11 minute read
PROPERTY MANAGEMENT
The ABCs of DDs
DID YOU KNOW?
JUSTINE KRIGE, director in corporate and commercial practice at Cliffe Dekker Hofmeyr (CDH), shares some legal advice for entrepreneurs
Most investors will want to conduct a due diligence (DD) investigation on a business before investing any funds or taking up an equity share. What does this mean for your business if you are looking for funding?
WHAT EVERY ENTREPRENEUR SHOULD KNOW
1. Due diligence investigations typically comprise a legal, fi nancial and tax review.
This is done by performing a comprehensive analysis of the target company, often including commercial, banking and fi nance, litigation, employment, environmental, insurance, tax, intellectual property, and real estate law aspects. The assets and liabilities of the target company and how the business functions are scrutinised. Often various legal, fi nancial and tax teams will work in tandem. 2. How is a DD investigation undertaken? The company under investigation will typically be required to make important documentation available to the reviewers through a virtual or a physical data room. The nature of the documents and information required will have been set out in an information request.
These documents depend on the specifi c purpose of the review, but are usually a mixture of company secretarial documents, constitutional documents, client and supplier agreements, employment agreements and human resource policies, payroll schedules, business licences, trading terms and conditions, business plans, fi nancial statements and tax fi lings, among others. 3. What are reviewers looking for in a DD investigation? Generally, they are looking for any potential risks faced by the target company such as existing debt obligations in the form of unpaid tax or potential administrative fi nes as a result of statutory noncompliance, as well as any restrictive or unusual clauses in agreements, particularly those which trigger adverse consequences in the event of a change of control of the target company (for example, if an investor takes up a majority stake). Depending on the particular sector in which the business operates, there may be a specifi c focus on certain aspects of the target company’s operations (for example, an emphasis on evidence of environmental legal compliance in respect of a waste management company). 4. How is a DD investigation ultimately relevant?
Ultimately, the reviewers will compile a due diligence report, which will give a full picture of the target company. This report will enable the investor to gauge the commercial viability and performance of the target company and make an informed decision about the investment. The report will also inform the nature and extent of the warranties and indemnities that the investor may want to include in the investment agreement so that any identifi ed risks are adequately mitigated.
The due diligence report is typically pivotal in an investor’s ultimate decision (and on what terms) to invest. 5. How can the target company assist? Statutory compliance (or noncompliance) is a key consideration. Review your basic company secretarial and other statutory records, founding documents, employment contracts and human resource policies, supplier and customer arrangements, trading Justine Krige
A due diligence investigation examines the structure and operations of the target company, its assets and liabilities, as well as any potential risks that it faces in the market. In short, are there any skeletons in the closet or risks around the corner? The scope of a due diligence investigation will vary from case to case. Generally, the more signifi cant the investment, the more detailed and probing the due diligence investigation.
terms and conditions, business licences and tax fi lings. Where these do not comply with legal requirements, correct as soon as possible. Ensure that the company keeps a comprehensive paper trail, and as the business concludes key contracts, carefully consider whether they would be attractive to a potential investor. Businesses that are structured correctly from the outset and keep up-to-date records are more likely to lend themselves to investment.
RETHINKING TECHNOLOGY
The current global crisis is compelling business owners to rethink the way they do business. Now more than ever, future-proofi ng needs to embrace new technology like proptech. By RAINA JULIES
Proptech is evolving at a rapid
pace and is real estate’s biggest disruptor. Essentially, proptech allows the real estate market to explore digital innovations that make doing business more effi cient, simpler and seamless. Think drone technology for virtual tours, the rise of artifi cial intelligence (AI) where AI platforms allow developers and investors to test feasibility and risks, cloud-based technology that provides access to data on any property from anywhere, and robotic automation that uses software or bots to streamline business operations and reduce costs.
“Proptech is a powerful level of tech that’s increasingly merging the digital world with the commercial property environment,” says Wayne van der Vent, co-founder of Quoin Online, innovation partners in the commercial property sector. “Landlords and owners need to rethink not only the method of transacting and marketing, but also what makes their property different and attractive to tenants, buyers and investors. Tech moves fast; if there was ever a time for proptech to take centre stage, it was during the lockdown.”
Van der Vent explains that the offi ce sector may, for example, “need to look at more fl exible leasing arrangements, not only offering space, but also services. It may be necessary for landlords to adopt the same methodologies as shared offi ce operators.”
It’s this type of disruption and solutions-based focus that makes proptech an essential part of growing the commercial property market in crisis times.
Many commercial buildings
such as shopping centres and office blocks house a variety of different wireless telecommunications infrastructure. These can include towers, antennas, digital antenna systems, cabinets, satellite dishes and transceivers. These are typically located on rooftops and within buildings. However, managing this complex environment effectively can be challenging. Landlords often struggle
SIMPLIFYING tELECOMMUNICATIONS MANAGEMENT
Mark sweMMer, managing director of the Reach Group, explains how managing complex telecommunications infrastructure can be simplified
to ensure optimal space utilisation for communications infrastructure, lack adequate knowledge of technical site installation requests and battle to ensure that energy consumption costs are recouped. They may also be unaware of the revenue generation opportunities that could exist.
Finding a partner to help simplify the complexity and provide a complete managed solution via a single point of contact will make life easier and more profitable for landlords and property managers. The reach Group enables telecoms operators and wireless services providers to access buildings’ rooftops, towers and outdoor areas to extend their coverage, providing consumers with multiple broadband, telecommunications, fibre, LTe and 5G services. This then empowers landlords and property managers to actively manage and leverage their rooftop space and outdoor areas to enhance revenues from alternative leasing areas.
