We do two (2) things only; 1) we advise and; 2) we invest.
We offer advisory services to lower mid market family owned businesses with sales revenues of between R10 and R50 Million who want to sell a portion of their shareholding due to; lifestyle changes; comply with “license to operate” imperatives (BBBEE legislation) or in order to bring in new strategic partners to help take the business to another level.
In addition to the above, we also help family business owners whose businesses may not be ready for sale, due to prevailing market factors or endogenous factors, prepare their businesses for an eventual sale. This category includes businesses that generate EBITDA numbers that may not be attractive to debt, mezzanine and/or equity investors and/or those whose EBITDA’s do not translate into healthy free cash flows to the firm (FCFE) or to equity (FCFE).
If time is not on your side for one reason or another, we will share with you available options as well as their pro’s and con’s and potentially also, link you up with qualified players in the space.
How we work
Step 1: Initial engagement and signing of a reciprocal non disclosure agreement (NDA).
Step 2: Agree on the terms of reference and sign an engagement letter. Please note that there will be an up front fee that will be payable before we commence any work or incur any costs.
Step 3: Exchange of information – 5 Year’s worth of financial information and applicable company information. Please note that the sooner we receive the information required the sooner we can get started.
Step 4: Conduct a marketability assessment.
Step 5: Agree on the strategy; where to play and how to play. We will develop the game plan, based on your needs and preferences, insights from step 4 above as well as prevailing market dynamics. If the marketability assessment suggests that the business may not be ready for sale due to endogenous factors, we will develop an improvement strategy for you.
Step 6: Develop a marketing plan, produce appropriate marketing material, draw up a list of prospects.
Step 7: Search, approach, screen and shortlist.
Step 8: Letter of Intent (LOI) or Expression of Interest (EOI) from the Buyer.
Step 9: Due Diligence & Negotiation
Step 10: Sale & Purchase Agreement and Close
We take equity positions in family owned businesses whose owners want to exit partially and bring in strategic partners to help scale or optimise their businesses and/or secure “license to operate” imperatives as required by the BBBEE legislation. Our Investment preference is laid out below:-
- Geography: South Africa
- Revenues: R50 Million to R200 Million, but we would also consider, businesses falling outside this revenue bracket that have strong social impact potential and strong EBITDA margins as a percentage of sales and/or lower reinvestment rate compared to industry average.
- EBITDA: We have strong preference for businesses that generate EBITDA of between R10 Million and R40 Million, but would consider businesses outside the stated range for the same reasons as above.
- Ownership preference: Significant minority or majority.
- Industry sectors: We are industry agnostic, but we have strong preference for sizeable and defensive sectors, high growth sectors or those that are riding a tailwind of some sort. This includes, but is not limited to sub sectors that service above sectors.
- Exclusions: We do not invest in start ups and distressed/or turn around cases. We also do not invest in mining, primary agriculture and property, but will look at businesses that provide products and services to these sectors.
- Companies: We have a strong preference for businesses that have some inherent strength that will allow the business to churn out sustainable and growth incomes. In addition, we look at companies led by strong management or technical teams with a strong sense of alignment.
- Investment Strategy: Growth/Expansion Capital and Leveraged Buy Outs.