If valuation were as simple as Googling “global industry multiple” and slapping it onto a South African company, dealmakers here would have a lot more grey hair and far fewer jobs. Yet, surprisingly often, that is exactly what founders, investors, and even some advisers try to do. The reality? Valuing businesses in South Africa is less like following a recipe and more like cooking in a kitchen where the electricity keeps tripping, the ingredients are imported, and everyone has a different view on what “done” looks like.

In mature markets, valuation frameworks can feel almost neat. Public market comparables, deep liquidity, and relatively predictable risk environments allow for cleaner benchmarking. In South Africa, however, country risk has a way of gatecrashing every valuation conversation. Currency volatility, political uncertainty, infrastructure constraints, and shifting regulatory landscapes all find their way into the discount rate, whether we like it or not. This means that a tech company trading at 12 times EBITDA in Europe does not automatically justify the same multiple in Johannesburg, even if the business model looks similar on paper.

Liquidity is another reality check. South African capital markets are smaller and thinner than their global counterparts, which often results in a liquidity discount. Buyers simply demand a margin of safety for investing in an environment where exiting an investment can take longer and be more complex. This is particularly relevant in private transactions, where the absence of a ready market for shares can materially affect pricing.

Then there is earnings quality, arguably one of the most critical yet misunderstood elements of valuation. Strong revenue growth means little if margins are volatile, customer concentration is high, or cash conversion is weak. In South Africa, where many businesses are family owned or entrepreneur led, normalising earnings for owner specific costs, irregular expenses, or cyclical fluctuations is often essential to arriving at a credible valuation.

Local dynamics also shape outcomes in transactions and capital raises. Sector conditions, empowerment considerations, funding availability, and even the bargaining power of strategic buyers can sway valuations as much as financial metrics. Ultimately, the smartest valuations in South Africa are those that blend global principles with local reality. Because here, context is everything.