Four Notable Factors
By Jim Zipursky, Principal
Omaha Office, Corporate Finance Associates
CFA has been active closing numerous
cross-border transactions over the past 10 years. "Closing a deal with a buyer or seller in your own country is difficult enough," said Armand-Louis Weisheimer, Chairman of the
International Corporate Finance Group (of which CFA is a founding member), "but getting a deal done with a buyer or seller from a foreign country who speaks a different language and
lives seven time zones away is even more challenging."
What are the biggest challenges of selling your business to a buyer outside of the USA? The following, non-inclusive list of challenges is based upon our experience working with buyers
and sellers on cross-border transactions.
Just because it plays in Peoria does not mean it plays in Paris or Prague. The way we conduct business in the USA is much different than other countries. Many people outside the USA
think Americans work too many hours and talk about business too much. A typical business lunch with Europeans involves little discussion of business and usually includes a bottle of
wine or two. Even table manners are quite different: at a lunch meeting with our buyer clients from Europe, the owners of a business in the USA were amused as they watched their
European counterparts eating their pizza with a knife and fork.
We Americans are spoiled. English has become the language of the business world. We assume everyone around the table speaks English. While most business people outside the USA speak
English, they do not always understand American English nor are they conversant with most American colloquialisms. In a recent negotiation with our European buyer-client and American
seller, the seller's attorney said of our offer, "That dog don't hunt!" You can only imagine baffled stares on our clients' faces as they asked me to translate. Never assume those
around you completely understand what you are saying when English is not their first language.
Buyers from outside the USA are pleasantly surprised by our employment laws and practices; there is no such thing as at will employment in Europe. At the same time, they are terrified
of our litigation-happy society and blanch at our maze of regulatory requirements regarding employment. Buyers outside the US cannot believe how little vacation time is offered to
American employees; 4 weeks annual vacation time plus 15 federal holidays per year is the approximate standard in countries outside the USA.
Buyers from outside the USA, especially those in Europe, are dumbstruck by the level of personal expenses many US business owners charge to their businesses. "Charging personal
expenses, even if business related, to your business is simply not done in Europe," said Weisheimer, "Auditors in the various countries search for these things. For example, in France,
we are not allowed to turn in expenses for business meetings held on a Sunday because we are prohibited
by law from conducting business on Sunday." Furthermore, buyers outside the USA are often confused by the complexity of federal, state, county and municipal tax laws, as well as the
challenge of dealing with multiple states each with their own, often conflicting, tax regulations.
The challenges to getting a cross-border deal are myriad and include more than this list. However, with the globalization of business and the lack of strength of the US dollar
vis-à-vis other currencies, there has never been a better time for a US-based company to consider an offer from a buyer outside the US. But remember to mind your manners and to be
cognizant of the customs of others from different cultures.
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