Cross-Border M&A Planning

Every merger and acquisition requires extensive planning and preparation to ensure a successful integration. However, cross-border M&A planning often involves additional considerations and challenges.

When expanding into a foreign jurisdiction, companies must understand how various financial, political, and legal factors will impact the structure, objectives, and overall integration of the deal. Even seemingly-simple oversights can have disastrous consequences, including causing harm to the new company’s reputation.

Key Cross-Border M&A Considerations 

Every M&A is unique, but certain considerations are common to all mergers and acquisition transactions involving foreign jurisdictions. Below are some key financial, political, and legal factors to consider when implementing a cross-border M&A.

Tax Implications

Taxes are matters of local jurisdiction. As such, understanding the implications of tax differences among various jurisdictions is of critical importance to a positive cross-border M&A outcome. Far too many buyers rush through this process in an effort to close the deal quickly, but differences in corporate tax rules from country to country can dramatically impact the success of the integration.

Legal Structures

 Having the appropriate legal structures in place is also critical. M&A transactions can be structured as asset deals or stock deals, based on the acquirer’s objectives.

When it comes to cross-border deals, legal structure considerations vary by country. For example, many countries put restrictions on foreign ownership of certain industries, which may result in the need for an alternative approach. Furthermore, buyers should be familiar with local labor laws.  

Political Factors

If the cross-border integration will create significant changes to certain causes, politicians and various influence groups may take interest in the M&A. This is most common when large office closures or offshore job movements threaten the local economy.

How to Ensure a Successful Cross-Border M&A 

To increase the likelihood of success, key players involved in a cross-border integration should:

•      Determine individual roles and responsibilities;

•      Establish clear goals and objectives;

•      Determine organizational structure early in the process;

•      Establish policies, processes, and practices;

•      Understand the financial, legal, and political considerations of the integration;

•      Establish measurable factors of success;

•      Clarify all aspects of integration planning and governance;

•      Foster clear and proactive communication;

•      Determine how and when various levels of personnel will be included;

•      Effectively manage cultural differences;

•      Establish and adhere to proper budgeting and proper allocations of business investments and capital; and

•      Work with an M&A attorney with specific experience in cross-border integrations.

Proper cross-border M&A planning should begin during due diligence and must include a deep consideration of the financial, legal, and political implications of the transaction. In addition, strong leadership is absolutely critical to a favorable outcome in any cross-border M&A transaction.

How a Cross-Border M&A Lawyer Can Help

When it comes to any type of M&A, a solid, well-defined strategy is essential. An experienced M&A attorney can help you achieve your M&A goals in the most seamless, efficient manner possible.

At Parsus Law, our legal team has significant experience with all forms of M&A, including cross-border transactions. We can handle transactions covering multiple jurisdictions, quickly identifying different deal strategies and anticipating issues before they arise.

Contact Parsus Law Today

At Parsus Law, we advise U.S. companies that wish to expand overseas, as well as foreign companies seeking opportunities in the U.S. and abroad. From tax analysis and financing to intellectual property rights and employment matters, we guide clients through all aspects of cross-border M&A, including the most complex issues and transactions. Contact the M&A team at Parsus Law today to learn more.

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