Buying a business based in another country is a fast and exciting way to expand internationally. Over the next few months, we will be delving into different international expansion strategies. But out of all the various international expansion strategies, buying an overseas company is perhaps one of the most direct routes to getting up and running in a new country – and so as good an option as any to get the ball rolling.
How can buying a business overseas help you to expand internationally?
When you purchase a foreign business you are buying access to a new marketplace. Following an acquisition, you are likely to take over an established business, with a recognised brand and some loyal customers. You will also have suppliers established from the outset and, from a rules and regulations standpoint, the local authorities will often continue to regard you as a local business.
Anyone well-versed in buying foreign businesses will tell you that language is, perhaps, the most important factor affecting whether a takeover deal is a success or not. If you are trying to buy a company in a country that does not speak English, it’s vital that you, as an individual, try to learn the language – to build positive relations if nothing more.
However, when it comes to the paperwork, it pays to be working with the very best translation services team, such as the experts here at Bubbles. In fact, working with the right translation experts will help you to beat off rival bidders with just as much nous as a local buyer.
Overcoming the challenges of buying a company overseas
There are a number of challenges involved that you need to be well aware of before taking the plunge and buying a business based overseas. Let’s look at these in a little more depth.
Consider buying a distressed business
Just because a business is struggling doesn’t mean that you could not turn it around; buying a distressed business could be a good tactic for some companies. If you find a business resembling one you already run successfully in the UK, but that has a flaw such as poor management or poor cash flow, you may be able to grab a bargain before breathing new life into the operation.
Look for synergies
If you already run a business, buying a similar business that you can run alongside your current operation can generate synergies that can translate into cost-savings and efficiencies. This is about finding the right bolt-on operation that will add to your current company rather than involve investing in an entirely new business strategy.
Opt for a business in a familiar industry
For anyone buying an existing business, having expertise and experience in the industry is a major plus-point, if not an essential.
Carry out a thorough review of your target’s financial records
With the help of translation services, if the business is based in a non-English-speaking country, you will be able to access and analyse the company’s financial records. Establish whether the business has large debts, what their turnover and profit is and how reliable their cashflow is.
This process not only helps you to identify any problems but can also help you to focus on areas that may need attention once you complete the purchase.
Meet the owners
Remember, building relationships with sellers will help to create rapport. Meeting the sellers face to face and seeing the business in the flesh can help to minimise the risk of buying a damp squib of a business.
For an overseas business, you’ll need native speakers and translators on hand to help you work through any language barriers in documents and perhaps interpreters for meetings.
Understand the culture
Understanding the culture of a target business is vital when considering an acquisition. This is the case when buying in the UK, but is even more pertinent when buying overseas. Translation services are, of course, an essential part of this process, but even if the company is based in an English-speaking country or operated in English, our localisation experts can help you to grasp the cultural nuances of the business you are interested in.
The country’s culture will play a part in how the business and, vitally, its employees and employment laws operate. If you don’t feel that you can adopt the same working culture, this might not be the best option for you.
Undertaking due diligence
Finally, we can’t talk about acquisitions without mentioning due diligence; perhaps the best way to mitigate the risks involved with buying any business, particularly one based in another country. The use of effective translation services is essential at this stage. Your due diligence should check the following, but this list is not exclusive:
- Strategic fit
- Taxes
- Litigation
- Corporate structure
- Assets
- Intellectual property
- Contracts
To sum up, providing you have great translation experts onboard, buying an overseas business can be a fast track to international expansion for an ambitious business person.
It’s advisable not to underestimate the differences between working cultures in various countries and do everything you can to avoid missing out on personal connections with sellers just because you can’t share a few words in their language.
If your marketplace is global, now could be a great time to speak to Bubbles about reaching across borders
