Expansion into foreign markets is a great development opportunity for many companies, but it is also often fraught with high risks. Therefore, when acquiring a foreign company, additional factors that do not have such significance in the case of domestic transactions should be considered.
The consideration and development of an international expansion plan that will take into account in particular financial and legal risks as well as business and transaction risks is of particular importance. The definition and distribution of these risks is often different than in domestic transactions. Such a plan or strategy provides the companies with the information they need to make effective business decisions.
When finalizing cross-border acquisitions, five key elements need to be considered that will determine the success of the project:
- language skills and cultural differences,
- appropriate identification and analysis of the subject and industry,
- legal and regulatory environment in the given country,
- understanding of the mechanisms that shape the ultimate purchase price of an entity,
- knowledge and understanding of differences in accounting principles and estimation of potential impact of the exchange rate risk.
More useful information can be found in the article 5 things to consider before completing an international acquisition by Greg Naviloff of RSM US, on page: http://rsmus.com/what-we-do/services/transaction-advisory/5-things-to-consider-before-completing-an-international-acquisition.html. We encourage you to read the article.