Facing a Cross-Border Transaction? What You Need to Know

Whether you are a business owner who is looking to grow your company through acquisitions or you are a business owner considering the sale of your company, in many cases it is worthwhile to expand your search internationally. Finding the right target across the border will allow you to enter new markets quickly. There has been an explosion in international M&A activity – in fact, according to Reuters, the first half of 2018 saw a record-setting $2.5 trillion in global transactions. If you choose to broaden your search to other countries, it is necessary to be proactive and diligent.

Here are some critical considerations that you should make before pursuing an international transaction.

Finding the Right Company to Align with Your Objectives

While this is important in all transactions, it can be particularly difficult to find the best fit when searching across borders. Frequently, those living in different countries may assign higher or lower significance to aspects of a business than a seller expects them to, which can lead to discrepancies in valuations and a lack of consensus about future goals. Working with a team of seasoned professionals ensures that only appropriate targets are evaluated and that valuations are accurate for all parties involved.

Ensuring Compliance with Applicable Laws and Regulations

Understanding which laws and regulations need to be followed in each region and country isn’t always straightforward. For example, when pursuing an acquisition or merger in a Eurozone country, the transaction may need to be approved by the European Commission’s Merger Regulation Group. If the deal involves any type of bank, it likely needs to be green-lit by the European Central Bank. Each country, and sometimes each state or region, will have its own regulations to follow. Partnering with the right international legal support team will guarantee appropriate compliance.

Mitigating Unique Risks

Concerns about currency and taxation are common, and many parts of the world lack the regulatory oversight and transparency required in the United States. While no team of advisors can change those facts, they can help ensure that you have all the information and data necessary to make informed decisions about whether any given risk is worth accepting, or if it might be better to pursue a different target.

The Bottom Line

While it can be more complicated to pursue a cross-border transaction than a domestic one, that shouldn’t stop you or any other business owner from pursuing that potentially perfect deal. By having the right advisory team, a business owner can feel secure in taking advantage of the many benefits that foreign markets may present. Contact us to learn more about Symmetrical ‘s Advisory Services Team.