One of the best opportunities for U.S. sellers is the vast overseas market of buyers. However, changing the old adage, "let the seller beware." Provided herein are the major hurdles for selling your firm to a non-U.S. buyer.
- Culture. Each country (and region withing that country) is distinct in terms of mores and values. Assuming ownership remains for more than a few months, can you adapt to their culture?
- Thy buyer's executives who manage your firm must be fluent in English and clearly understand our financial statements.
- How will the local and regional tax laws in country x affect your firm?
- Since the ultimate working capital computation is usually in dispute, how will the buyer's financial statement system impact the resolution?
- How can you "measure" the element of trust? Does one or more of the seller's employees get to reside at the non-U.S. corporate location?
- Quite often, sellers should prepare for a much longer due diligence process. Hopefully, this results in better exit pricing.
- Sellers should determine the economic stability of the buyer's country, especially if there are provisions in the purchase for installment payments and/or earnouts.
- We suggest that the buyout process set benchmarks at 60 day intervals to ensure the diligence and deal integration are closely tracked.
- How much emphasis or value is the buyer placing on the IP?
- How will the buyer treat common (same) or conflicting customers (serious competitors) of each firm? This one aspect of the deal could drastically change the deal pricing.