Buying a Business in South Africa: What Actually Goes Wrong
By Sasha Müller, Business Development and Cross Border M&A Manager, Anatrica Partners
Published 25 September 2026 – Last updated 25 September 2026
A practical guide for foreign acquirers — and Turkish industrial groups in particular — from Anatrica Partners & Vunani, working both ends of the Türkiye–South Africa corridor.
Key takeaways
Foreign investors can buy South African businesses and take their profits home, but value leaks in predictable places that never appear in a teaser. The seven points we raise with every client before they sign:
- Capital set-up: the non-resident endorsement of share certificates and the registration of any shareholder loan must happen when the money first comes in.
- Remittances: since the 2026 exchange control changes, banks remit offshore only after SARS confirms tax compliance through an AIT PIN.
- Payment risk: government customers are legally due to pay in 30 days but often pay in 60 to 120 — read the debtors book by counterparty type.
- Employees: under section 197 of the Labour Relations Act, staff transfer automatically with a business sold as a going concern.
- Merger control: Competition Commission thresholds changed on 1 May 2026, and public interest conditions — especially ownership by historically disadvantaged persons — apply even when competition is not affected.
- Mining carve-outs: section 11 MPRDA consent takes quarters, not weeks, and closure liability is the most under-modelled number.
- Timeline: months for a clean founder-led business; plan for about a year on a carve-out.
Most foreign buyers in South Africa don’t lose money on the price. They lose it on what they didn’t ask. The factory belongs to a separate company the seller also owns. The biggest customer contract has a change-of-control consent clause. The seller expects his loan account repaid on top of the share price. And the EBITDA you’re paying a multiple on includes a management fee to a group company that disappears the day you take over — replaced by three salaries on your payroll. None of that appears in a teaser. All of it appears in month two. Anatrica Partners runs acquisitions on the Türkiye–Southern Africa corridor, with a team in Istanbul and, through our partnership with Vunani Corporate Finance, on the ground in Johannesburg. Below is what we tell our clients before they sign anything — starting with the three questions Turkish industrial groups ask us first.
Can foreign investors take profits out of South Africa?
Yes. Foreign investors can repatriate dividends, interest and sale proceeds from South Africa, provided the investment is recorded correctly with an authorised dealer bank when the capital first comes in — and the rules tightened in 2026.
Get the non-resident endorsement right on day one
When you introduce capital as equity, your South African bank must endorse the share certificates “non-resident.” Under Regulation 14 of the Exchange Control Regulations, that endorsement is the only official evidence that the shares are a non-resident asset, and it is what lets you repatriate future dividends and sale proceeds without separate SARB clearance. Miss it, and you will be regularising it years later at the worst possible moment.
Register the shareholder loan before the money moves
A foreign loan to a South African company must be registered with the authorised dealer bank, which issues an electronic reference number. Without that number, the South African subsidiary cannot legally buy foreign currency to pay interest or repay principal.
Loan pricing: SARB interest rate caps removed
The April 2026 exchange control guidelines removed SARB’s interest rate caps on inward foreign loans; pricing is now negotiated on a market-related basis. That materially improves the shareholder-loan route for foreign groups funding an acquisition from home.
The new tax-compliance gate on remittances
Authorised dealers may no longer remit funds offshore until SARS confirms tax compliance through the Tax Compliance Status Approval for International Transfer (AIT) PIN. After several years of loosening, this is a significant tightening. We build the SARS timeline into the dividend calendar rather than discovering it the week the client wants the cash.
| Funding route | What must happen at entry | What it enables later | Common mistake |
|---|---|---|---|
| Equity | Share certificates endorsed “non-resident” by the authorised dealer (Regulation 14) | Dividends and sale proceeds repatriated without separate SARB clearance | Endorsement skipped; regularised years later |
| Shareholder loan | Loan registered and electronic reference number issued before funds move | Interest and principal paid offshore; market-related pricing since April 2026 | Funds sent first, paperwork later |
| Any remittance | SARS tax compliance confirmed via AIT PIN | Bank releases the transfer | SARS timeline left out of the dividend calendar |
Türkiye–South Africa double taxation agreement
Türkiye and South Africa have a double taxation agreement in force since 6 December 2006, applying to withholding taxes on amounts paid from 1 January 2007. It reduces withholding on dividends, interest and royalties between the two countries, so it belongs in the holding-structure decision from the start. We model the treaty rates against a direct Turkish holding and any intermediate holding company before the funding route is fixed.
