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Adrian Dommisse

Adrian Dommisse

Adrian Dommisse has experience in the fields of corporate finance and acquisitions, structured finance and commercial law. He trained in commercial litigation at Webber Wentzel in Johannesburg before moving to London where he worked in structured finance for seven years, ultimately as an investment banker. In 2008 he returned with his wife to the country of his home and his heart, South Africa, to raise his two children. After a rewarding period at Edward Nathan Sonnenbergs, where he practiced commercial law, he then struck out on his own and founded Dommisse Attorneys.

Website URL: http://www.dommisseattorneys.co.za

Is buying a distressed company a bargain or burden?

Friday, 27 September 2013 08:50 Published in Venture Capital
Is buying a distressed company a bargain or burden?

Every now and then an opportunity comes along that looks very hard to resist. If you’re a seasoned entrepreneur, this might come in the form of a company that, although in such distress that the shareholders want out, still has genuinely valuable assets or a viable business model.

What you need to know about offshoring your business

Wednesday, 10 April 2013 11:57 Published in Trade & Investment
How to move one’s business offshore is a popular topic among entrepreneurs – but the decision is not as easy as many seem to think. 
There is lots of excitement about Mauritius because their corporate tax rate is much lower (potentially just 3% as opposed to 28% in South Africa), but offshoring needs to be a substantial and genuine exercise - doing so just because you think you can avoid tax is the wrong way to go about it. SARS is very aware of this issue. If you have a company registered in Mauritius but all your management and employees are in South Africa, you’re going to attract unwelcome attention.
There are two good reasons companies should consider establishing an offshore office: If they’re genuinely expanding their activities beyond the borders of South Africa, or to meet the needs of major international investors. 
In the first case, entrepreneurs should be aware that there are major costs associated with setting up offshore.  There must be a real separation between your South African and international operations. You can’t just have a postal address in Mauritius but still run everything from Johannesburg: there needs to be real substance.
You will need to prove to anybody enquiring that key management decisions are made in the offshore jurisdiction, he adds. That means local offices, resident senior staff and all your board meetings will need to be held there, just for starters. That cost will need to be weighted against the benefits of actually running a business from that office. So if you’re genuinely looking for a good base from which to expand into South Asia, for example, go for it.
Beware of “loop structures” in which South Africans have an interest in an offshore holding company that in turns owns assets in South Africa. It’s a fairly obvious way to try and avoid paying tax, and it could make criminals of your entire board. It’s a rookie mistake.
The second reason to consider setting up offshore is to secure a major international investor who is wary of putting money into South Africa because of currency and political risk, the tax regime and exchange control regulations. 
The truth is that investors will only put their capital into a country like South Africa if they can take it out again easily. We see investors who are willing to carry the cost of moving the whole operation offshore to avoid exchange control and political risks.  Obviously that assumes underlying operations that transcend national borders.
They are also likely to insist that intellectual property be developed outside South Africa, he says. IP that is developed locally will be classified as a South African asset, which is a situation that international investors may not accept, he says. For this reason, a significant part of key development resources will probably have to be located outside of South Africa.
In summary, establishing an international office only makes sense if you’re a genuinely international business. Choose your advisors very carefully, and accept that this is not a low-cost exercise. You will need a tax expert with specific experience in this area, as well as good legal advice. 
Five things a commercial law firm learned by doing its own acquisition

As a commercial law firm, we are very often called to assist our clients through mergers, acquisitions, management buyouts, venture capital investments and other transactions in which ownership of shares in a company changes hands. For a privately held company, especially a small one, these are critical moments that can profoundly affect the long-term health and sustainability of the firm.  


Over the years we’ve seen pretty much everything there is to see: The successes, the mistakes and the occasional tragedy. Yet doing our own acquisition of another law firm proved to be extremely educational. At last, we really know how our clients feel through what is almost always a stressful process, even when everything goes well.


These are the most important things we learned:

1.  Keeping emotion out of it is hard

As lawyers, we’re normally able to keep a certain objective distance from the negotiations involved in the sale of a company, or shares in a company. We work to get our clients the best deal we can, because that’s what professionals do: But it’s not our baby. Now that we’ve gone through a process where it is our baby – where we will be personally affected by the outcome for years to come – we understand why it’s so hard to be subjectively involved.


2.  Change management is one of the keys to success

This is one of the things we all knew – but experiencing it for ourselves really drove the message home. We had to deal with how to merge systems and company cultures, how to nurture relationships through change and how to ensure staff had all the right incentives they needed to stay with the new, merged firm.


3.  Remember the clients

We made a special effort to keep our clients well informed about what was happening and to reassure them about the continuity of the service they were used to: But even so, the conversations that followed were not always what we expected. It’s easy to forget that what seems obvious to everyone inside the firm need not be obvious at all to outsiders. Managing client perceptions and expectations should be a very high priority during the acquisition process.


4.  There’s no such thing as too much paperwork

Nobody loves mounds of paperwork, but once again the lesson has been driven home: The more you get down on paper, the better. Make sure that what you think has been agreed has been written down and signed – or it’s not agreed at all. Intentions that are not written down in exhausting detail may be not be as clear as you think they are, and handshake and back-of-the-envelope deals are a recipe for relationship fallout. This is not just unpleasant; it’s a serious risk to the success of the deal.

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