When ownership changes, boards must adapt

Something significant has been happening around East Africa’s established businesses. Regional and international groups have been acquiring controlling interests or increasing substantial shareholdings. These developments point to changes in ownership across the region and raise questions for the institutions affected and their boards.

An established business offers what takes years to build — licences, customers and distribution networks.

But much of its true value is intangible: local knowledge, relationships, management capability, institutional memory, reputation and trust accumulated over decades. In East Africa, these attributes are not soft extras.

They shape regulatory confidence, loyalty, commitment and execution. They rarely appear separately in a purchase price, but can be costly to lose.

What makes an institution attractive to a new owner can also be vulnerable to dilution during integration.

A larger shareholder can bring capital, technology, products and market access. Common systems can strengthen risk management and regional scale can encourage harmonisation.

Yet some local practices, relationships and judgment calls are not obstacles to remove; they are part of the institution’s value. The board must distinguish integration that strengthens the institution from change that weakens the capabilities that made it valuable.

For directors, formal responsibilities may remain unchanged, but their circumstances can alter considerably. Strategic influence, capital allocation, technology, risk and senior appointments may acquire a group dimension. Decisions may increasingly be made or influenced elsewhere in the group.