When you are about to sell your company, the decision to potentially sell to a foreign party as well is an important strategic consideration. The international takeover market offers significant opportunities, but it also presents several challenges.
What factors can play a role in the decision to include foreign parties in the sales process? This expert contribution outlines various opportunities and challenges.
Opportunities
Access to larger buyer pool
Once you have made the decision, together with an adviser, to sell a business, it can be advantageous if the adviser is part of an international organization with several foreign offices. You then have the opportunity to approach buyers from the international market locally.
Perhaps the most obvious advantage of this choice is that you will have immediate access to a larger buyer pool. This will increase the chances of finding a suitable buyer. Moreover, this may result in a higher sales price, given the increased competition among potential buyers.
Possibility of higher valuation
Moreover, international buyers who may not yet be active in the Dutch market may be willing to pay a premium for businesses that provide access to the new market for them. Moreover, it appears that international buyers generally, offer higher multiples than domestic buyers.
This is reflected in the table below taken from the Brookz Takeover Barometer. A seller selling his/her business to a foreign party often receives a higher price than if he/she were to sell the business to a Dutch party.
Improved brand awareness and market expansion.
Offering your company in the international market can also offer many opportunities when you want to reinvest or not sell your entire business directly. After all, working with a foreign party can lead to improved brand awareness and reputation in new markets.
It opens doors to new customers, which is valuable not only for sales, but also for future business growth and expansion.
Challenges
Cultural and business differences
The international sale of your company naturally involves a number of challenges. For example, cultural and business differences can be challenging. What is considered direct and efficient in one culture may be perceived as rude or aggressive in another.
These differences can prolong the process or even cause the transaction to fail due to miscommunication or misunderstandings. It is therefore important to partner with an experienced adviser with extensive knowledge and experience in international transactions when making an international sale.
Complexity of transactions
In addition to cultural and business differences, there are of course differences between legal systems, tax regimes and regulations. For example, each country has its own set of laws and regulations regarding corporate sales, taxation, labor law, and data protection.
In addition, there may be differences in required documentation, approval processes, and due diligence requirements. Getting these issues in order can significantly lengthen the sales process.
Conclusion
Thus, selling your company to a foreign party presents both opportunities and challenges. The opportunity to gain immediate access to a larger buyer pool and a higher company valuation is contrasted with the complexity and length of the process.
It is therefore important to think carefully about the decision to offer your company on international acquisition markets. Thus, the help of an adviser with its own branches abroad can help in finding the right partner.
