Amid widespread reports of a decline in M&A activity in 2002, precipitated largely by the downturn in the global economy, Cliffe Dekker enjoyed a buoyant transactional period. The firm was ranked third overall by deal flow in DealMakers annual ranking of all firms involved in corporate finance activity (published March 2003) and third by number of transactions in Ernst & Young’s Review of Mergers & Acquisitions Activity for the Year 2002 (April 2003).

M&A activity during 2003 has seen an increase in black empowerment transactions. Cliffe Dekker has been involved in a number of these transactions and has the specialised skills needed to handle the intricate structuring which is often required. The recent Harmony/Armgold transaction was described in a number of press articles as "unique", "innovative" and "ground breaking". In acting for Harmony, Cliffe Dekker was intimately involved in a model which is likely to be held up as an example for future empowerment transactions for a number of years.

The overhaul of the JSE Securities Exchange South Africa listings requirements, amendments to the Labour Relations Act affecting the transfer of a business as a going concern, stricter competition authority requirements and tax liability issues are some of the recent changes within our regulatory environment. More changes are expected soon, including the redrafting of aspects of the Companies Act and the imposition of certain corporate governance obligations and responsibilities on boards of directors in line with guidelines recommended in King II – the King Report on Corporate Governance for South Africa 2002.

These regulatory pressures make independent advice essential to successful M&A transactions and place greater emphasis on the requirement for a thorough legal due diligence.

DealMakers (Vol 3: No 4) remarked that the extent and depth of knowledge, expertise and commitment of Cliffe Dekker’s team had been demonstrated not only to its clients, but also to those on the other side during the transaction process.

Undoubtedly, dramatic changes to SA’s laws dealing with corporate activity have affected M&A transactions - and the selection of corporate advisors to structure deals. A high degree of skill and specialisation is now needed to navigate companies through the stream of new, complex legislation.

Chris Ewing