Many business experts predicted that the number of mergers and acquisitions (M&A) taking place would begin to slow in the wake of the EU referendum.
However, the Brexit vote doesn’t seem to have taken too heavy a toll on cross border M&A, with the UK already overseeing around 54 inbound deals worth $38 billion (£29 billion) since the result was announced, according to Fox Business.
As the UK continues to represent an attractive target for overseas investors, Bubbles considers the importance of language on the success of such complex international transactions.
Why All the Focus on Due Diligence?
Language plays a vital role in every stage of a business acquisition, but the due diligence process often requires the most input from language specialists.
Due diligence protects both buyers and sellers during an acquisition. It reduces the risk of legal difficulties during and post-acquisition. It ensures that the buyer has all the information they need to make an informed decision regarding the purchase.
Due diligence can take a number of months and generally involves intense analysis, particularly in the case of large businesses with an international presence. Ultimately, the process should answer the question of whether the business should be purchased, and if so, how the transaction should be structured and how much should be paid.
Among the areas under scrutiny will be finance, intellectual property, customers, employee issues, and compliance with the law both in the target business’ current hub country and the hub country of the proposed purchaser.
Language and the Due Diligence Process
The complexity of the due diligence process makes it essential for everyone to be able to communicate effectively in a language they feel confident with, but this can be difficult where the parties in question don’t share a common language.
As a result, professional translation plays a vital role in M&A, and multilingual due diligence is becoming a common concept in a modern world based around international business. The amount of translation required is dependent on the transaction taking place, but along with the due diligence documentation, other important documents that often need to be localised include the sale and purchase agreement, any government approvals, finance and banking material, contracts relating to the ownership of key assets and annual accounts.
The quantity and costs of translation are variable as no two deals will be the same. But there are a number of common factors that will influence just how much material will need to be translated in a merger or acquisition.
The political and economic situation of any countries involved in the deal will be a key factor here, particularly when it comes to meeting government requirements and regulations, these issues will dictate much of the due diligence process, and in more complicated settings can require significant translation service to ensure all parties involved adhere to relevant legislation.
Global or Local?
How the translation process is approached is dependent on whether the acquirer or investors are using global accounting and legal firms to broker the deal, or relying on local professionals. The use of local professionals can help to bypass some of the political and economic factors mentioned above, which are often better understood by local firms. However, global firms may be more likely to employ multilingual advisors, a factor which could help to keep tighter control over the deal process.
Translation isn’t just about the words on the page, it’s the meaning and implications that they carry too. Mergers and acquisitions are complex at the best of times, so ensuring that there are no crossed wires is essential during a cross-border deal. Making sure everyone involved has a clear understanding all of the related documents, will keep things as fast and efficient as possible, and could help avoid some seriously expensive problems further down the line.
Bubbles has translators with strong business backgrounds in hundreds of global languages and markets. If you’re considering buying a business overseas, talk to us today about how we can keep everyone on the same page during the purchase process.
