BEE Ownership Transaction Advisors
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Employee Ownership (ESOPs)
Employee Share Ownership Plans (ESOPs) promote employee engagement, attract and retain talent, and achieve BEE ownership recognition. Often structured as trusts, it is crucial they meet the ESOP requirements set out in the BEE Codes.
What you should consider:
Long term sustainability
Alignment of shareholder and employee interests
Cost to the company and benefits to employees through business cycles
Simplicity in communication and administration
Effective and transparent governance
Our services:
Assess ESOP feasibility for your business
Design an optimal, sustainable ESOP
Integrate tax, legal, HR, BEE, regulatory, technical accounting, and risk
Drive implementation
ESOP communication and trustee training
Strategic Black Investor
In South Africa’s competitive and dynamic business climate, having a strategic BEE partner is often crucial for success. Such partner can add value by stimulating growth, introducing new business, or retaining existing clients. Transcend Capital has an extensive network of qualified Black investors that are able to add value.
What you should consider:
Cultural fit
Track record and opportunity for business value-add
Ownership demographics/profile
Financing ability
Transaction terms
Our services:
Source partners who are a good match for your business
Evaluate competence, value-add, risk and BEE scorecard impact
Structure and implement the transaction
Integrate tax, legal, BEE, regulatory, technical accounting, and risk
Lead negotiations and drive the financial close
Broad-Based Ownership Schemes and Charitable Trusts
Broad-based ownership schemes are a great way of improving your BEE scorecard while enabling broad-based empowerment at grass roots level. These schemes are typically charitable, educational, or developmental trusts or NPCs that typically support company bursary schemes, emerging Black entrepreneurs, or employees and their dependents. In 2021 the DTIC issued a Practice Note clarifying the structural requirements of BBOS’s.
What you should consider:
Clearly define the class of beneficiaries
Ensure that funds flow to beneficiaries annually to achieve social impact
Implement sufficient governance measures to prevent fronting
Establish robust administration to ensure BEE audit compliance
Our services:
Strategically design an optimal sustainable BBOS
Assist with beneficiary selection
Integrate tax, legal, HR, BEE, regulatory, technical accounting, and risk
Structure and implement the transaction
Black Private Equity Funds
Black private equity funds are set up to invest in and grow businesses, providing capital and strategic input while transforming investee companies. If structured to meet BEE Codes requirements, private equity funds can enable BEE Ownership recognition.
What you should consider:
Verify that the fund fully complies with the DTIC BEE Codes requirements
Confirm that the fund is bona fide and not designed to circumvent BEE regulations
Ensure that fund managers are at least 51% Black-owned
Ensure the presence of active Black managers with relevant experience
Align on investment horizon
Our services:
Advise on the setup of Black private equity funds
BEE Codes compliance assessment
Structure and implement the transaction
Risk assessment of funds that appear to good to be true – particularly relevant for multinational companies
Integrate tax, legal, BEE, regulatory, technical accounting, and risk
Sales of Assets
Sale of Assets allows you to improve your BEE Ownership by selling a business asset such as commercial property (sale and leaseback), a business division or a subsidiary to a Black investor. BEE ownership points are linked to relative valuation of asset sold and the selling entity, and are locked in after 3 years.
What you should consider:
Evaluate Sale of Asset feasibility and expected BEE ownership credit
Ensure that the various requirements of Statement 102 of the BEE Codes are met
Obtain an independent valuation of the targeted asset and the business, ensuring consistent application for future verifications
Ensure legal terms secure a workable relationship and sustainable recognition
Our services:
Assessing feasibility and evaluating options for your business
Sourcing qualified Black purchasers
Structuring an optimal, sustainable and BEE-compliant solution
Integrate tax, legal, BEE, regulatory, technical accounting, and risk
Lead negotiations and drive the financial close
Equity Equivalent Investment Programme
Multinationals unable to address BEE ownership through traditional routes can earn BEE ownership credits through the DTIC Equity Equivalent Investment Programme. This involves contributions to approved Enterprise Development or Socio-Economic Development initiatives, measured against 25% of business value or 4% of revenue.
What you should consider:
Ensure your company meets the DTIC requirements, particularly regarding a policy of no minority shareholding internationally
Assess the implementation road map, including engagement with DTIC
Evaluate the cost of the ownership credits vs traditional options
Identify required capacity for the ongoing management of the programme
Our services:
Outline the requirements of the Equity Equivalent Investment Programme
Evaluate the program from a cost and business value perspective compared to other BEE ownership options
Support Equity Equivalent program design
Determine a defendable valuation of the business
Assist with DTIC interactions through our partners
Let’s set up a call to discuss how we can help you.
Insights
Trade tensions: Can employee ownership schemes create common ground?
The current tensions between the United States and South Africa run far deeper than any single issue. Disagreements over South Africa’s stance on Gaza and other foreign policy elements have strained diplomatic relations and stirred trade conflicts. Despite these...
Why senior leaders must be on board to drive a successful ESOP
Employee Share Ownership Plans (ESOPs) are a powerful way for businesses to engage staff, boost retention, and meet Black Economic Empowerment (BEE) objectives. Achieving ESOP success needs the full commitment and expertise of senior leaders. Working together, they...
Opinion: 4 key steps to crafting an ESOP that strengthens your SA investment pitch
The South African Competition Commission's revision of its public interest guidelines has increased the importance of local ownership in companies that attract foreign investment. Mergers and acquisitions that significantly enhance ownership by “historically...