Cross-border M&A 101 - Where to start?
Hopefully this post can pick up some interest and help the younger bankers of today and or those who currently have no cross-border M&A experience.
This post is about the differences between EU, U.K. or U.S. national transactions, and international, cross-border M&A transactions.
For everyone’s comfort I’ve searched on WSO for prior info on cross border transactions and there’s little to no information on how these transactions are different - hopefully this post can fill that gap.
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POST BEGINS
I’m lateraling from a regional boutique in the U.K. to a top specialist that’s heavily involved in cross-border M&A.
I have the CISI Lvl 3 and have done 4/5 MM-UMM deals in the UK, but have yet come face to face with a cross border transaction.
Obviously answers to the following questions will differ depending on the country or continent you’re covering, so feel free to mention where your experience is from in your answer.
Can those with experience of cross-border M&A:
- Recommend/share any resources or websites that provide relevant information for cross-border M&A (reason for asking is over the last couple of weeks I’ve struggled to find really good info on this, most are very high level and provide no real detail).
- Outline how these transactions are different to regional/national M&A. I.e
i) what differing regulatory bodies become party in the transaction.
ii) what stages of the transaction are different and or are most influenced by the cross-border nature.
iii) How currency conversions are dealt with, both in models and in transaction…hedging/futures?
iv) How much more work comes across your desk as a result of the extra tax planning/regulatory work/completion mechanisms…obviously lots of this is outsourced but from experience this can influence analyst/asso work too.
- Provide any anecdotes or tips for cross-border M&A in general…. or more specifically how to adapt to your first cross-border transaction, including any horror stories of time zone differences…
- Explain/comment on how you an An/Asso and your MD think about these transactions differently. Including what ‘red flags’ might arise in a cross-border transaction as opposed to a more vanilla transaction.
Any accounts you can provide of interesting transactions wuold be appreciated too.
Cheers all,
congrats on Ardea
Nice try
b
Lawyers deal with the cross-border aspects (regulatory, employment, antitrust, tax structuring), so there's little difference in the type of financial analysis you do beyond some valuation aspects to consider (country risk premium, inflation adjustments, and FX exchange).
Appreciate the comment.
Country risk premium is interesting, can see why it increases cost of cap... How does this work with typical acquisition premium for the sector, I assume this lay on top of average bid premium I.e. they’re combined?
Just had a Quick Look online for inflation adjustments in M&A and can’t see much - what work do you actually have to do for inflation adjustments, what calculations are these based off?
And FX conversion, is this just as simple as applying conversion rates at the end of the typical valuation work, or is there something more? Cheers
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