Due to the negative impact of COVID-19 on business profitability and related impact on business valuation, many companies find themselves in a situation where their BEE transactions are underwater. This will result in Net Value points dropping below the subminimum level, and a reduction of between one and two BEE levels.
This may impact the ability to do business with existing and future customers, and may also result in breach of customer and licensing contracts.
A strong BEE scorecard will continue to be important, even if it may not seem an immediate priority.
In this webinar we discussed our recommendations on dealing with existing BEE transactions:
Assessing the impact of COVID-19 on current BEE transactions and Net Value points
Considering the options of:
Waiting out the crisis for value to return; or Restructuring the current transaction,
Communicating to BEE shareholders as to the current position and the proposed options available for the parties.
Structuring new BEE transactions can be expensive and time consuming. This is the time when management effort and funds should be focused on sustaining businesses. It is worth understanding the options to salvage the existing transaction, particularly if done without significant debt write off – thus maintaining shareholder value for all parties.
Please let us know if you would like to speak to one of our ownership specialists by contacting us here.
If you would like to continue the conversation, please let us know by contacting us.
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