In the 20th century, international M&A activities were dominated by multinational corporations. However, in the last few decades, the number of strategic acquisitions has decreased and private joint stock companies are becoming leaders in this type of business. The global value of mergers and acquisitions reached $5.8 trillion in the first nine months of 2021, while interest in cross-border business and collaboration is growing. Europe is becoming the area with the highest growth and opportunities to activate mergers and acquisitions in the next few years, leading it to lead the US and Asia in the M&A sector.

Influence of external factors on the activity of mergers and acquisitions

Globalization of the market forces most companies to expand globally through "greenfield" investments or simply by buying an existing company in a foreign country through international acquisition. Many start-ups are in the expansion phase or are simply ready to take over other businesses. Foreign companies can benefit from a highly educated or cheap workforce, a shorter supply chain, lower service/production costs, expanding customer base or access to local financing and subsidies.

Different conditions in local markets may allow for cheaper deals or multiple arbitrations. From a sales perspective (i.e., a company looking for foreign buyers or investors), the rationale can be varied. Due to temporary situations in which certain industries find themselves, shareholders may sell their company to benefit from the high value recognized by potential acquirers. Family businesses may face succession problems that new ownership can solve, while loss-making businesses must make a decision to ensure survival. 

Risks of investing in new business

There are many good reasons for buyers and sellers to look for foreign targets or acquirers, but that doesn’t mean it’s easy to do at the same time. The cross-border buyer must be prepared for new approaches and risks. Any merger and acquisition activity may take longer than expected and as a result raise investments financially. This means that in addition to researching the usual goals of a particular company, the investor should consider the specific challenges of his international transaction, depending on the country in which the investment is made.

When it comes to sales, it can be difficult to find foreign buyers, especially if they are not direct competitors of the company. Identifying possible downloads is also not the only problem. The seller should attract acquirers in accordance with the culture and business practices of the recipient, while supporting a reasonable valuation.

When is the best time for a merger and acquisition activity?

The seller makes a successful sale when he gets the highest possible estimate, when the deal is completed as soon as possible, confidentiality is strictly guaranteed and when guarantees are issued, and post-closure risks are minimized.

Whether you are buying or selling, working with an M&A advisor, especially one with a local presence, can be extremely helpful in increasing your chances of completing a fast and successful business. The Merger and Acquisition Advisor is one of the many types of consultants involved in the business, but the role it plays is crucial throughout the process. In this case, the M&A advisors are there to provide their clients with relevant analyzes and expert answers throughout the process and to monitor certain activities, ensuring that they work together, according to a clear and successful agreement. Grant Thornton experts are highly qualified and trained for every type of merger and acquisition, including foreign ones. Contact us with confidence!

Izvor podataka: TOUCHPOINT