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Business Partners

Empowerment Fund
Tailormade
for entrepreneurs

Introduction
The Business Partners Empowerment Fund facilitates the participation of black entrepreneurs (African,
Indian and Coloured individuals) into the mainstream economy through equity participation in well
established and successful white owned businesses that are in need of empowerment for future growth.
These criteria, as well as the requirement of full time involvement of a black entrepreneur in the business, are
what set the Business Partners Empowerment Fund apart from other funds. In this way, value is added to
the existing business and true black economic empowerment is ensured.
The Empowerment Fund is dedicated to cater specifically for the SME market and the transactions are
structured such that all parties benefit from the initial investment stage whilst also ensuring that the new
found relationship remains sustainable over the long term.

Key criteria
The fund will consider investments from R1 million up to R4 million but, where warranted, transactions in
excess of R4m will also be considered. Fundamental to the investment approach of the Fund will be the
following aspects;
• A well established white owned business with a track record of at least three to five years with
good growth potential in a post investment stage.
• A white entrepreneur who is committed to the success of the business and sees the economic
merit of empowering the business.
• A black entrepreneur who is willing and able to add value to the business by becoming
operationally involved in the business on a full-time basis whilst earning a market-related salary.
• An action plan to facilitate the transfer of skills pertaining to the day-to-day running of the business.
• A funding structure that is easily understood by all interested parties.

Typical key characteristics of an empowerment transaction


One of the most important differentiating factors of the investment approach of the Empowerment Fund
is the fact that the investment amount introduced into the target company is in the nature of equity rather
than debt, which is often not the case with other funding models. Business Partners will acquire a direct
shareholding (minority stake) in the target company and through that, assist with the funding of the
empowerment partner’s shareholding.
The structure of a typical transaction to be considered by the Business Partners Empowerment Fund can
be summarised as follows:
Step1:
A fair market value of the company must be agreed upon by all interested parties by employing fair and
market related valuation principles.
Step 2:
To facilitate the transaction, a new company will be formed. The existing company will sell its assets and
liabilities at the agreed market value of the business to the new company to be formed.
Step 3:
The new company is set up with a flexible shareholding structure that includes the empowerment partner,
the white business owner and Business Partners. The typical investment instruments used will be variable
rate shareholders loans which will be in the nature of equity.
Step 4:
The relationship between the shareholders is regulated by a mutually agreed upon shareholders agreement.
Step 5:
The empowerment partner becomes a full time employee, shareholder and director of the new
company with an action plan to transfer skills to him/her over a pre-determined period.

The benefits of the structure


The overall benefit of this structure from an ownership and management perspective
is that the new company would immediately obtain empowerment status as defined by the Codes of Good
Practise issued by the Department of Trade and Industry.
Benefits for the white business owner:
• Business Partners has a direct interest in the business and shares in the risk of the business.
• Business Partners will assist in finding a suitable black entrepreneur/s through its extensive
marketing networks.
• The white entrepreneur immediately receives a sizeable portion of the market value of the business
in cash.
• As Business Partners has a direct investment in the business, it is in its interest to ensure that a
sound relationship exists between all shareholders, thereby ensuring that the business achieves the
anticipated financial returns and remains a viable operation.
Benefits for the empowerment partner:
• He/she becomes a shareholder and director in a profitable company with a proven track record.
• As Business Partners has a direct investment in the company, due diligence will have been
performed on the business to ensure that the business is being acquired at a fair market value. This
however is no guarantee of success and it is ultimately the skills and dedication of the entrepreneur
that determine the level of success.
• He/she becomes a full time employee and earns a market related salary over and above the
rewards of being a shareholder.

The due diligence process


The normal due diligence process would be followed by Business Partners before an investment decision
is made. Consideration would be given to specific aspects such as the quality of the entrepreneurs and
management, the company value and the viability of the business.

The Business Partners difference


If you are a white business owner wanting to empower your business or a black entrepreneur wanting to
venture into the SME market, you can be certain that, through the Empowerment Fund, Business Partners
will be able to provide you with both investment and value-added solutions.
Each empowerment transaction will be customised and personalised in order to satisfy all stakeholders that
the proposed transaction is both fair and meets the needs of the individual business operations, ownership
and management.
Contact details

Investing in Entrepreneurs™
Business Partners is committed to investing in South Africa’s entrepreneurs in every way by providing
them with integrated full-service investment and business solutions.

Should you have any questions or would like additional information, we invite you to call any of the offices
listed below.

Business Partners Limited Business Partners Centre


Corporate Services 5 Wellington Road, Parktown, Johannesburg
Tel: +27 11 480 8700
Fax: +27 11 642 2791
E-mail: enquiries@businesspartners.co.za
Website: www.businesspartners.co.za
Company registration number: 1981/000918/06
ISO 9001:2000 certified
National offices
Bellville East London Nelspruit Queenstown
Tel: (021) 919-3242 Tel: (043) 721-1525/6/7 Tel: (013) 752-3185 Tel: (045) 838-1004
Fax: (021) 919-3333 Fax: (043) 721-1528 Fax: (013) 752-4669 Fax: (045) 838-1008

Benoni* East London Polokwane Richards Bay


Tel: (011) 422-2640 (Arcadia Park)* Tel: (015) 297-1571 Tel: (035) 789-7301
Fax: (011) 845-3005 Tel: (043) 743-5485 Fax: (015) 297-1461 Fax: (035) 789-6727
Fax: (043) 743-0596
Bethlehem Port Elizabeth Springbok
Tel: (058) 303-7842 East Rand (Jet Park) Tel: (041) 582-1601 Tel: (027) 712-1120
Fax: (058) 303-6801 Tel: (011) 397-2616/7/8 Fax: (041) 585-2297 Fax: (027) 712-3519
Fax: (011) 397-2619
Bloemfontein Pretoria (Centurion) Stellenbosch
Tel: (051) 446-0536 George Tel: (012) 664-3397 Tel: (021) 809-2169
Fax: (051) 446-4978 Tel: (044) 873-6112 Fax: (012) 664-2641 Fax: (021) 809-2187
Fax: (044) 873-3397
Cape Town Pretoria (Waterglen)* Upington
Tel: (021) 464-3600 Johannesburg (Industria) Tel: (012) 993-5513 Tel: (054) 331-1172
Fax: (021) 461-8720 Tel: (011) 470-3000 (012) 993-5415 Fax: (054) 332-2334
Fax: (011) 470-3123 Fax: (012) 993-4490
Durban (Westville)
Tel: (031) 240-7700 Kimberley
Fax: (031) 266-7286 Tel: (053) 831-1778
Fax: (053) 832-2389 * Property Services only

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