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M&A Buyer: Going Global

Everyone knows that to be global, you need representation in Europe… one of the largest economic regions in the world.  And since English is the second language for many Europeans, how difficult can it be?  Often, European executives visiting the US are likeable, and their actions are very similar to local executives.

It should be simple.

Some facts to remember.  Most European Executives speak English – in addition to 1-2 other languages - and when meeting executives here in the US, they frequently adapt their actions to the host environment.  They are accustomed to doing so since they frequently work in countries other than the home culture – Switzerland, France, Italy, Spain, Germany, Austria, Belgium etc. are a day’s drive apart.  Culture, laws, economic environments differ throughout Europe, and if a US executive is unaccustomed to changes, negotiating, closing and integrating a transaction can be very challenging.

Overall M&A success statistics are dismal, and studies show that International M&A transactions have a worse-than-average success rate. There are several keys to success in international transactions

  • Team selection:  Understand the keys to the transaction value and the keys to complete a successful transaction through to the strategic objective.  Once these keys are identified, staff the team for success.  If you don’t have the right talent, get it… the risks are far too high without qualified resources. Also, the team should be comfortable working together – make sure there is a personal element to the team. Trust is essential.
  • Goal setting:  Develop a transaction summary that is clear, concise and easily interpreted by those with different native language.  Include specific and measurable goals so that the team understands when the goals are achieved.
  • Planning:  Develop transition plans with the team… ensure team engagement using both formal and informal planning means.  An international transaction requires more time and more investment than a comparable domestic transaction to complete.
  • Communication:  Communicate… communicate … communicate.  Communicate includes listening as well as outward communication.  It is difficult to be successful when M&A transitions are in a single country. Cross-border transactions require more formal (scheduled… written) and informal communication (ad hoc… unscheduled…the occasional phone call…).  Person-to-person communications are absolutely essential so that the clarification is immediate and thorough whenever questions arise.  It is nearly impossible to over communicate.
  • Technical competency:  International transactions include technical requirements not found in a single country.  For example tax, legal, intellectual property – on both a federal and local levels – can be significant.  Those unaccustomed to international transactions may approach the transaction with a cost saving attitude that can be costly.  Engage the experts to protect your investment. 

When involved in an international transaction, understand that it will be higher risk, and cost significantly more than a domestic transaction to complete.  If you approach the international transaction as if it were a domestic transaction, you will likely under staff and under budget (time and cost) the transaction.

How do you find the right people to assist you in completing a transaction?  Global law firms or CPA firms, or perhaps the local representatives from the US Commerce Department often refer qualified resources.

PS … these tips are effective for Asia and Latin America as well……