With sufficient action a win-win scenario may be found and real business growth be achieved
Private Equity may provide attractive solutions for well-differentiated firms
- Commercial Funds – e.g. Vumela, Corvest
- Private Equity Funds, e.g. Spinnaker
In the short term black ownership itself is a differentiation, and for most businesses the only sensible approach is a broad based ownership scheme
- Allows achievement of triple bottom line
- Avoids the risk of failed partnerships
- Through the application of the modified flow-through principle, minimises the amount of equity to be parted with (although minimum remains ~26%)
The longer term strategy needs to consider redomiciling outside of South Africa
- The hard reality facing South African Entrepreneurs is that the majority of their growth prospects lies outside of the formal economy in South Africa
- South African Entrepreneurs must plan their growth inside South Africa with a reality that in the future they will likely grow outside of South Africa
- There are increasing case studies of growth opportunities North of the Limpopo and elsewhere globally
- Real growth is always driven from the core, consequently the South African landscape still provides opportunities to maximise the core transplant this growth elsewhere
- In many scenarios, it makes sense to unbundle organisations and keep entities below a R50m revenue per annum mark
- In some scenarios, it already makes sense to move certain commercial activities to e.g. Mauritius or Botswana or other multi-domicile friendly destinations
In general, a challenge is presented to non-majority black owned businesses to focus on differentiation and draw on business networks to safeguard commercial spend
- In the long run, technological differentiation / intellectual property / though leadership is the only sustainable way to ensure relevance in an environment where you cannot majority own your own business
- Networks allows set-asides and alternative solutions to optimise inter-business spend and optimise overall TMPS