Most acquirers pay too much, miss something important, or get the structure wrong. We walk you through an acquisition from the first model to the final signature, so you see what you are really buying - and pay what it is actually worth.
Most acquisition mistakes are avoidable. They share a common thread: not enough rigour, at the wrong stage, by the wrong people.
Sophisticated sellers present the most flattering version of their business. Earnings are normalised upward, growth stories are compelling, and the information memorandum answers the questions it wants to answer. An independent valuation - based on what the numbers actually show, and adjusted for what they conceal - is the only reliable basis for a price.
Assets are easy to see. What sits beneath them - a disputed tax liability, a supplier contract that expires at change of control, a key employee who leaves on completion, a lease with onerous terms - is not visible on a balance sheet. Financial and commercial due diligence that is done properly surfaces these before they become the buyer's problem.
An asset purchase and a share purchase have materially different implications for tax, liability exposure, VAT and the complexity of the transaction. Earn-outs and deferred consideration can protect or expose the buyer depending on how they are structured. The deal structure, agreed too late or for the wrong reasons, can cost more than a bad price.
Through Alchemy Capital Investments, we invest our own capital in South African businesses. We have sat on the buyer's side of the table many times - not as advisors observing, but as principals with our own money at stake.
That experience changes the quality of buy-side advisory. We know what a seller's information memorandum is designed to do. We know which due diligence findings are dealbreakers and which are manageable. We know where buyers habitually leave value behind in negotiation.
When we act for you as a buyer, that knowledge works entirely in your favour. On any single transaction, we act for one side only.
Lead buy-side advisor on a series of acquisitions forming part of a broader strategic expansion programme in the South African market.
Buy-side lead on a multi-entity acquisition spanning water engineering, pumping technologies and solar - financial, commercial and operational diligence through to close.
Acquisition advisory for a global mining-equipment group on a South African control-systems acquisition, with a decade of follow-on buy-side and restructuring work since.
Multiple buy-side acquisitions and capital raises in the sector - integrated modelling, bank engagement, legal diligence support and execution.
From the initial brief through to the final settlement, here is how a buy-side mandate runs when it is run properly.
We start with clarity: what you are buying, why, what you expect to pay, what you are not willing to inherit, and what success looks like twelve months after close. A clear brief shapes every subsequent decision.
An independent valuation model built from the information available - normalised EBITDA, working capital analysis, debt and cash assessment, and an indicative price range with the assumptions that drive it. This is the number you negotiate from, not the number the seller starts with.
The real investigation. Financial review of the accounts and underlying trading, commercial review of the market position and customer base, operational review of staff and key contracts, and legal diligence on agreements and liabilities. We prepare or coordinate the data room review, identify the issues that matter, and give you a clear picture of what you are actually buying.
The right structure for the transaction: asset or share purchase, consideration mechanics, earn-out design if appropriate, funding strategy and lender engagement. We prepare the financial model and information pack required for bank appetite and work through the funding conditions with the lender.
We model every negotiating position, advise on where to hold and where to move, review the sale agreement for commercial risk, and stay at the table through the legal process. The gap between heads of agreement and signed SPA is where deals are most fragile.
Final settlement, completion accounts, and the post-close period where integration decisions are made. We remain available as advisor through the transition, because the first 90 days after an acquisition are often where the real work begins.
Due diligence covers financial review (audited accounts, normalised earnings, working capital, cash and debt), commercial review (market position, customer and supplier concentration, competitive risk), operational review (staff, systems, key contracts and key-person risk), legal review (agreements, disputes, regulatory compliance, intellectual property) and tax review (outstanding liabilities, SARS compliance, transfer pricing). The depth of each work stream depends on deal size and complexity - a R20m acquisition needs a different process than a R200m one.
Overpaying usually comes from three sources: a valuation based on inflated or non-normalised earnings; missing a material risk in due diligence that should have been priced; or competitive pressure that pushes price beyond defensible value. The protection is an independent valuation built from the actual numbers, rigorous diligence with a clear risk register, and a walk-away price agreed before the negotiation starts - not after it is underway.
From a buyer's perspective, an asset purchase is often preferred because it limits exposure to the seller's historical liabilities - the buyer takes only the assets and contracts it chooses. A share purchase transfers the whole company, including all liabilities known and unknown. The tax and VAT treatment differs significantly between the two, and the right structure depends on what is being acquired and the specific circumstances of the deal. Take specialist tax and legal advice before committing to either - the structural decision has consequences that outlast the negotiation.
South African acquisitions are financed through a combination of equity (the buyer's own cash or capital), debt (bank acquisition finance, typically from one of the major commercial banks) and sometimes seller financing through deferred consideration or an earn-out arrangement. The optimal structure depends on the deal size, the target's cash generation, the buyer's existing leverage and the specific lender's appetite for the sector. A well-structured financial model and information memorandum are essential for securing bank appetite and negotiating competitive terms.
Whether you have a specific target in mind or are searching for the right opportunity, a short conversation with us costs nothing and may save you considerably more. Everything discussed is confidential.