Navigating the Global M&A Landscape: The Surge in Cross Border Transactions
Cross border transactions have risen tremendously in the M&A sphere in recent years as a way for companies to gain access to new markets. Many U.S. companies are setting their sights on foreign targets, and by the end of 2023, cross border M&A transactions had increased to an estimated $779 billion. As interest rates begin to see a slight cooldown and supply chain disruptions decrease, the rise in cross border deals is inevitable.
International transactions require strong partnerships to pull off a successful deal. As a business leader, it’s important to understand how to successfully navigate international deals with an experienced partner. Here, we’ll share our insights on cross border M&A transactions, weigh the risks and the benefits, and also give you some recommendations on building a successful partnership to conduct these deals.
The Risks and Rewards of Cross Border M&A Transactions
There are certain factors you must consider before embarking on an international deal. One of the most important considerations is the political stability of the foreign target. Any kind of political upheaval can be seen as a risk, which is why many U.S. companies are now setting their sights on investments in stable countries in Europe and in Canada and quickly withdrawing from Russia.
Tax laws and other country regulations could also be a risk. For example, post-pandemic, China experienced strict lockdown measures, as well as rising political tensions. As a result, there was a significant decrease in U.S. private equity and venture capital investments, from $28.92 billion to $7.02 billion. It’s important to conduct your due diligence to ensure that you won’t get held up by costly bureaucratic regulations in your target’s country.
Despite these risks, cross border M&A transactions still pose significant advantages. In addition to portfolio diversification, international transactions lead to access to new talent and the acquisition of profitable intellectual property. Growth in new markets is another key advantage, as well as adding to existing production capacities or product technology, which could help you gain a competitive edge. Scalability is an essential consideration for every deal and cross border transactions allow for unmitigated growth. In order to take full advantage of these opportunities, however, partnering with a local expert is imperative.
The Importance of Local Expertise
With the growth of international transactions, local expertise and partnerships are essential. A local M&A advisory firm, like MelCap Partners, is well-versed in tax regulations, industry restrictions, or other country-specific laws, and can help you navigate your cross border transaction.
MelCap Partners has a key competitive advantage in our partnership with Globalscope, a robust network of 55 international M&A firms. Globalscope International M&A Advisors is a partnership of a leading group of corporate finance and business advisors working around the globe to support both domestic and international transactions. The founder of MelCap Partners, Al Melchiorre, is currently on the Board and serves as Globalscope’s Head of Sectors.
With this strategic partnership, we have access to more than 400 investment bankers around the world, on nearly every continent, all of whom can help provide personalized support for your business. We have provided custom solutions to numerous businesses throughout the world and this partnership echoes our commitment to maintaining relationships with our clients. MelCap Partners is also proud to be recently recognized as Globalscope’s Spring 2024 Most Active Member. Our dedication to supporting our clients, both domestically and abroad, is unparalleled.
To showcase our success with cross border transactions, let’s turn to an example. Kids Works Creative Learning Centers, headquartered in Ohio, provides comprehensive childcare services to both infants and toddlers, as well as school age children. In 2023, MelCap Partners fostered the acquisition of Kid Works by BrightPath Early Learning. Headquartered in Canada, BrightPath Early Learning is a division of Busy Bees, the largest childcare provider in Ireland, Malaysia, Singapore, and the United Kingdom. Our comprehensive support allowed for the successful sale of this company, and MelCap was even honored with the Global M&A Network’s American Deal of the Year for our outstanding work.
Connect with us today to learn more about our cross border M&A capabilities.
