LETTER: Deals under pressure
Financial acquirers are even more prudent and risk averse now
The purchasing manager index (PMI) figures released by Absa show a stuttering economy. This, with the fact that Deal Leaders Africa, an M&A advisory firm working with the owners of private businesses, is also seeing a slowdown of international interest in certain industries, is a big concern.
While there are still transactions lined up, lenders and funders are making it very difficult to enable these to conclude. Financial acquirers are even more prudent and risk averse than a few months ago (if that is possible).
A critical factor affecting transactions is that a not insignificant minority — about 15% — have experienced a drop in financial performance during the transaction process. This is putting pressure on concluding these deals on their original terms and is requiring innovative structures to get the deals across the line.
Lunice Johnston, Via e-mail
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