The impact of elections on M&A deal activity

The impact of elections on M&A deal activity

The impact of elections on M&A deal activity 768 512 Tamela

South Africa is gearing up for what many believe will be one of the most pivotal elections post-1994. According to experts, the outcome of this election will be key for South Africa’s investment case, particularly given the current macroeconomic backdrop which is marked by high interest rates (which means elevated debt servicing costs), subdued GDP growth expectations, a distressed fiscus and, most unfortunately, continued load shedding.

But what does this mean for the country’s M&A deal activity? Over the past decades, experience has shown that the build-up to elections often makes investors and businesses jittery, which consequently impacts M&A deal activity. Ahead of elections, murmurs of policy changes or regulatory shifts can lead to reluctance in making investment decisions and investors taking a “wait-and-see” approach, which ultimately slows down M&A activity.

In South Africa, potential cabinet reshuffles or changes in leadership of regulatory bodies can affect the feasibility and attractiveness of M&A transactions. This is particularly pronounced for heavily regulated industries or sectors where the value accretion expected from a particular transaction could easily be eroded by regulations.

However, for deal advisors, the abovementioned factors emphasize the importance of deal preparation and timing to ensure deal success. Investors and advisors should have a nuanced understanding of political dynamics and the regulatory environment, especially within heavily regulated sectors where policy shifts could easily lead to deal failure. The uncertainty and resulting market sentiment also present an opportunity for strategic investors to acquire assets at attractive valuations before the market reprices as the policy expectations and the macroeconomic outlook become clearer.

How can we help?

Tamela Holdings is a Corporate Advisor and Sponsor business with extensive market experience. Tamela has the expertise to assist you in navigating merger and acquisition transactions from cradle to grave. To the extent that you may be interested in exploring your strategic rationale for an M&A deal and require guidance on the process and considerations, Tamela will be at your service.

For more information, please contact Tshepo Radebe at +2711 783 4907 or via email at

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