Do South African customers actually pay on time?
Private-sector customers in South Africa mostly pay on commercial terms; public-sector customers often do not, even though the law requires them to pay within 30 days. Your working capital model must reflect the difference.
What the numbers show
Section 38(1)(f) of the Public Finance Management Act obliges government to settle valid invoices within 30 days. In practice, National Treasury data for Q2 2025 recorded 95,399 invoices older than 30 days, worth R12.4 billion, still unpaid — a 17% deterioration on the prior quarter. Suppliers to government routinely wait 60 to 120 days. Municipalities are worse: municipal debt to Eskom has passed R114 billion.
How we diligence the debtors book
- Split debtors by counterparty type. A target with 45 debtor days overall may have 25 on its mining customers and 140 on its municipal ones. Those are two different businesses.
- Test collection, not invoicing. We match bank receipts against the ledger for the last 18 months. Revenue recognised is not revenue banked.
- Check who is funding the gap. If the target stretches its own suppliers to survive slow-paying customers, you inherit a creditor problem as well as a debtor one — and your first act as a foreign owner will be to normalise terms, which is a cash call.
- Price the working capital. Agree a normalised level at completion, adjusted for seasonality. In South Africa, more value leaks here than in the purchase price itself.
The conclusion is not “avoid public-sector customers.” It is: fund them properly, or discount them properly.
Is expropriation a real risk for foreign-owned businesses?
For an operating industrial business or a mining asset, expropriation is not the live risk; regulatory delay, counterparty payment and infrastructure are. The picture is calmer than the headlines suggest.
Status of the Expropriation Act 13 of 2024
The Expropriation Act was signed into law in January 2025 but has not yet come into operation: section 31 provides that it commences only on a date proclaimed by the President in the Government Gazette, and that proclamation has not been made. Meanwhile, the Western Cape High Court heard five days of constitutional challenge in August 2026, brought by the DA, AfriForum and IRR Legal. Two points hold regardless of the outcome. Compensation remains a constitutional question under section 25 — it must be “just and equitable” — and nil compensation is an argument the state must win in a specific case, not a general permission. And the courts are policing the limits: in May 2026 the Supreme Court of Appeal (City of Tshwane v Summer Season Trading 63) upheld the setting aside of a municipal expropriation because the city lacked lawful authority for it.
What protects foreign investors: the Protection of Investment Act
The Protection of Investment Act, 2015 gives foreign investors national treatment: they may not be treated less favourably than South African investors in like circumstances. It does not provide investor-state international arbitration. Disputes go to South African courts, with a DTIC mediation route available. Structure your dispute resolution — and your choice of local partner — with that in mind.
Founder-led business or corporate carve-out: which seller are you dealing with?
South Africa is currently producing sellers from two opposite ends of the market — ageing founders without succession and large groups selling non-core operations — and the two require completely different deals. Treating them the same way is how buyers overpay.
| Lane one: founder-led mid-market | Lane two: corporate carve-out | |
|---|---|---|
| Typical seller | Manufacturer, supplier or distributor; founder in his late sixties or seventies; no succession | Mining, industrial or energy group streamlining its portfolio or raising cash |
| What you are buying | Customer relationships and a founder’s know-how | An asset lifted out of a system that has been carrying it |
| Main risk to price | Key-person risk | Standalone cost, shared infrastructure, regulatory consents |
| First question | How much do you want to sell, and do you intend to stay? | What did the parent do for this business, and what did it charge? |
| Typical timeline | Months | Plan for about a year |
Lane one: the founder-led mid-market
This is not a distressed asset; it is an opportunity, provided you can answer one question — what happens to the customer relationships the day the founder stops answering his phone? We ask two things in the first meeting: how much do you actually want to sell, and do you intend to stay? “One hundred percent, I’m out in three months” is a different deal from “sixty percent, and I’ll run it for five more years.”
