Joining with another entity is a complicated and delicate process, whether you are acquiring, being acquired, or merging with the other company. The process becomes more complex when a company in one country merges with, acquires or is acquired by a company in another country.
At different times, inbound or outbound merger and acquisitions–or both–may be more common or popular in certain areas of the world. At present, for example, companies in India and China are particularly active in international mergers and acquisitions.
Inbound and Outbound Mergers and Acquisitions
Mergers and acquisitions generally are a narrow niche in business law, with a significant level of knowledge required. Inbound and outbound mergers and acquisitions require an even more unique knowledge base. Some considerations common to international mergers and acquisitions include:
- The impact of governmental regulations at all levels, such as licensing, employment law, taxation, and subject-matter regulation
- The potential difficulty of complying with the laws of both countries at all stages
- The obstacles to integration posed by differing cultures and languages
- The risks of inadvertently waiving attorney-client privilege
- National security concerns and attendant restrictions
- Barriers to due diligence in differing legal and cultural environments
- Restriction of markets or the conduct of certain types of business in some countries
- Coordination of intellectual property rights
In short, there is a lot to think about. Significant due diligence is required, but may be more difficult to achieve than is typical in a domestic mergers and acquisitions situation. Of course, the complex requirements, necessity of understanding, and adapting to a separate set of laws and potential for conflicts creates significant pitfalls for the both companies.
A qualified, experienced inbound / outbound mergers and acquisitions attorney can help ensure that you have thoroughly considered all relevant factors, understand the legal requirements associated with your proposed transaction, follow procedures appropriately, and do not overlook local, state or federal regulations, tax structures or other obligations.
What are Inbound and Outbound Mergers and Acquisitions?
Inbound and outbound mergers and acquisitions are simply cross-border mergers and acquisitions. All international mergers are both inbound and outbound mergers–the characterization depends on which party’s perspective you are viewing the transaction from.
Inbound Mergers and Acquisitions
As the plain language may make clear, an inbound merger or acquisition is a transaction in which a foreign company merges with or acquires a domestic company. When the inbound company is in the United States and is being acquired by or is merging with a foreign company, both companies will benefit from experienced legal guidance, particularly in the arena of compliance with the Securities and Exchange Commission (SEC) requirements and other government regulations.
At the same time, however, the U.S. government offers incentives for foreign investment in U.S. companies.
Outbound Mergers and Acquisitions
In an outbound merger or acquisition, a domestic company purchases or merges with one in another country. A U.S. company entering into an outbound merger or acquiring a foreign company will require significant guidance with regard to legal and compliance issues in the other country, as well as any restrictions, reporting requirements or other regulation the U.S. government places on pre-merger interactions.
Depending upon the target country, U.S. businesses seeking to merge with or acquire a foreign company may face significant obstacles in the conduct of due diligence.
Work With Knowledgeable Professionals for a Successful Inbound or Outbound Merger
Mergers and acquisitions generally require a great deal of support and guidance, and not just from attorneys. Those needs are similar, but perhaps even broader and more compelling when a cross-border merger or acquisition is involved. Some other professionals who may be involved in a successful international merger or acquisition include:
- Financial Consultants
- Valuation Experts
Experienced International Mergers and Acquisitions Attorneys
The cross-border mergers and acquisitions attorneys in our firm understand the complexity of this type of transaction and the importance of playing by the rules in both countries: both the strict regulatory requirements associated with mergers and acquisitions and the cultural expectations that can significantly impact the success or failure of the relationship.
We are accustomed to working closely with other professionals like those listed above to put together everything you need to move forward with an inbound or outbound merger or acquisition.Whether you are a seasoned international investor entering into a new market or are just considering your first cross-border transaction, we are here to help. Contact KPPB LAW for more information.