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 specically for the SME market and the transactions are structured such that all parties benet 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 ve 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 partners 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 exible 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 benets of the structure

The overall benet of this structure from an ownership and management perspective is that the new company would immediately obtain empowerment status as dened by the Codes of Good Practise issued by the Department of Trade and Industry. Benets 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 nding 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 nancial returns and remains a viable operation. He/she becomes a shareholder and director in a protable 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.

Benets for the empowerment partner:

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 specic 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 Africas 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 ofces listed below.

Business Partners Limited Corporate Services

National offices
Bellville Tel: (021) 919-3242 Fax: (021) 919-3333 Benoni* Tel: (011) 422-2640 Fax: (011) 845-3005 Bethlehem Tel: (058) 303-7842 Fax: (058) 303-6801 Bloemfontein Tel: (051) 446-0536 Fax: (051) 446-4978 Cape Town Tel: (021) 464-3600 Fax: (021) 461-8720 Durban (Westville) Tel: (031) 240-7700 Fax: (031) 266-7286 East London Tel: (043) 721-1525/6/7 Fax: (043) 721-1528 East London (Arcadia Park)* Tel: (043) 743-5485 Fax: (043) 743-0596 East Rand (Jet Park) Tel: (011) 397-2616/7/8 Fax: (011) 397-2619 George Tel: (044) 873-6112 Fax: (044) 873-3397

Business Partners Centre 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
Nelspruit Tel: (013) 752-3185 Fax: (013) 752-4669 Polokwane Tel: (015) 297-1571 Fax: (015) 297-1461 Port Elizabeth Tel: (041) 582-1601 Fax: (041) 585-2297 Pretoria (Centurion) Tel: (012) 664-3397 Fax: (012) 664-2641 Queenstown Tel: (045) 838-1004 Fax: (045) 838-1008 Richards Bay Tel: (035) 789-7301 Fax: (035) 789-6727 Springbok Tel: (027) 712-1120 Fax: (027) 712-3519 Stellenbosch Tel: (021) 809-2169 Fax: (021) 809-2187 Upington Tel: (054) 331-1172 Fax: (054) 332-2334

Pretoria (Waterglen)* Johannesburg (Industria) Tel: (012) 993-5513 Tel: (011) 470-3000 (012) 993-5415 Fax: (011) 470-3123 Fax: (012) 993-4490 Kimberley Tel: (053) 831-1778 Fax: (053) 832-2389

* Property Services only

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