Before the transition begins, one of the most critical factors is establishing mutual trust and understanding between all parties involved. Proper due diligence also dramatically impacts the quality of the valuation. The post-transition process depends not only on the quality of the plan, but on its execution. Once a determination about the right strategy has been reached, it is vital to make sure that everyone involved acts accordingly.
Why a Lack of Transparent Communication May Cost a European M&A Deal
Each consideration is unified by the same core principle: transparent communication. Especially in a European M&A deal, transparent communication doesn't just mean the difference between success and failure. Without it, an M&A deal may be DOA.
Poor communication at the start spells uncertainty in a local/foreign landscape during a time when businesses cannot not afford it. All elements at play should be understood by all involved parties for the deal to happen without complications; if one party doesn’t have a full grasp on union memberships, it is unknowingly exposed to collective bargaining agreement liabilities. If one party doesn’t offer transparent communication concerning a high-risk workforce, it may not provide the full picture to the other party to account for factors like manual labor or other dangerous activities required by that specific business or industry. There are also a number of inward-facing risks that each party needs to deal with, too, particularly concerning stakeholders.
Bringing All Parties Together to Ensure the Smoothest European M&A Deal
According to one recent study, clear communication may be one of the only things that all parties agree is important during this fragile times. Ninety-five percent of investors said that clear communication about a deal is hugely important; 93% of employees said that they expected to be kept up to date about transaction news; and the same was true for 88% of customers and 85% of regulators.
Essentially, getting the most accurate, actionable information out to these core groups as quickly as possible is a way to ensure that decision makers have all the information needed to make clear, confident decisions. Failing to share integral information with key actors who need it the most does more than just degrade their ability to play their role in: it erodes their essential sense of trust in the entire European M&A deal. For an organization that is already going through the delicate process of expanding internationally, it could just make it impossible.
Go into Your European M&A Deal with an Experienced Partner
The often complex M&A process should serve as an important reminder of how critical it can be to have the right partner by your side during this process. A partner organization well versed in the finer points of global mergers and acquisitions can focus on many essential elements (like payroll) on your behalf, allowing you to focus on core tasks that truly require the maximum amount of your attention.
Velocity Global utilizes its global infrastructure to support organizations during the M&A process, including carve-outs and additional global transactions. Using our International PEO (Professional Employer Organization) solution, our expansion experts assist with hiring and onboarding in your new market—and with no need for a legal entity.
With a global infrastructure spanning more than 185 countries, Velocity Global can help ensure local compliance, help with closing transactions quickly, and—especially—provide transparent communication throughout the entire process, virtually anywhere.
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