The South African M&A market 2007-Now
An introduction
From a Law Firm perspective:
Legal Advisory Market: M&A Trends, Insight and Dominance (2007-Now).
This report provides an analysis of the Mergers and Acquisitions (M&A) landscape in South Africa from 2007 to 2024.
It explores the trends in the total deal value of M&A deals for legal advisors, the deal flow or activity for legal advisors, and the market dominance of various firms and financial institutions.
This report makes use of publications across trusted platforms including Dealmakers, Legal 500 and company websites to make assumptions about the sector and the respective companies.Â
The report delves into the fluctuating nature of M&A deal values, highlighting significant peaks and troughs over the years.
It also examines the correlation between deal activity and total deal value, providing some insights into the complexity of the M&A market.
Deal Value Trends in South Africa (2007-2023)
Value of M&A Transactions in South Africa from 2007 to 2023.
Trend Analysis (2007-2013)
The period from 2007 to 2013 was characterised by an overall declining trend in the total value of M&A deals. This could be indicative of subdued activity or lower-valued transactions during this period.
Upward Shift (2014-2015)
In 2014, there was a significant shift in the trend with the total value of M&A deals escalating rapidly, culminating in a boom in 2015.
The total value of M&A deals reached its peak at R5 Trillion in 2015, marking an unprecedented upsurge in the market.
Subsequent Decline (2016-2023)
Post-2015, the total value of M&A deals reverted to a declining trend, which persisted through to 2023.
The total value of M&A deals reached their lowest point in the observation period in 2023, plummeting to R96 million.
The fluctuating nature of M&A deal values over the years underscores the dynamic and volatile environment within which these transactions occur.
The sharp peak in 2015 and the significant decline till its lowest point in 2023 highlight the cyclical nature of M&A activities and the impact of various market forces on these trends.Â
Deal Flow Analysis for Legal Advisors in M&A Market (2007-2023)
Deal Flow/Activity in M&A Transactions in South Africa from 2007 to 2023.
Initial Trend (2007-2010)
The deal flow or activity for the M&A market for legal advisors commenced with a general declining trend from the base year of observation.
This could be indicative of a subdued market or lower deal activity during this period.
Positive Movement (2010-2013)
Between 2010 and 2013, the market experienced a positive shift, leading to a peak in the observed years in 2013 with 440 deals.
This period marked a significant increase in deal activity, suggesting a more vibrant and active M&A market.
Subsequent Decline (2014-2023)
Following the peak in 2013, the market returned to an overall declining trend. This suggests a decrease in deal activity or a shift towards fewer but larger deals.
Noteworthy Observation (2015)
Interestingly, the boom in the total value of M&A deals in 2015 did not correspond with an increase in deal activity.
This indicates that the deals in 2015 were larger on average, contributing to the high total value despite the lower deal count.
The lack of correspondence between deal activity and total deal value in certain years underscores the complexity of the market and the multitude of factors influencing these trends.
Analysis of Average Transaction Size and Market Share in M&A (2015)
Average Transaction Size in M&A Transactions in South Africa from 2007 to 2023.Â
Peak Average Transaction Size
As depicted in the accompanying graphic, the year 2015 marked the highest average transaction size in the observed period.
This coincides with the year that also recorded the highest deal values, indicating a correlation between the number of deals and their average size.
Dominant Legal Advisors and Financial Institutions
In 2015, three leading law firms, namely Webber Wentzel, ENSAfrica, and Bowmans, dominated the legal advisory market for M&A work, accounting for approximately 95% of the total market share. Similarly, the M&A financial institutions market was largely controlled by Standard Bank, Goldman Sachs, Deutsche Bank, and JPMorgan, which collectively held about 92% of the market share.
This concentration of market share among a few key players is indicative of their significant influence and role in the M&A landscape during this period.
Key M&A Transactions in 2015
Several major transactions significantly contributed to the M&A activity in 2015. These include:
Anheuser-Busch InBev’s Acquisition of SABMiller: This deal, valued at R1.5 trillion, had a substantial impact on the global M&A industry towards the end of 2015. It underscores the scale and significance of M&A transactions in shaping industry dynamics.
Acquisition by Oceana of Daybrook Fisheries: Oceana, a prominent South African fishing conglomerate, made a significant move with its R4.59 billion US acquisition of Daybrook Fisheries. This transaction transformed Oceana’s status from a largely South African consumer perspective, highlighting the transformative potential of M&A deals.
Acquisition by Sibanye Gold of Anglo American Platinum’s Rustenburg operations: This deal was another major contributor to the M&A activity in 2015, further emphasising the active and dynamic nature of the M&A market during this period.
These transactions not only shaped the M&A landscape in 2015 but also had far-reaching implications for the respective industries and the broader economy.Â
Top 1 M&A Legal Advisory Firm Score Count from 2007 to 2023.
Score Count For Top 1 Ranking in M&A deals from 2007 to 2023 in South Africa.
The graphic provided offers a clear depiction of the number of times firms have secured the top position in M&A deals in South Africa from 2007 to 2023.
Notably, Webber Wentzel emerges as the leading firm, having achieved the top ranking seven times within the observed period.
This dominance underscores Webber Wentzel’s significant role and influence in the M&A landscape during this time.
Current State of M&A in South Africa (2023-2024)
The M&A landscape in South Africa in 2023 saw a significant decrease compared to previous years. Completed M&A deals collapsed by almost 90% from the previous 12 months, reaching the lowest total number of deals since 2007.
However, it’s important to note that while the number of deals decreased, the value of the deals may not have decreased at the same rate.
The value of a deal can be influenced by many factors, including the size of the companies involved and the specific terms of the deal.
Despite this downturn, there are signs of a resurgence in M&A activity in South Africa in 2024.
Improvements in interest rates and easing power crises have fueled renewed optimism. Marc Ackermann, head of corporate finance at Investec, anticipates a return to pre-pandemic M&A levels, with global deals growing up to 15%.
For more information contact Busisiwe on busi@thegrmgroup.com