Is Cross-Border M&A Right For Your Business?

Cross-border mergers and acquisitions can be a powerful strategy for accelerating your company's growth, mainly if you've found yourself in a position where your success has reached a plateau. Your company can benefit from a transaction that takes you into a new global market in several ways. And if you own a technology company, the opportunities are enormous right now, with the tech sector expected to see the highest growth in inbound cross-border M&A in 2024, mainly due to the artificial intelligence boom. 

For the first quarter of 2024, total global M&A volumes climbed 30% to reach $755.1 billion, according to Dealogic. According to a survey by Statista, 98% of CEOs plan to engage in strategic transactions this year. That number is up from a whopping 89% in 2023. Many CEOs plan to employ cross-border M&As to achieve their global expansion goals. 

Cross-border M&A can open up new opportunities for your business and even save time and money over other, less impactful growth strategies. By finding the right market overseas, you can expand in a region by joining forces with a company with an established customer base. It can be a relatively simple way to gain new customers and generate growth if properly executed. Smaller countries can be ideal markets for companies looking to expand because they are far less saturated with competitors and newer innovations. 

Is cross-border M&A right for your business? Let's look at some ways your company could benefit from moving into a new region through a merger or acquisition. 

The Need to Diversify 

Cross-border M&A is a significant option to mix up your offering of specific products or services. Gaining new technologies or innovations can create new revenue streams and breathe new life into those you already have. When you can scale up, you can also expedite time to market, mitigate competition, and gain access and brand recognition. By doing so, you can expand your business's market share and, in turn, its bottom line. This all becomes more important as our world sees rapidly increasing globalization. 

The Tax Benefits 

By pursuing a cross-border M&A deal, you could unearth some new tax advantages for your business. Some governments offer tax breaks following a merger or acquisition. More tax perks can be found by adding international revenue streams or even relocating your business's headquarters. Tax laws vary by country, so you may want to enlist the guidance of an M & A expert so that you can avoid making a wrong and ultimately costly move. 

The Distribution Aspect 

Cross-border M&A is an incredibly effective tool for expanding your distribution network. It is much easier than launching into new markets without the instant benefits of a merger or acquisition. You do not have to spend money on building new facilities if you can snap up existing ones. By gaining access to new distribution channels, you can reach customers in new regions, which is valuable for your business if it offers niche products or services in high demand in certain areas but with limited reach. 

The Talent Factor 

By merging with or acquiring another business, you instantly gain new talent for your company, which can be hugely beneficial if you need help finding key talent in your home country. It can also be a much more resourceful way to save time and money because you do not have to train new employees. However, it would help if you carefully made the right moves with your cross-border deal. It is common for a transaction to end poorly because you need to prepare a proper retention strategy and maintain clear communication throughout the process. You will want your new team members to be excited about the latest changes and feel positive for them rather than having them jump ship simply because they need clarification about what the process means for them and their futures. High morale goes a long way in building a company that continues to thrive. 

The Cost Savings 

Building new facilities in another country costs money. So does hiring and training new employees. A cross-border M & A strategy can be much less expensive when expanding your business into new markets than building from the ground up. Depending on the country you grow in, it can also be a money-saving factor because it may be cheaper than your home country regarding real estate, taxes, materials, wages, and other factors. 

The Financial Component  

Cross-border M&A transactions can bring growth for both parties involved in the deal. When you pool the incomes of both companies, you ultimately gain more financial power through the increase in the generated overall revenue. And when you gain more financial control, you gain more influence over customers and make life much more difficult for your competitors. 

The Intellectual Property Advantage 

As global markets become more innovative across industries, merging with or acquiring a foreign company that has already patented technology can be a massive competitive advantage for your business. By adding tech-driven firms or IP assets, your company can quickly boost your research and development efforts, strengthen your product portfolios, and keep a leg up on competitors. This strategy is key for sectors that rely on technological advancements and innovation as key drivers of success. 

The Difference, an M&A Expert, Makes 

As you can see, cross-border M&A offers many advantages for a growing business, but it can be easy to make a costly mistake if you need to know what you're doing. It's a tedious process with its share of pitfalls, and one wrong move can pose a severe blow to your company. So, when considering a move into a new country, get the planning process done right. If you enlist the guidance of a cross-border M&A expert, you can have peace of mind throughout the process. Remember that the due diligence process for a cross-border deal is much more involved than a domestic M&A deal. You will face a slew of difficulties, including tax issues, antitrust rules, product labeling changes, and even challenges inherent to cultural differences. But if you have the right M&A expert in your corner, you can enjoy a successful deal and a prosperous future for your business.  

Ready to Make a Move? 

If you are considering expanding your company to a new region, now is a great time to get the ball rolling. Please contact our M&A experts at Benchmark International at your earliest convenience to discuss how we can help you achieve the best deal possible.