Lane two: the corporate carve-out
This is where assets of real scale sit, and most inbound buyers are not watching it. Some groups are optimising a portfolio; others are raising cash under pressure. The asset can look identical; the negotiating position does not. The public record shows the direction. Anglo American demerged its platinum business as Valterra Platinum in May 2025; De Beers is under a structured sale, with a preferred bidder named in July 2026; and the Anglo–Teck merger is completing across 2026–27. In May 2026 Anglo agreed to sell its Australian steelmaking coal mines to Dhilmar for up to $3.875 billion, with completion expected by the first quarter of 2027. This followed De Beers impairments of $2.9 billion for 2024 and a further $2.3 billion for 2025. De Beers itself has run a programme since 2024 that removed over $100 million of annual overhead and sold or closed non-core assets. What the headlines don’t list are the second- and third-tier assets falling out of these processes: shafts, plants, service divisions, logistics arms, non-core ferroalloy and industrial minerals operations. Most never reach a formal auction, because the seller wants speed and certainty rather than a beauty parade. On these deals, certainty of close beats price more often than sellers admit publicly — and this is where Anatrica focuses.
Share purchase or asset purchase?
In a share purchase you buy the company with its full history; in an asset purchase you buy selected assets, and every contract, permit and licence has to be transferred separately. The choice decides who carries the past.
| Share purchase | Asset purchase | |
|---|---|---|
| Legal entity | Same company continues | Assets move into the buyer’s vehicle |
| Tax, employment and contractual history | Stays with the company; the agreement allocates risk through warranties and indemnities | Largely stays with the seller, except what transfers by law |
| Contracts, leases, permits, licences, brand rights | Remain in place; check change-of-control clauses | Each must be transferred or re-issued individually |
| Employees | Employer does not change | Transfer automatically if the business moves as a going concern (section 197 LRA) |
Section 197: the workforce comes with the business
Where a business transfers as a going concern, section 197 of the Labour Relations Act moves employment contracts automatically to the new employer. You cannot buy the machines and leave the workforce behind. Budget your headcount plan accordingly — and be straight with people, because the unions will be. In an asset deal, production also stops for want of one permit nobody listed, so we build the transfer list line by line.
Due diligence: where value leaks in South African acquisitions
Due diligence in South Africa is about separating reported numbers from the standalone business you will actually own. These are the areas where we push hardest.
Earnings quality
We strip out one-off income, then add back expenses that won’t disappear: the group management fee, the shared bookkeeper, the family member on payroll doing real work. We test the year-end spike for collection, discounts and returns, and separate contracted orders from hopeful ones.
Real capacity versus rated capacity
A machine’s nameplate is a marketing document. Actual output depends on breakdowns, shift patterns, raw material supply, water and power. We walk the floor and read the maintenance log, not the brochure.
Carve-out checks nobody asks until month three
- What the parent actually provided. Treasury, procurement leverage, insurance, IT, legal, engineering, shared safety and environmental management. Reported EBITDA is either flattered by a favourable allocation or crushed by an arbitrary one; neither is the standalone number. We build it from the ground up, then negotiate a transitional services agreement (TSA) with a defined end date and price — not a handshake.
- Transfer pricing inside the group. If the operation sells to a sister company — concentrate to a group smelter, components to a group assembly plant — that price is an internal accounting choice, not a market. Model the arm’s-length price before you model the return.
- Shared infrastructure. Shafts, tailings facilities, processing plants, water rights, substations, rail sidings. Establish what you own, what you hold a servitude over, and what depends on the seller’s goodwill. The third is not a right.
- Mining rights and ministerial consent. Transferring a mining or prospecting right requires section 11 approval under the MPRDA, and B-BBEE ownership, community and Social and Labour Plan obligations transfer with it. This is measured in quarters, not weeks. The Draft Mineral Resources Development Bill, 2025 is still in progress, so the framework you diligence under may not be the one you close under.
- Rehabilitation and closure liability. Obtain the closure cost assessment, the financial provision and how it is funded — trust, guarantee or insurance — and whether that instrument transfers or must be replaced on day one. In our experience this is the most under-modelled number in a South African mining carve-out.
