Cross-border mergers and acquisitions and similar corporate transactions were an uncommon occurrence even in the not-too-distant past. The 1974 merger between the UK’s Unilever and US-based National Starch & Chemical was the first major transatlantic merger of its kind in 45 years.
But today, cross-border M&A transactions are an everyday occurrence in the increasingly connected global business world. In a new article for Chief Executive magazine, Womble Bond Dickinson attorney Melinda Davis Lux explores the reasons why cross-border M&A has exploded in the past 25 years. Davis Lux regularly advises international clients in such deals, working with attorneys in many different jurisdictions.
She identifies three significant factors that have led the way to increased global M&A activity:
1. A common business language. “When working on international deals, it is incredibly easy to reach out to partner firms across the world – whether in Asia, South America, or Europe, and to find attorneys who are accustomed to working with US companies and transacting business in English,” Davis Lux writes. Multi-lingual international attorneys often serve as the facilitators for local business executives and their American counterparts in deals involving US businesses, and their English-language skills are essential to making deals flow smoothly.
2. The rise of near instant communication technology. Email and conference calls, in particular, allow highly complex deals involving attorneys and businesses in multiple countries to stay on track. Davis Lux talks about a recent transaction she worked on, in which an email chain involved parties in Germany, India, Romania, the UK and the US. “Without emailing, the complexities and time-constraints of coordinating deals among multiple companies in different countries would have been deeply challenging,” she writes.
3. Greatly mitigated risk. Similarly, the mobility of information and people has made due diligence far more practical to conduct in complex cross-border deals. With this increased access to due diligence, companies are much more willing to engage in cross-border transactions. “Moreover, money now flows almost instantaneously,” Davis Lux writes. “As long as planning occurs to place funds in bank accounts in relevant jurisdictions and currencies, closings can occur in multiple countries with certainty that fund flows can be initiated and confirmed as received same-day, if not within hours.
Click here to read “Three Transformations That Expanded Cross-Border M&A Opportunity” in Chief Executive magazine.
In 2018, Davis Lux also authored an article on “Knowing When Not To Pursue A Merger” for Chief Executive.
Melinda Davis Lux provides guidance on sophisticated merger, acquisition, and joint venture transactions. She has exceptional depth of experience working for global companies and with cross border M&A transactions, particularly in Europe, South America, and Asia.