A value assessment model which uses deal objectives, financial and
non-financial indicators as a guide to assess value creation in mergers
and acquisitions. The extent to which post- merger deal objectives are
achieved and the potential benefits derived from mining deals that
may not necessarily be financial of nature, but which are necessary to
sustain and enhance future performance, were considered. The premerger
and post-merger performances based on some financial
indicators that reflect profitability for shareholders were also used.
This value assessment model was used to assess four major deals
that have occurred in the South African mining industry since 2003 as
part of a postgraduate dissertation. In this paper, the Harmony and
ARMgold merger is used as an example of how the model can be
applied. The model’s relevance and applicability can also serve as a
guideline in developing a framework or holistic guideline in assessing
whether mining BEE deals in South Africa create value.