the mid-market M&A corporate advisory’s African headquarters in Cape Town, South Africa in August of 2018.
The Clarotech group of companies specialise in Information and Communications Technology (ICT) providing consulting, physical product and support services to businesses throughout Southern Africa. Operating since 2001, the company satisfies the need for advice, solutions and ongoing service. Clarotech’s aim is to simplify ICT by supplying relevant solutions of value through proven end-to-end methodology.
Logicalis is an international multi-skilled solution provider supplying digital enablement services. The business boasts a well-curated customer base where it advocates for some of the world’s leading technology companies including Cisco, HPE, IBM, CA Technologies, NetApp, Microsoft, Oracle, VMware and ServiceNow. The Logicalis Group has annualised revenues of over $1.5 billion, from operations in Europe, North America, Latin America, Asia Pacific and Africa. It is a division of Datatec Limited, listed on the Johannesburg Stock Exchange, with revenues of over $4 billion.
The similarities in business strategy, culture and ethos between the two companies have made this acquisition a “natural fit”, says Colin Fair, Managing Director and owner of Clarotech. “For the past few years, the management team has been looking for a company who could be a partner for us, one that would allow us to create something special from the marriage. We have been seeking a 1+1=4 scenario that would benefit our customers and our staff. This is what Clarotech has found in Logicalis.”
Commenting on this, Andre Bresler of Benchmark Corporate South Africa said: “This transaction affirms many analysts’ predictions of a positive climate for M&A in the TMT sector for 2018. Whilst there was defined interest from both up and down the supply chain in this acquisition, the strong cultural fit and clear synergies offered by the ultimate acquirer were evident from the outset. It has been a real privilege to have a hand in such an outstanding result for such outstanding clients.”
On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.READ MORE >>
You have worked hard to build your business from infancy and bring it to the success it has achieved thus far. Taking your business to the next level feels like the right thing to do, but your personal load is getting larger and larger, so how can you do that? You are nearly maxed out as it is. You knew starting a business would be hard and growing it would be even harder.
Should you sellout completely? Should you find a partner? You are probably beginning to explore your options. One option, that will make your job easier and help you find a partner who can take your company to its full potential, is using a mergers and acquisitions firm to help you find a buyer that will fulfill your vision for your business, through a strategic acquisition.
A strategic buyer is a buyer that acquires another company with optimal synergies to create an end business that is greater in value than the two companies standing alone. Often, these buyers will pay a premium for businesses as their goal is to gain more value than the intrinsic value of the company being acquired. In other words, the goal here is to make one plus one equal three.
You might be thinking you can find a partner yourself and paying for outside help doesn’t seem very lucrative. This is where you are wrong. An advisor is essential to finding a partner who can help you grow your business in the way you want. Additionally, a mergers and acquisitions firm can negotiate on your behalf to make sure you gain the most from a strategic partnership or acquisition.
Finding the right type of partner is key. Using a sell-side mergers and acquisitions firm will allow you to have access to a myriad of potential buyers who can help take your business to its full potential. Moreover, a sell-side advisor keeps your needs at the forefront of all they do throughout the entire mergers and acquisitions process. Your best interest is their best interest, so this is an important aspect to keep in mind when looking for an advisor to help with the sale of your business.
There are multiple ways to grow through strategic acquisitions. A strategic acquisition doesn’t limit you to looking at potential buyers only within your industry. You may find the best way to grow is to find a company that compliments yours. Your company may be the missing piece needed for a larger business to continue growing effectively, which gives you an advantage in sale negotiations.
Partnering up with a competitor or complimentary company within the same marketspace will also allow you to expand your professional footprint. A strategic buyer wants your business to succeed just as much as you do, and they see the value your business has to offer.
Of course, you want your business to continue being successful. Therefore, you need to continue focusing on its growth and investing your time into the business itself, not a transaction. You will save money short-term, but you will lose hours upon hours of time if you try to sell or merge your business on your own. Moreover, you could unintentionally fall behind on the business end of your operation, and this can negatively affect the value of your company, resulting in money lost.
Benchmark International is a mergers and acquisitions firm with decades of experience. We have closed over 500 transactions across more than 30 industries. We are a sell-side M&A firm always putting our clients first. We focus on selling the business for the highest value and find you a compatible partner, so you can focus on managing your business.READ MORE >>
Benchmark International has recently opened a new office in Cape Town, South Africa (see 3rd July blog post), headed up by Andre Bresler and Dustin Graham. This is an exciting development for Benchmark International, in a dynamic evolving market.READ MORE >>