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Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study
Thesis (MAcc)--Stellenbosch University, 2020.
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| Format: | Thesis |
| Language: | en_ZA |
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Stellenbosch : Stellenbosch University
2020
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| _version_ | 1867614119606091776 |
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| access_status_str | Open Access |
| author | Conradie, Shaneen |
| author2 | Lamprecht, Christiaan |
| author_browse | Conradie, Shaneen Lamprecht, Christiaan |
| author_facet | Lamprecht, Christiaan Conradie, Shaneen |
| author_sort | Conradie, Shaneen |
| collection | Thesis |
| dc_rights_str_mv | Stellenbosch University |
| description | Thesis (MAcc)--Stellenbosch University, 2020. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/108346 |
| institution | Stellenbosch University (South Africa) |
| language | en_ZA |
| last_indexed | 2026-06-10T12:46:58.390Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2020 |
| publishDateRange | 2020 |
| publishDateSort | 2020 |
| publisher | Stellenbosch : Stellenbosch University |
| publisherStr | Stellenbosch : Stellenbosch University |
| record_format | dspace |
| source_str | SUNScholar — Stellenbosch University Repository |
| spelling | oai:scholar.sun.ac.za:10019.1/108346 Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study Conradie, Shaneen Lamprecht, Christiaan Stellenbosch University. Faculty of Economic and Management Sciences. School of Accountancy. Financial crises -- South Africa Bankruptcy -- South Africa Business failures -- South Africa Mixed methods research -- South Africa UCTD Thesis (MAcc)--Stellenbosch University, 2020. ENGLISH SUMMARY: South African companies in financial distress have the opportunity to file for business rescue in terms of Chapter 6 of the South African Companies Act No. 71 of 2011 (Companies Act). The business rescue process involves the appointment of a business rescue practitioner (BRP) (RSA: s129(3)), who is required to prepare a business rescue plan. The business rescue plan should, among other things, indicate to creditors the benefits of adopting a business rescue plan as opposed to the benefits of immediate liquidation (RSA: s 150 (b)(vi)). The Companies Act does not explicitly require that a valuation of the company’s assets be performed, neither does the Companies Act advocate a specific valuation technique. However, the BRP is expected to perform some form of valuation of the company’s assets in order to provide an indication that stakeholders would be better off supporting business rescue proceedings than with immediate liquidation. Valuation thus becomes a vital aspect of business rescue because the estimated values determine the size of the pie to be divided between creditors and if possible, shareholders. The problem is that conventional valuation methods may not be applicable in a business rescue scenario because the underlying assumptions may not hold under business rescue circumstances. The aim of this research study was, therefore, to explore how the BRP determines the business rescue value of a financially distressed company in order to present a business rescue value in the business rescue plan. A systematic literature review was conducted with the aim of compiling a theoretical valuation framework. The study adopted a convergent, mixed methods design, comprising both qualitative and quantitative research. The theoretical valuation framework formed the basis for the qualitative strand of the study, which involved the constant, comparative thematic analysis of the data collected through semi-structured interviews which were conducted with senior business rescue practitioners. In addition to the qualitative strand, the study also included a quantitative strand which involved the quantitative content analysis (descriptive analysis and inferential analysis) of various business rescue plans. The empirical results of the study showed that the income approach and multiple approach of valuation, popularly used to value healthy going concern companies, are less appropriate in business rescue practice. The study found that where the intended outcome of business rescue is to return the company to solvency, a short-term, undiscounted cash flow budget is prepared by the BRP to determine the business rescue value, but without including a terminal value in the projected cash flows. Where the intention of the business rescue is to obtain a better return as compared to immediate liquidation, the study provided evidence that an asset approach is appropriate in determining the business rescue value. The results of the study further showed that both the business acumen and relational acumen of the BRP is a major influencer in respect of the business rescue value. The study identified and substantiated appropriate financial and nonfinancial elements which are applicable when determining the business rescue value. It is anticipated that the findings of this study may serve as best practice guidance in the business rescue industry and lead