Cross-border mergers and acquisitions present significant legal challenges for private companies looking to expand internationally. These deals often face delays and complications because each country has business laws and regulations. Knowing these risks early for companies based in Irvine looking to buy foreign businesses can mean the difference between a successful deal and a costly mistake.
The basics of international M&A risks
Mergers and acquisitions, or buying a company across borders, involve dealing with two or more sets of laws simultaneously. For example, a deal between an Irvine-based company and a German firm must follow both U.S. and EU rules. This includes everything from employee treatment to data handling.
Key risks to watch out for
Before diving into specific risks, it’s important to note that each country has its own set of rules that can affect your deal:
- Government approvals: Many countries require special permits for foreign buyers, especially in key industries like tech or healthcare.
- Worker protection laws: Each country has different rules about laying off workers or changing their benefits.
- Tax rules: International deals often trigger special tax events that can change the deal’s value.
- Brand and patent rights: Countries protect intellectual property differently, which can affect your rights to use certain technologies.
- Financial reporting: Different countries use different accounting methods, which can hide problems in the target company’s books.
These risks can make or break a deal, so addressing them early in the process is crucial.
How to protect your interests
The best defense against these risks starts with proper planning:
- Get local experts in both countries before beginning talks.
- Create a clear timeline that includes all needed government approvals.
- Review all contracts and rights in both countries.
- Set up a strong team to handle worker concerns.
- Plan for tax impacts well before closing.
A well-planned approach helps avoid costly surprises later.
When dealing with cross-border M&A risks, having the right legal team makes all the difference. An experienced business law firm can help spot potential issues before they become real problems and help you with litigation should it happen.