Cross-border mergers are one of the most effective ways to take your company to the next level of business. With such a deal, you can enter new markets, attract more customers, or increase your assets. However, this method of business development should be used with caution, as it is a bit different from the usual transactions within the same market sector. Learn about the specifics of cross-border deals and why are cross-border deals more difficult.
What are the specifics of cross-border mergers and acquisitions?
Cross-border deals seem at first glance to be a little different from the usual domestic transactions. There are some common features between them, but in fact, these processes require a different approach to their implementation. The essence of cross-border mergers is to expand and increase the assets of a company by acquiring structural parts that are located in another country. This means that the company not only increases its assets but also enters new markets. Not surprisingly, many businesses find cross-border mergers to be the most profitable way to expand opportunities for their company.
Cross-border deals have several characteristics, including:
- Expansion of the company beyond national borders;
- This merger results in a new legal entity with an individual name and statute;
- The new company is governed by the laws of the country where it is headquartered, and the individual structural parts that are located in another country must comply with the laws of the country where they are located.
The popularity of cross-border mergers is increasing with the globalization of the world economy, which proves their advisability for the stability of the company and expanding its sphere of influence.
Features of cross-border mergers and the use of VDR service
Cross-border mergers require more careful preparation than mergers within the national economy. In order to ensure a positive outcome of the transaction, it is necessary to:
- To draw up a plan for the future transaction. To be sure that the entire merger or acquisition transaction goes well, you need to prepare a plan in advance. In this way, you can divide the complex process into several stages, each of which is much easier to monitor than the entire transaction at once. In addition, this way you will be more confident that you haven’t missed anything.
- Conduct thorough due diligence. This involves checking the documents of two different companies, which will later become one whole. To do this, gather all the necessary documents in one place – such as a remote file storage facility – and allow the parties to access it, which will save time and effort to review all the documentation.
- Prepare a post-merger plan. This won’t just be a plan – it will be a practical guide to how the company will evolve through the transition. In the case of a cross-border merger, such a plan should take into account the specifics of the company’s operations in different countries and take into account different legal regulations, as well as employee reorganization needs in multiple countries.
- Prepare accounting and tax reports. These will be useful for due diligence and will also help prepare the basis of the new company’s operations. An analysis of all assets should be done, and a new corporate budget should be formed, keeping in mind the specifics of the company’s transnational operations.
It should not be forgotten that for cross-border mergers, it is necessary to choose the right time, in order to get as much benefit as possible. Mergers consultants, whose services are recommended, can help you choose the right moment.