Soria Hay, executive director of Bravura, says for the most part these trends are positive.

“Recent empowerment transactions reflect not only lessons learnt from past deals but also the changing legislative landscape surrounding empowerment in the country,” Hay says.

A new trend is that while few companies conclude deals only with their employees, most now include their employees in their transactions, as opposed to excluding employees in the past.

Hay says the trade and industry department refers to this trend as the golden triangle of empowerment, whereby companies do deals with three parties: their employees, entrepreneurs and a broad-based group.

Another trend which is becoming increasingly regular is that the vendor company (the company that needs to do the empowerment deal) assists in the funding of the transaction, ensuring that the deal is no longer funded at arms length in the marketplace.

Hay says that while some arms-length deals are still being transacted, most of these are unsustainable because they depend heavily on the dividend flow coming from the company to be able to service the interest, and on the share-price performance of the company.

“Increasingly, while some of the funding is done by a third party, assistance is mostly provided by the company needing to do the transaction itself — through accepting a put option on the shares — or even the shareholders of the company,” Hay says.

Hay says codes recently issued by the department penalise firms that do not have robust funding structures.

The incentive to assist in the sustainable funding of a deal is high, as only 12 out of a potential 20 points can be earned for ownership if the funding is not correctly structured, she says.

Another trend is that there are still a lot of celebrity transactions, namely deals characterised by a lack of new entrants and a lack (or a very small part) of being broad based, Hay says.

“These deals are not sustainable and do not help to build the bigger, positive economic landscape needed in SA.”

She says companies have started looking at all the different elements on the empowerment scorecard, not only at ownership and management but also at areas such as preferential procurement, skills development and employment equity.

“It is therefore likely that we will see rapid transformation in the economic landscape in the next year because companies are starting to implement thorough transformation genuinely within their structures, incorporating a broad range of empowerment elements,” Hay says.

She says there are some empowerment transactions that demonstrate negative elements, such as those that make shares available only to the company’s black employees.

“Other negative transactions have included deals clinched by companies that have approached empowerment with a lack of long-term vision.”