Accelerating International Expansion and Growth Through Mergers & Acquisitions

The use of mergers and acquisitions (M&A) to accelerate growth is a well-established business strategy, and offers a company the potential to enter new markets, access top talent and reduce costs. By merging with or acquiring another firm, a business can often achieve these goals more quickly and easily than with a solo expansion. These are not automatic outcomes however, and sometimes an M&A deal will not deliver as expected or can bring more complexity than anticipated.

Go to the profile of Tim Burgess
Sep 12, 2018
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The use of mergers and acquisitions (M&A) to accelerate growth is a well-established business strategy, and offers a company the potential to enter new markets, access top talent and reduce costs.  By merging with or acquiring another firm, a business can often achieve these goals more quickly and easily than with a solo expansion.  These are not automatic outcomes however, and sometimes an M&A deal will not deliver as expected or can bring more complexity than anticipated.

This uncertainty is multiplied when an M&A takes place across international borders, and a company finds itself entering a new and unfamiliar market.  While there can be significant opportunities, there is also a new level of risk for the emerging multinational company. 

Nonetheless, some of the immediate benefits of expanding through an international acquisition include:

  • An existing team already in place in the new market with valuable experience
  • Established business infrastructure and facilities
  • Confirmed regulatory approvals
  • Developed relationships with customers and suppliers

These advantages are often the reasons behind a planned M&A deal, and it can appear deceptively simple to step in and take over an ongoing enterprise.  But, there are multiple steps involved to make an acquisition a long-term success in a foreign market.

Opportunities

It is the business opportunities that often spur an acquisition, where another company’s success can be leveraged across borders.  The buyer is essentially moving into the acquired company’s established market niche and region, and combining both companies resources and talent.

Diversification

In some M&A, the acquired company may have a distinct product or service line that allows the buyer to quickly diversify and compliment their current portfolio.  In some cases, that may have been the primary motivation for the M&A deal, to give the buyer access to a distinct service or technology in a new global region.

Presence in New Markets

The most obvious opportunity in international M&A is the ability to quickly enter a foreign market where a company may not have had a previous presence.  The acquired company has paved the way and already have brand recognition and goodwill in the country, both of which form a large part of the target company’s asset value.  It would take years to achieve this in a straight expansion, which is part of what makes the cost of an acquisition worth the investment.

Access to New Talent

Because the management and employees of the acquired company are usually part of the asset sale, there is an immediate impact in having a new talent pool with experience in the foreign market.  Instead of having to recruit and hire new employees, or assign existing staff, the buyer now has a human resource asset at their disposal that are already working.

For this reason, it is crucial that there a be careful management of all employees involved in M&A, to ensure that they remain in their positions and will perform as expected.

Risks

Even with the advantages and opportunities that M&A bring, the risks cannot be overlooked when entering the market of a foreign country.  Unless a company has gone through the process before, they may be surprised at the number of new challenges they will be facing internationally...read more

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Go to the profile of Tim Burgess

Tim Burgess

Director, Shield GEO Services Ltd

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