Things to consider in a cross-border sale, merger or acquisition

What to think about when contemplating a cross-border transaction

According to Boston Consulting Group’s 2025 M&A report, approximately 30% of global M&A (by value) consists of cross-border deals. As member firms of the Cognos International Corporate Finance network, we always consider the appropriateness of overseas counterparties when setting the strategy for a transaction process and frequently approach overseas parties, even when the ultimate deal ends up being concluded domestically.

What, then, defines whether a deal is likely to appeal to overseas acquirers or investors, and what should vendors and their advisers think about in making approaches to overseas parties?

What kind of buyer are you looking for?

Overseas Trade Buyers

Most cross-border M&A relates to trade buyers. Trade buyers are often operating in the same or adjacent markets. For a vendor this means that an overseas buyer should easily understand the product or service they are delivering and will potentially see synergistic value in the acquisition of a new territory, potentially with additional benefits in terms of staff talent, complementary product sets and a geo-political/currency hedge. If, therefore, a vendor is seeking a full exit in the short term to a buyer who understands their business and is likely to leave their operations broadly intact; an overseas trade buyer is an obvious option.

Overseas Private Equity

If a vendor is seeking a full or partial exit to private equity then it is also worth considering overseas private equity. In this instance cross-border equity appetite is generally confined either to larger transactions or niche sectors where investors are explicitly mandated to seek global opportunities. For example, there are a number of overseas funds specifically looking for life science investments; these funds almost always have a global focus. By the same token we have recently seen US private equity funds show an interest in primary investment in UK and European Assets where those assets are of a reasonable size and/or offer the opportunity for an international buy and build strategy.

How big is your business?

There is an undeniable correlation the world over between scale and value. This is true in domestic deal dynamics and even more so in intra-country deal dynamics. If acquiring a business is risky, then acquiring one that is geographically remote from Head Office and in an unfamiliar jurisdiction and trading environment is even more risky. The mitigation to this is frequently that the target business is sufficient substantial both to be independently resilient and to “move the dial” in terms of the buyers’ own value metrics. How big is big enough will depend on the sector and the geographies involved, but getting overseas buyers to pay attention to sub-scale or undifferentiated businesses even within their own market can be very challenging.

Are you selling what they are buying?

It is important to intelligently research buyers, whether domestic or overseas. However, when your information deck will be landing on the desk of someone whose native language is not yours, it is more than normally important to ensure that you have fully researched their M&A history and any stated corporate development strategy and contextualised your opportunity within that strategy in clear, concise language.

Most M&A worldwide is conducted in English but that does not mean that the M&A executive in large corporates speaks English as their first language, and it will be important to hit the right buttons early if you are to attract the right attention. Using the right words to grab their attention is probably a case-by-case piece of work and not something that will be effective if done generically.

Is your process flexible enough for patience?

In our experience, the involvement of interested parties from overseas in disposal or fund-raising processes can materially impact timescale. Where US and UK buyers and investors will often react very quickly to an opportunity they are interested in, other cultures may not be pressured into a response simply because your process requires one. The Japanese for example will frequently simply decline to participate in an “auction” process, considering it critical to build trust with a potential acquisition’s team before entering any financial discussion.

Oftentimes overseas buyers will have complex ownership structures or will have to “sell” the opportunity internally and foster consensus before being able to enter a bidding process. Even the signing of a non-disclosure agreement subject to the laws of an overseas jurisdiction is likely to involve a few days of wrangling with a legal department.

Where the “best” buyers are overseas, it is wise to create a staggered process, building to a point where everyone with serious motivation is brought to a slow boil at the same time. Otherwise potentially serious buyers will be left behind by an unduly aggressive process.

Is the presentation of your financial data unduly “localised”?

International Financial Reporting Standards have helped somewhat with the alignment of financial information within M&A processes but there is still material scope for misunderstanding which often only comes to light once a headline price has been struck and exclusivity granted.

Different countries can take very different views of such things as revenue recognition policies, the treatment of tax incentives, lease accounting, capitalisation of development costs, valuation of stock and provisioning. While it is entirely appropriate to present financial information under the generally accepted accounting practices of your own country, it is also well worth understanding how potential counterparties might take a different view, particularly where the divergence is potentially material.

Do you have advisers who can help you avoid misunderstandings?

One of the biggest risks to the successful outcome of a deal with an overseas buyer is the erosion of trust. This erosion can often be inadvertent and the result of misunderstandings or miscommunications arising from different customs, practices, interpretations of language or figures and a failure of both parties to understand what normal looks like for their prospective buyer/vendor.

A classic example is the difference between a standard UK Share Purchase Agreement and a US one. In the US it is conventional to have both indemnified warranties and to expect a “general” indemnity which translates into a holding back of consideration, “just in case”. Both things would typically be anathema to a UK vendor for whom warranties are subject to a legal claim for damages and where indemnities are expected to relate to specific identified and quantified risks. Unless the broad principles on which the deal is to be done, as well as the legal jurisdiction to which it is to be subject, are discussed and agreed reasonably early, both parties will think they are being entirely reasonable and yet there will be a financial and legal gulf between them. Good advisers with experience of both jurisdictions will be able to anticipate and avoid these misunderstandings and so ensure that the principals to the deal continue to build a strong relationship.

Comparing an overseas deal with a domestic one.

Once the marketing process is well advanced and it is time to consider offers, it is self-evidently more challenging to compare multiple overseas offers than to compare offers from a range of domestic buyers or investors. While advisers can guide bidders to formulate offers on a reasonably consistent basis and using whatever currency is most appropriate, the language and assumptions will reflect a variety of cultures, standard deal structures and legislative requirements.

It is critical to understand precisely what an offer means before either starting to negotiate it or thinking about accepting it. While the debt free/cash free principle is familiar the world over, the definition of debt might not be consistent (see above) and provisions relating to founder time commitments, access to management, any incentive plans for staff, tax issues (for the company) and due diligence requirement must be unpicked and clarified. If elements of the consideration are to be deferred or earned-out then the basis on which they will be paid, by which entity and in which currency are worth clarifying early on and ensuring that there is a meeting of minds on the principles if not the specific mechanics. In terms of private equity transactions approaches to management incentives, the degree of openness about fund structuring and clarity about future reporting lines is likely to vary. While many cross border deals go ahead and are successful, there is more to unpick and clarify before progressing.

In conclusion, there is no doubt that overseas buyers and investors are worthy of exploration in many proposed exit or investment processes. However there is a reason that only 30% of completed deals are with an overseas counterparty. There is more complexity to processes, more risk of misunderstanding and more to decode/clarify in an overseas deal. It is therefore important that this is understood fully before embarking on a deal process and that advisers are experienced in international transactions and navigating this complexity.

A network like Cognos gives its member firms the support of teams on the ground and embedded in the culture of business around the world, smoothing the paths of our clients and assuring positive outcomes.

Please get in touch if you’d like expert in-market M&A advice for your business.