to an expansion of existing valuation theory. AFRIKAANSE OPSOMMING: Suid-Afrikaanse maatskappye in finansiele nood het die geleentheid om aansoek te doen vir besigheidsredding ingevolge Hoofstuk 6 van die Suid-Afrikaanse Maatskappywet No. 71 van 2011 (Companies Act). Die besigheidsreddingproses behels die aanstelling van 'n besigheidsreddingpraktisyn (BRP) (RSA: s 129 (3)), wie verantwoordelik is om 'n besigheidsreddingplan voor te berei. Die besigheidsreddingplan moet, onder andere, vir krediteure aandui wat die voordele van die aanvaarding van 'n besigheidsreddingplan is, in teenstelling met die voordele van onmiddellike likwidasie (RSA: s 150 (b) (vi)). Die Maatskappywet vereis nie eksplisiet dat 'n waardasie van die maatskappy se bates uitgevoer word nie, en die Maatskappywet skryf ook nie 'n spesifieke waardasie-tegniek voor nie. Daar word egter van die BRP verwag om 'n vorm van waardasie van die maatskappy se bates uit te voer ten einde 'n aanduiding te gee dat belanghebbendes beter daaraan toe sal wees om besigheidsreddingverrigtinge te ondersteun as met onmiddellike likwidasie. Waardasie word dus 'n kardinale aspek van besigheidsredding, aangesien die geraamde waardes die grootte van die bedrag bepaal om tussen krediteure en indien moontlik, aandeelhouers te verdeel. Die probleem is dat konvensionele waardasie metodes moontlik nie van toepassing mag wees in 'n besigheidsredding scenario nie, omdat die onderliggende aannames dalk nie geld onder besigheidsredding omstandighede nie. Die doel van hierdie navorsingstudie was dus om te ondersoek hoe die BRP die besigheidsreddingswaarde van 'n maatskappy in finansiele nood bepaal, ten einde 'n besigheidsreddingswaarde in die besigheidsreddingsplan aan te bied. ʼn Sistematiese literatuurstudie is gedoen met die doel om 'n teoretiese waardasie-raamwerk te skep. Die studie het 'n parallelle gemengde metodes ontwerp, wat bestaan uit beide kwalitatiewe en kwantitatiewe navorsing. Die teoretiese waardasieraamwerk het die basis gevorm vir die kwalitatiewe gedeelte van die studie. Die kwalitatiewe gedeelte het die konstante, vergelykende tematiese ontleding van data, wat verkry is deur semi-gestruktureerde onderhoude met senior BRPs, behels. Benewens die kwalitatiewe gedeelte, het die studie ook 'n kwantitatiewe gedeelte ingesluit. Die kwantitatiewe gedeelte het die kwantitatiewe inhoudontleding (beskrywende analise en afleidings analise) van verskeie besigheidsreddingplanne behels. Die empiriese resultate van die studie het getoon dat die inkomste benadering en relatiewe benadering van waardasie, wat algemeen gebruik word om die waarde van gesonde, lopende saak maatskappye te bepaal, minder geskik is in besigheidsreddingpraktyk. Die studie het bevind dat waar die beoogde uitkoms van die besigheidsredding is om die maatskappy terug te keer na solvensie, die BRP 'n korttermyn, onverdiskonteerde kontantvloei begroting voorberei om die besigheidsreddingswaarde te bepaal, maar sonder om 'n terminale waarde in die geprojekteerde kontantvloeibegroting te gebruik. Waar die bedoeling van die besigheidsredding is om 'n beter opbrengs te verkry in vergelyking met onmiddellike likwidasie, het die studie bewys dat 'n bate benadering gebruik word in die bepaling van die besigheidsreddingwaarde. Die resultate van die studie het verder getoon dat beide die besigheidsvernuf en verhoudingsvernuf van die BRP 'n groot invloed het op die besigheidsreddingswaarde. Die studie het toepaslike finansiele en niefinansiele elemente wat van toepassing is in die bepaling van die besigheidsreddingwaarde geidentifiseer en gestaaf. Daar word verwag dat die bevindinge van hierdie studie kan dien as beste praktyk leiding in die besigheidsredding bedryf asook lei tot 'n uitbreiding van bestaande waardasie teorie. Masters 2020-01-28T10:24:27Z 2020-04-28T15:10:30Z 2020-01-28T10:24:27Z 2020-04-28T15:10:30Z 2020-03 Thesis http://hdl.handle.net/10019.1/108346 en_ZA Stellenbosch University xviii, 210 pages ; includes annexures application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Financial crises -- South Africa Bankruptcy -- South Africa Business failures -- South Africa Mixed methods research -- South Africa UCTD Conradie, Shaneen Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study |
| title | Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study |
| title_full | Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study |
| title_fullStr | Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study |
| title_full_unstemmed | Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study |
| title_short | Determining the business rescue value of a financially distressed South African company : a convergent mixed methods study |
| title_sort | determining the business rescue value of a financially distressed south african company a convergent mixed methods study |
| topic | Financial crises -- South Africa Bankruptcy -- South Africa Business failures -- South Africa Mixed methods research -- South Africa UCTD |
| url | http://hdl.handle.net/10019.1/108346 |
| work_keys_str_mv | AT conradieshaneen determiningthebusinessrescuevalueofafinanciallydistressedsouthafricancompanyaconvergentmixedmethodsstudy |