- Why is it really non-core? “Portfolio streamlining” and “the asset we couldn’t fix” produce the same press release. The tell is in the capex history: an asset starved of sustaining capital for three years is being sold, not streamlined.
Distressed sales and business rescue
Buying out of business rescue gives you speed and costs you warranty protection. The practitioner gives very little, and the creditor compromise sets the terms. You buy as-is, with your protection in the price and in what you verify yourself.
Corporate housekeeping
We check CIPC records against the securities register, the MOI against the shareholders’ agreement, authority to transfer, security interests over the shares, loan accounts, guarantees and related-party leases. South African businesses are frequently tidy in substance and chaotic on paper. That is fixable — but only before signing.
Competition Commission merger control in 2026
South African merger control reviews both competition and public interest, and on a carve-out it is a structuring input, not a formality. Thresholds changed on 1 May 2026 — the first revision since 2017 — so anything computed on the old numbers needs redoing.
| Merger category (from 1 May 2026) | Combined turnover or assets | Target turnover or assets | Filing fee |
|---|---|---|---|
| Intermediate | R1 billion | R200 million | R220,000 |
| Large | R9.5 billion | R280 million | R735,000 |
| Small (below thresholds) | Not notifiable, but the Commission can call it in for six months after implementation | ||
Public interest applies even without a competition concern
Section 12A(1A) of the Competition Act obliges the Commission and Tribunal to assess public interest factors even where a merger raises no competition issue: employment, small and HDP-owned businesses, the ability of national industries to compete internationally, and the spread of ownership to historically disadvantaged persons and workers.
Ownership is the live issue
The Commission’s revised guidelines treat virtually every merger as carrying a positive obligation on ownership spread, including foreign-to-foreign transactions and private equity deals with no competition concerns. Default remedies have been ESOP allocations, minority equity sales to HDP purchasers or divestitures, typically in the 5% to 25% range; an ESOP is generally expected to hold 5% to 10% of equity across a broad base of workers. The precedent is real: Burger King was initially prohibited because HDP ownership would have fallen from 68% to zero, and was cleared only once an ESOP took an effective 5% interest. For carve-outs the consequence is direct. If the asset sits inside a group with a strong empowerment profile and your acquisition vehicle has none, you are not neutral — you are dilutive. Solve it during structuring, not after the Commission raises it.
National security review
A presidentially appointed committee can block a merger involving a foreign acquiring firm on national security grounds, covering sectors including energy, mining, banking, insurance and defence.
| Approval a mining carve-out may need | Authority | What it tests |
|---|---|---|
| Section 11 MPRDA consent | Minister of Mineral and Petroleum Resources | Transfer of the mining or prospecting right, B-BBEE, community and SLP obligations |
| Merger clearance | Competition Commission / Tribunal | Competition and public interest, including ownership spread |
| National security review | Presidentially appointed committee | Foreign acquirer in a designated sector |
| Exchange control | Authorised dealer bank / SARB | Non-resident endorsement and loan registration |
Sequenced deliberately, running these in parallel is a competitive advantage over a rival bidder who hasn’t thought about it. Discovered late, it is why deals die. Our advice is commercial rather than legal: put the employment and ownership story into the first draft of the filing. Deals that arrive with a credible transformation proposition clear faster and cleaner than deals that arrive arguing about whether they should have to.
How to structure an offer so you compare like with like
A clear offer states exactly what the price represents: enterprise value before debt and cash is not what the seller receives for the shares.
- Loan accounts: if a seller loan is being repaid, show it alongside the share price — never inside it and beside it at the same time.
- Growth capital: money paid to a seller for existing shares does not enter the company. Capacity expansion is separate funding, separately agreed, with its use documented.
- Downside cases: model lower sales, late collections and currency movement. If revenue is in rand and debt in dollars, euros or lira, test what a 15% move does to your cover ratios. In this market that isn’t pessimism; it’s Tuesday.
How long does it take to buy a business in South Africa?
There is no standard timetable: a clean founder-led deal below the merger thresholds takes months, while a carve-out needing section 11 consent, merger clearance and a transitional services agreement should be planned for about a year. On the longer deals, the interim period needs its own structure: conditions, responsibilities, deadlines, bank mandates, customer communications, and the scope and duration of any seller support.
