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Business matrimonies: Why united we are strong


Robert Likhang

HUMAN beings multiply and grow through marriages (matrimonies). The differences between a male and female, the strengths and weaknesses of each through marriage are solidified to create a new structure called marriage which is stronger and more powerful than the sum of the two who went into marriage. There is efficiency as resources are put together for the use of the two and the children coming from them.  Similarly businesses can come together and join forces with their resources and build much more powerful organizations than the sum of those who came together, thus benefit even more.

There are various ways in which businesses can come together: Sole traders can form a partnership, partnerships can find an investor who may not want to work within the business but rather provide business skills at board level and financial investment resulting in a private company. They may wish to attract further investment from the public and extend their company from a private company to a public company, which would have a lot of shareholders not active in the running of the business, but who would appoint board to run the company on their behalf and report in the Annual General Meeting.  Companies themselves whether private or public can enter into matrimonies, one being a merger where two companies of similar size form a new company, or a takeover wherein the bigger company absorbs the smaller company and takes control.  A takeover may be friendly wherein parties agree to the transaction or it may be unfriendly wherein a predator buys shares from shareholders in the stock exchange without the control of the board of the company being taken over.  There is another loose arrangement which is a temporary marriage to address a particular project, and it is called a Joint-Venture (JV). In a JV two or more companies execute a project jointly and completion of that project or projects the companies separate.  JV is operational in that it does not affect the rights of the shareholders (ownership) of the companies concerned, it is simply a mean of executing projects putting together their resources. The JV may be made up of several companies each handling area of strength e.g. another company could offer machinery, another manpower, another uses its makeup (branding and reputation) etc.

Why matrimonies

The business landscape in Lesotho has suffered a lot due to political instability, investor instability, poor regulation or overregulation, disbursements from government treasury, government poor planning and execution, corruption and many factors that have become Lesotho’s descriptive features.  The reality is that individual businesses are struggling and with little promises resulting possibly from coming projects such as new mines, lowland water scheme, Polihali dam project etc. Even in our present form, individual businesses will not be able to take advantage of the coming projects if we do not approach them wiser and more united.  Our present form is not helping us even to take advantage of supplying big business in Lesotho as we do not have consistency of quality supply.  Business people often look at bribery, or obtaining more loans as a means of growing. Bribery is criminal and will finally come out. Bribery is a system of corrupting business ecology and has long-term negative impact on business and culture. Seeking additional loans from bank with the view that more money will create more opportunities is a sick and dangerous way of thinking. Money is not the only resource, there are other resources such as management ability, manpower, management information, make-up (reputation and brand), methods (processes), and availability of appropriate materials, markets, and appropriate machinery. In my accounting and consulting career I have seen many businesses sink with a lot of money because they do not have management skills, or their make-up is unable to attract profitable market segments, or their methods are not efficient enough as such they lose a lot of money out of process costs etc.  I have seen some companies being excellent in one area but weak in another, and would only wish the different companies would come together.

Going about business matrimonies

It is important to review why we went into business and I think for most it was the gains (operating or capital) our businesses offer us.  We also wanted independence and freedom etc. If our current businesses do not offer that then we have failed. We need to be making profits for annual dividends, and also ensuring that our businesses have grown to the level we can sell them at very high capital gains, either partially or in full.  We need to have freedom to direct our businesses to wherever we want. Often time’s business people come to a point where that freedom flies away, they remain proprietors however the real proprietors are banks, because the businesses through pledging, mortgaging, cessations, sureties have taken over the business, personal assets and the live of the ‘proprietor’. When your condition comes to this level you need to review yourself as business man and see if a matrimony with another business would not be a solution.

Review your business in terms of the resource gaps, and identify some businesses that are stronger in the areas of your weaknesses, or you may have the same strengths but can double them to be able to supply to a particular market. Your capital and Make-up will assist you in deciding on the appropriate matrimonial agreement, partnership, joint venture, takeover, merger etc.  Discussions will start on appropriate model of matrimony that best suits your risk appetite.  Ensure that business valuations are done, and also ensure that shareholders agreements are developed for future peace.

Alternative unions

You may not take on board full matrimonial relations but some unions that could improve your business. While a franchise is not strictly a matrimonial relationship, but taking on a franchise may address your Make-up and Methods weaknesses.  Another union could also be attracting Management ability by providing shares to other business gurus so that they assist in growing the business, a loose alternative is setting up a board wherein you attract professionals as independent board members.


Ensure that you consult capable business advisors and accountants, who will help you in the valuation of businesses concerned to ensure a fair deal, and also help you with drawing proper shareholders’ agreement.  It is critical that all parties become open so that there is continued peace. My experience in conducting business valuations and shareholders agreements have shown me that absolute openness and integrity are necessary. I believe more united businesses could have efficient staff compliments, and where necessary some skills such as Human Resources and Accounting can be outsourced. I have seen reduction in costs and improvement in efficiency of our clients who offer business outsourcing services to. Let’s face the coming mega projects stronger.

Mr Likhang FCIS, ACMA, CGMA, CA (L) is the founder RL Consulting – Chartered Accountants & Business Consultants. (Contact: www.yourfd.co.ls)

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