A communal table in Roamwork’s shared office space. The members’ kitchen area and canteen.
1. New clientele. More people are considering co-working as an option.
Enquiries are being received from larger businesses wanting more flexible leases and employees of big corporates who receive stipends to work from anywhere.
WHAT’S TRENDING
IN CO-WORKING? 2.Property developers. Cape Town property developers have caught on to DarreN ePsTeiN, founder of Roamwork in Harrington Street, the co-working and co-living trend. For example, property development company Neighbourgood is converting the former and NieL Bekker, CEO of CHIPS Townhouse Hotel in the CBD into a co-working space, share the top co-living space with a shared communal trends in the co-working space workspace – Neighbourgood East City – for young professionals. 3. Finding the niche. Bekker points out that turning on the Wi-Fi in an empty office and calling it a co-working space doesn’t cut it anymore. You need to offer something specialised to a particular class of clients. There’ll be more spaces with unique benefits for differentiated communities.
Roamwork has an in-house production studio with an infinity curve and green screen. There’s also catering available and showering facilities and it’s dog-friendly. 4. Clubs not cubicles. Epstein says today’s spaces are not desk, chairs, cubicles and somewhere to plug in a laptop.
Globally, they’re becoming more like members’ clubs. Roamwork, for example, boasts a full art collection sponsored by Art Gazette. 5. Cross-pollination. Shared spaces create networking opportunities in a time when people have Zoom fatigue and limited chances to connect in person. 6. a home for headquarters. Several businesses are now seeking a space to connect monthly, but don’t want an office of their own. There’s massive opportunity for communal spaces to accommodate this new use case.
* The top trends in co-working formed part of the research findings done by the Cape Town Central City Improvement District (CCID) into co-working within the Cape Town CBD.
CELEBRATING a key milestone
WeconnectU, the rapidly growing property management software solutions company, is celebrating 500 000 property units being managed on its cloud-based platforms this month
In just four years since its inception, WeconnectU has grown into a provider of choice for body corporate, homeowners associations and rental portfolio managers who seek the most advanced end-to-end property management solution to make them more compliant, manageable, scalable, and profi table.
“WeconnectU was born out of our frustrations managing a large portfolio of properties. We were using multiple systems to handle all the elements of our business, none of which were integrated or designed with the workfl ows and challenges of property management in mind,” says Danie van der Merwe, one of the three Van der Merwe brothers who collaborated and started the company specifi cally to solve the very real challenges they and other property managers faced.
SOLVING REAL-WORLD PROBLEMS
Johann van der Merwe, CEO of WeconnectU, says the company is dedicated to solving the real-world problems property managers face. “We solve problems through easy-to-use property management software designed with the fi nesse that experts in the industry will appreciate. Our fully integrated ecosystem ensures optimal effi ciencies for property and rental asset managers through our community management software, rental asset management software and inspection and maintenance management software.”
He says the company started with community management, as this is the fastest-growing sector in property management and one of the more complicated and heavily regulated sectors. The result was one of the fi rst end-to-end community management solutions bringing all tasks and stakeholders together on one, transparent, cloud-based platform. It includes a custom-built fi nancial module, intelligent dashboards to monitor and manage client and business KPIs, built-in (and constantly updated) support for compliance and an unprecedented level of comprehensive reporting.
“After this, we needed to respond to the numerous requests for rental management and inspection and maintenance management solutions. The goal was an integrated ecosystem that could handle the full range of property management services, replacing outdated systems with a complete suite of reliable, user-friendly, effective and effi cient cloud-based tools,” says Schalk van der Merwe, who recently joined the team to add value to the partnership through his varied and rich experience in the property industry.
“The team felt they had far more to offer the industry with a new solution for rental portfolio management that would support a more modern asset management experience, rather than just another administrative property management system. The resulting rental asset management software addresses the entire value chain of rental portfolio management, including tenant vetting processes, bank integrated account management, lease management, and integrated inspection and maintenance management,” says Schalk.
“It was important to us to ensure that we kept solving real industry problems with our technology, rather than just building tech for tech’s sake,” says Johann. “So we decided to secure the exclusive global marketing licence for RedRabbit, the industry leader for inspection and maintenance management. We chose to integrate it with our platform instead of reinventing that particular wheel.
“WeconnectU aims to enable property managers to deliver a rich and valuable client experience. We do this in two ways: by dramatically improving effi ciency to give them time to focus on adding value to their clients’ property assets and portfolios, and by creating exceptionally detailed reports that can be used to inform, educate and advise investors on the status of their properties as investments.
“Our goal is to continue supporting the industry with our cutting-edge technology and ecosystem of tools, solving complex industry problems with simple, elegant and user-friendly solutions,’’ says Johann.
CYBERSECURITY ADVICE WEBINAR
As part of celebrating this milestone, WeconnectU will host an expert advice webinar on 9 September at 10am, announcing major new system features and focusing on cybersecurity in the property industry. Guest speaker Eric Lundberg, from Redshift Cyber Security, will discuss why cybersecurity is important in the property management industry, the importance of a hosting platform that comes with built-in security best practices and the impact more people working from home has on security.
➔ To join this insightful and topical webinar, register by scanning this link.
➔ Scan this QR code to go directly to the WecoonectU website.
will appreciate.” – Johan van der Merwe
For more information:
086 999 0756 james@weconnectu.co.za www.weconnectu.co.za
