Successful middle-market mergers and acquisitions (M&A) require a multi-faceted approach that can differ significantly from multi-billion-dollar transactions. At the most fundamental level, every M&A deal always involves a combination of financial, strategic, legal and operational expertise. But in international transactions, the value of cross-border middle-market experts are critical because the needs are often much more specific. Interpersonal expertise, local market knowledge, and cultural integration, for example, are far more critical concerns.
By ignoring the differentiating factors—especially the personal and foreign dynamics involved in cross-border M&A—the opportunities for long-term success are uncertain at best. Which is where Globalscope comes in.
Although there are many advantages of working with a global network of middle-market M&A experts, there are four key reasons why buyers and sellers alike need the expertise of a network like Globalscope. In the cross-border middle-market space in particular, all stakeholders need deep capabilities in:
- Local Legal and Regulatory Expertise
- Communication and Change Management
- Cultural Integration
- And personal needs and priorities.
Local Legal and Regulatory Expertise in Cross-Border Transactions
In reality, there is no such thing as a global market. There are only local markets that operate in an international arena. The norms that work in one country are often dramatically different from what is common in another.
In middle-market cross-border transactions, this is a particularly critical issue. You’re usually working with two-to-three markets at the most. So, the need to understand the legal and regulatory requirements for each specific market is usually more in-depth than what you’ll find in multinational transactions on an enterprise scale. With the Globalscope model, the approach is to provide you with the expertise and experience you need in each specific region per se—not a generic strategy with tip-of-the iceberg market compliance.
Communication and Change Management
It’s hard enough to manage communication and change-management issues in a domestic M&A process, but when different countries, different languages, and different cultural backgrounds are involved, the challenge is considerably more daunting—and much more important.
No two cultures are exactly alike, and as anyone who has worked with a foreign partner can tell you, it’s not uncommon to think both of you are on the same wavelength, only to find a couple of weeks later that neither one of you understood what the other was saying at the time. The scenario is even more challenging if foreign languages are involved.
In multi-billion-dollar cross-border transactions, individual cultural missteps are less damaging, simply because inadvertent cultural mistakes in a single region don’t damage the transaction as a whole, and they can be corrected over time. But when the work is between one country (or even region) and another, part of the advisor’s charge is to protect the client against cultural mistakes that can literally scuttle the deal. That’s why a network like Globalscope is so important in a cross-border middle-market scenario. The M&A team includes native experts on both sides of the transaction, each of which brings years of experience and local market knowledge to the table.
Integrating the different cultures as seamlessly as possible is a major priority in cross-border transactions. Just as no two counties’ cultures are exactly alike, neither are those of two different businesses. In fact, cultural integration is always a priority regardless of the size of the deal, but in the M&A space, the challenges are usually much more granular and specific. How do the cultural norms of each entity in general differ between the buyer and seller? What potential biases or cultural traditions must each stakeholder understand? Are there existing practices that could offend one of the parties unintentionally? How do the rules for management hierarchies differ from country to country?
The list of potential pitfalls is long, but with on-the-ground expertise on both sides of the coin, integrating disparate cultures is much easier—and far less risky—from the very beginning.
Personal Needs and Priorities
The personal aspects of the transaction are by far the biggest differentiator between middle-market deals and large-scale multinational mergers. More often than not, middle-market deals are either made between at least one privately held business and another, a company that has been owned by a single family or a closely knit group of shareholders for years, if not decades. What does or does not happen to the previous owners’ interests is always a central concern.
Again, the Globalscope model is designed to address the personal needs of all parties involved from the very beginning. This requires a positive chemistry with and among the financial advisors who must demonstrate legitimate concern for the people they’re dealing with. In the end, corporations don’t sell businesses. People do. And Globalscope is designed to optimize the business and personal outcomes that are both needed to maximize success.
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John Sloan is president and CEO of Sloan Capital, LLC based in Dallas, Texas, USA. He specializes in selling, buying and financing businesses on behalf of privately owned companies. Learn more at sloancapitalllc.com.