Two Businesspeople Walking Down Hall Overlooking Factory

Global cross-border merger and acquisition transactions continue to be robust despite political uncertainties. In this environment, research and due diligence are more important than ever.

Global expansion

Careful Planning Is the Key to Global M&A

  • Craig Arends
  • 1/29/2018

Global M&A volume in 2017 continued to grow year-on-year, totaling more than $1.5 trillion for first three quarters of 2017, with more than 40 percent of the transactions being cross-border. Many signals point to this pace continuing in 2018, particularly in the United States.

However, the wild card is the extent to which political events in the United States and around the world will result in increased protectionism or other upheavals in areas such as taxation, regulation, and finance. So far, the deal markets appear largely unfazed, and rising U.S. equity valuations provide plenty of dry powder for stock deals.

It is difficult to predict what will happen in 2018 with the Trump administration continuing to develop its focus, the U.K. inching toward Brexit, and China’s mixed signals on outbound investment and capital movements. However, U.S. sellers and non-U.S. buyers are expected to remain interested in the opportunities presented by investment in the United States, and perhaps more so in a world where economic nationalism is on the rise.

Areas of focus for executives considering cross-border M&A

To be able to fully realize post-deal synergies and shareholder value, executives should focus on due diligence, planning, and execution when developing and implementing integration and sequencing plans.

Due diligence

Know your countries — Collect all company data and regulatory requirements to be able to make informed decisions.

Planning

Start early — Build local and regional teams early in the integration process (and begin planning before deal close) so that day one processes can run smoothly.

Emphasize speed to value — Develop a plan for efficient integration that emphasizes targeting synergies (financial, sales, employee) that can be realized quickly.

Execution

Manage centrally, implement locally — Develop a cohesive central governance structure but engage in-country teams to execute.

Expect roadblocks — Consider mitigation steps early and move quickly to help overcome hurdles when they are encountered.

As always in global M&A, the highs and lows for 2018 are likely to include many surprises. Sophisticated market participants will need to continually refine their strategies and tactics as the global and local environment develops. However, the rules of the road for successful M&A transactions remain well understood and eminently capable of being mastered by well-prepared and well-advised acquirers from all parts of the globe.

CLA can help you develop and execute an M&A plan and be your trusted transaction advisor towards a successful transition of ownership.

  • Craig Arends
  • Managing Principal of Industry
  • CLA Minneapolis