Cross Border Tuck-ins

I have complete a number of cross-border deals both as an operator and investor (in Canada, Ireland, India, and China) and pursued deals in a number of other European countries.  Most were on the buy side but a few I was on the board of the selling entities.

Some observations:
  • More difficult to execute because of the added complexity
    • Different laws and regulatory requirements
    • GAAP does not equal U.S. GAAP
    • Different nomenclature and jargon (for a trivial example, in the U.K. a term sheet is called the Head of Terms)
    • Consume more time and transaction costs
  • Cultural and geographic differences 
    • Negotiating style differences (in a few cases blunter than in the U.S. but in many cases less blunt)
    • Potentially language differences, if not in the deal documents but in the diligence materials
    • Distance and time zone differences make it harder to deepen relationships quickly
  • Typically you have two law firms (your incumbent M&A law firm and a local firm in the geography).  In addition, you retain local due diligence service providers (or at least local affiliates or offices of international firms).

  • Frequently, while sourcing transactions you experience very different views on expectations and value-driven by the local IT economy.   I helped execute a tuck-in deal in Ireland in 2000 at the peak of the Celtic Tiger era.  I liked to say the Irish believed it was their destiny to dominate and pillage (in a business sense) all of Europe.  To be honest, they were well-positioned while the boom lasted (great talent from across the EU, access to multi-lingual resources, culturally welcomed across Europe, and reasonable salaries and rent compared to London).  Similarly, I helped execute two tuck-ins of India based companies in 2004 and 2006.  Just like the Irish, the Indian IT economy was booming but in this case because of outsourcing.  I liked to say the Indian firms thought it was their destiny to dominate and pillage (again in a business sense) the world.  Frankly, it was exhilarating and fun to be partnering with folks with that much ambition and energy.  I loved visiting both geographies.
  • Several of my transactions have been home runs in that they fundamentally because they ended up being crucial to the business model and growth of the company.   While I don't have enough data to statistically confirm a common thread on the home run transactions, in multiple cases the leader was a U.S. ex-pat or a native leader who was educated and worked in the US.


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