DealMakers - 2020 Annual
by Marylou Greig
“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”
This misquote/paraphrase attributed to Charles Darwin (long story), aptly embodies the experience of businesses globally during the COVID-19 pandemic. The ability to embrace the digital revolution to advantage, and to adapt to unusual ways of communicating with clients, suppliers and stakeholders has, in many instances, determined the survival of operations.
The pause in M&A activity in the first few months of 2020 slowly abated during the course of the year, but remained significantly off 2019 values, down some 40% at R336,9bn with the number of deals announced down 20%. Operating in a changed environment brought significant complexity to transactions – parties who were halfway through acquisitions or disposals had to deal with challenging regulatory and other delays; limitations on the ability to conduct due diligence investigations; and complications in terms of valuing and pricing business enterprises and assets. There was also an increase in post-M&A disputes, where deals delivered below expectations, with some potential buyers relying on material adverse change clauses to exit transactions.
To this point, 11 additional deals announced during 2019, but which were yet to close in 2020, were terminated, pushing up the number of failed deals for 2019 to 30 – a number topped only by the 44 failed deals in 2008.
The increased use of Business Rescue as an option for companies in distress was a feature of 2020, and more so because of the positive outcome for several companies, thrust into the spotlight because of the COVID-19 pandemic. This year sees the introduction of the Business Rescue Award at the 2020 Ansarada DealMakers Annual Awards held in February 2021. It is one of the five subjective awards given, and hopes to highlight the benefits that this option can afford companies and stakeholders. These subjective awards are chosen by DealMakers’ Independent Panel, from nominations received using set criteria. A change in guard at the Independent Panel sees two new members joining the committee, and DealMakers is grateful to Rob Wessels and Jurgens Myburgh who, after five years, have stepped down. Funke Ighodaro has been joined by Bernard Swanepoel and Phuthi Mahanyele-Dabengwa, to whom I am grateful for selecting the winners of the 2020 subjective awards.
What this past year has reinforced in the minds of individuals is how fragile life is – our place on this planet, the relationships we have with family, friends and colleagues, and the day-to-day things we have long taken for granted. If this pandemic makes us better people as a result, then it has done its job. Stay safe all.