Frequently asked questions
Can a foreign company own 100% of a South African business?
In most sectors, yes. In practice, mining rights carry B-BBEE ownership obligations, and Competition Commission clearance increasingly comes with ownership conditions such as an ESOP, so 100% at signing may not mean 100% at closing.
Do I need SARB approval to invest in South Africa?
For a standard equity investment, the process runs through your authorised dealer bank rather than a separate SARB application: the bank endorses the share certificates “non-resident” and registers any shareholder loan. Getting this right at entry is what makes later repatriation straightforward.
If I buy only the assets, do the employees transfer to me?
Yes, if the business is transferred as a going concern. Section 197 of the Labour Relations Act moves the employment contracts automatically to the new employer.
What are the South African merger notification thresholds in 2026?
From 1 May 2026, an intermediate merger is notifiable at R1 billion combined and R200 million target turnover or assets, and a large merger at R9.5 billion and R280 million. Filing fees are R220,000 and R735,000 respectively.
How long does section 11 MPRDA consent take?
It is measured in quarters rather than weeks, and it should run in parallel with merger clearance rather than after it.
What is a transitional services agreement in a carve-out?
A transitional services agreement (TSA) is a contract under which the selling group keeps providing services such as IT, treasury or procurement to the carved-out business for a defined period and price after completion. Without one, the buyer faces the cost of those functions from day one.
Where to start
If you haven’t identified a target, tell us your sector, budget, the stake you want and what you want the business to do for you. If you are already in discussion, send the financials, the seller’s price expectation and the scope of the deal — we will tell you within a fortnight whether it is worth diligence money. Anatrica Partners & Vunani handle target research, financial due diligence, offer structuring, regulatory sequencing, and ownership and funding design for acquisitions in South Africa. Learn more about our buy-side advisory, or see how we approach company valuation methods. We also tell clients when to walk. That has saved more money than any negotiation we’ve won. Still deciding on a sector? Read the companion piece: South Africa in 2026: A Guide for Turkish Investors.
About the author
Sasha Müller is Business Development and Cross Border M&A Manager at Anatrica Partners, Linkedin
Sources
Exchange control and repatriation
- Navigating South African Exchange Control for Foreign Firms — Lawzana
- SARS and SARB decide whether your funds can leave South Africa — Tax Consulting SA
- SA Exchange Control Regulations Suddenly Tightens Up — Regan van Rooy
- Double Taxation Agreements & Protocols — South African Revenue Service (Türkiye agreement, Government Gazette No. 29464, 11 December 2006)
Payment behaviour
- South Africa 30-Day Government Payment Rule
- Urgent action needed: Late payments threaten South African small businesses — IOL Business Report
- Government Payment Delays South Africa — Sourcefin
- Load shedding is over – and that’s exposing a new energy crisis — TechCentral
Property rights and investor protection
- City of Tshwane Metropolitan Municipality v Summer Season Trading 63 (Pty) Ltd [2026] ZASCA 81 — SAFLII
- SCA’s property rights ruling has lessons for new expropriation law — Moonstone
- Unpacked: Each party’s arguments in the Expropriation Act case — Daily Maverick
- Protection of foreign investments in South Africa — Global Arbitration News
Corporate carve-outs
- South Africa’s mining companies: the 2026 landscape — ProjectsIQ
- Anglo American agrees sale of steelmaking coal business for up to US$3.875 billion in cash — Anglo American, 18 May 2026
- Anglo American Takes Fresh $2.3 Billion Hit on De Beers — Ecofin Agency
- De Beers group sets out portfolio and organisational actions — De Beers Group
Mining rights
- African mining in 2026 – policy shifts and increasing investment — African Mining
Merger control
- South African Merger Control When Buying a Local Business (2026) — MJ Kotze Inc
- Politics of the Deal: Public Interest Impacting M&A — Mondaq
- Final Guidelines on the revised approach to public interest in merger control — Bowmans
- Recent Competition Tribunal case clarifies approach to ownership conditions — Werksmans
- Merger thresholds — Competition Commission South Africa
Employment transfer
- Labour Relations Act 66 of 1995 — South African Government