Factors affecting the success of broad-based black economic empowerment mergers and acquisitions

Abstract

Mergers and acquisitions (M&As) are an ubiquitous feature of modern corporate landscape. Most are entered into for various synergistic (voluntary) reasons whilst some, such as broad-based black economic empowerment (BBBEE) M&As, are driven largely by legislative requirements. Research has shown that the factors that lead to the success or failure of voluntary M&As are many and complex.Whilst there is a plethora of literature regarding the success factors for voluntary M&As, there is, however, a paucity of academic literature on the qualitative factors that lead to the success or failure of BBBEE M&As, despite quantitative studies showing the benefits of BBBEE M&As. Because of the significance of BBBEE to the economic development of the country, policy makers, academics and business people need to fully understand such factors.Given the dearth of academic literature on the subject, a qualitative, exploratory study conducted by way of face to face, expert, semi-structured interviews, was undertaken to answer the research problem.The study found that whilst BBBEE M&As are similar, in some respects, to voluntary M&As, BBBEE M&As require different or additional success factors to those applicable to voluntary M&As. Some of these are: funding structure, transaction rationale, expectations‟ alignment, clear deliverables, active governance, operational involvement, relationship management, transformation and social investment.