Franchise industry continues to drive value through mergers and acquisitions
Dumisani Bengu, Head of Franchising at Absa Mergers and acquisitions (M&A) have become an important driver of value in the South African franchise industry sector, which continues to grow in both volume and value for investors in this low risk high return sector of the economy. This is despite the recent trend of slow growth in the South African economy. Our own data shows strong year-on-year growth in the franchise assets book between 2016 and 2017, which ran in excess of 20% and was primarily driven by M&A in the multiple store franchise groups. Most of this M&A activity was experienced in retail, restaurant and fast foods, and fuel franchise sub-sectors of the South African franchise landscape. M&A generally refer to the transactions in which the ownership of companies, business organisations, operating units or assets are transferred or combined. In a merger, two organisations join forces to become one new business, usually with a new name whereas in an acqu...