Introduction to Cross-Border M&A
Mergers and acquisitions (M&A) are a great opportunity for companies whose growth potential exceeds their ability to acquire more market share organically. However, M&A is a complicated process and should not be undertaken lightly.
In 2020, M&A activity slowed down around the world, primarily due to the COVID-19 pandemic. As companies regain their footing, M&A activity is picking back up. This is especially true of cross-border M&A.
What Are Cross-Border M&A?
Cross-border M&A are similar to domestic M&A, but can be far more complicated. In most countries, a foreign company cannot directly acquire a local business. Instead, it must first establish a legal entity in the target country in order to consummate the transaction.
Cross-border M&A are the boldest of many ways to expand business internationally. Although these transactions carry additional risk, they can yield rewarding results if managed correctly.
Cross-border M&A are a global phenomenon, but it is extremely popular in countries with a history of economic liberality. This is why Europe is ideal for cross-border M&A.
The Impact of Covid-19 and Brexit on Inbound M&A Activity in the Benelux
After Brexit, companies whose European operations were weighted heavily toward the UK are naturally looking to expand their operations beyond the borders of Britain. Increasingly, companies in this situation are focusing their attention on the Benelux region (Belgium, the Netherlands, and Luxemburg). This region’s promising investment climate has established it as an exceptional point of entry for businesses wishing to expand into Europe.
The Benelux‘ strategic location enables businesses to thrive. It is a vibrant and forward-thinking market that has shown resilience even during the pandemic. The numbers speak for themselves: based on research conducted by Cap Expand Partners, in the first half of 2021, strategic acquirers based outside the UK and Europe targeted 42% more Benelux companies for their M&A transactions than in the previous year.
Apart from showing resilience and potential for growth, the Benelux offers some of the world’s best railways, airports, commercial ports, and road networks, providing efficient access to the rest of Europe. The region’s political environment is business-friendly, and actively promotes entrepreneurship and innovation. This infrastructure is further supported by prestigious universities and educational institutions that result in a highly skilled, English-speaking workforce. Additionally, the Benelux offers favorable tax regulations to non-EU countries.
The Benelux has established itself as an attractive foothold for a growing list of global companies seeking to expand into Europe. This is especially true in the aftermath of Brexit, with the UK removed from its traditional role as an entryway to Europe and economic uncertainty still looming over much of the continent. Its stability and commitment to international trade lead us to believe that the Benelux region will remain attractive for M&A activity, and we expect to see current M&A trends continue over the coming years.
The global market is full of opportunities, but the process of expanding outside your home country can be daunting. Cap Expand Partners have the experience and expertise in navigating international M&A transactions from start to finish to help you capitalize on new markets.