From: http://www.bizjournals.com/
Business acquisitions are complex transactions on many levels.
However, when you seek to acquire an international business, you must account for much deeper complexities throughout the entire process.
From targeting a particular company for acquisition and understanding doing business in the country and location you are considering to performing due diligence, negotiating acquisition details and finally, integrating the business into your company, things can get complicated.
That said, now is a prime time to consider acquisitions beyond U.S. borders.
Today’s domestic acquisition market is a seller’s paradise; investors are actively looking to put their money to work, which results in significant competition. In this seller’s market, even modestly attractive companies are fetching premium valuations from an unusually large buyer pool.
Moving beyond the United States for potential acquisitions may seem expensive. However, you can enter selected markets with potentially lower buyer competition, which could keep the purchase price in check.
If you’re considering an international acquisition, I encourage you to keep some of the following tips in mind:
1. Use time efficiently
Keeping momentum going throughout an acquisition is critical to closing the transaction.
This can be difficult when the buyer and seller are operating in different time zones. So be prompt in responding to requests or questions. Being slow could result in days going by before you get a response or support.
Weekly calls on the same day and at the same time can help to keep the deal on track. The window for talking with advisors and sellers in different time zones is small during the day, making it difficult to connect at unscheduled times.
2. Manage language differences and streamline communication
We use slang in emails and in our day-to-day communication with people here in the United States, and this can lead us to assume that everyone knows what our words really mean. Don’t make that assumption when communicating with parties to a potential international acquisition!
When speaking and/or writing to people in other countries, be sure to not use slang words and expressions, and do some research on what different terms mean in that particular country.
Language differences extend beyond words; they also include cultural norms and gestures. This is very important.
Consider that the age-old “A-OK” thumb-and-index finger hand gesture here in the United States means something entirely different in countries like Brazil — specifically, a more forceful and provocative request to “go jump in the lake.”
Additionally, be clear in your questions and requests. Lack of clarity will result in requests for clarification flying back and forth between parties, which wastes time and energy, often engenders ill will and ultimately bogs down transactions.
3. Understand relevant industry and acquisition-specific terminology
Be familiar with different terminology used in other countries. What we view as standard merger and acquisition (M&A) terms here in the U.S. might mean nothing to someone in another country— or something entirely different.
In the United Kingdom, for example, accounts receivable are referred to as trade debtors; revenue/sales are referred to as turnover; and a letter of intent is referred to as heads of agreement.
4. Build an appropriate advisory team
Having a domestic M&A advisory team is a good start, but do they have international experience? Are they targeted to the industry and location?
When you begin researching potential targets, have your experienced advisory team in place. Timing and experience can be everything in M&A.
You will likely need foreign advisors to supplement your domestic advisory team. Research advisors in your target countries. In many cases, your local advisors will be connected to their international counterparts.
With international acquisitions, every stage of the transaction takes longer because of the issues raised in the earlier points. But even when such transactions may seem unrealistic given the obstacles, international acquisitions offer a different — and potentially fruitful — avenue to grow your business, provided you plan appropriately and execute tactically.
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