Valuing companies under business rescue to attract foreign investors

Abstract

With increasing challenges facing the South African economic environment, the need to assist locally distressed companies appears to be more than ever an area of concern in order for these organisations to survive and the economy to thrive. The formal process known as Business Rescue, introduced in 2011, seeks to assist distressed companies by attempting to turn them back into going concerns. Existing literature however suggests, the success rate of this formal protocol to date has been low and one of the key reasons why seems to be the limited availability of local distressed funding. The aim of this research was therefore to establish what the current landscape of the local distressed market is and if an opportunity exists to alternatively seek external source of funds on an international level by attracting foreign investors to buyout these companies under Business Rescue based on their value. The research approach used was qualitative and exploratory in nature, where thirteen highly experienced experts were interviewed that provided a wealth of insight in the specific focussed area. The outcome however suggested that due to the many current uncertainties being experienced in the economic environment, the opportunity to attract foreign investors appears to be limited.