How to sell your business internationally
Have you considered selling your business internationally? While there are lots of potential buyers in the UK, your company may achieve a better sale price if you sell to an overseas business.
The world’s economy has been interlinked for many years now, which means you have more options available. In fact figures show that more investments are made from overseas businesses for UK firms than from UK based firms.
The Office for National Statistics has reported that international companies invested £16.1 billion in buying UK companies in the first quarter of 2022! In contrast, UK businesses only spent £2.9 billion on acquiring other UK companies in the same quarter.
Whilst these figures include acquisitions of PLCs and large companies, with these figures in mind, it’s clear that selling your business internationally is worth considering.
What about Brexit?
While you may worry that Brexit has impacted your chances of selling internationally, the figures mentioned show that isn’t necessarily the case. In fact, many European companies continue to want to take advantage of what the UK can offer. As a result, many EU businesses remain interested in acquiring firms in the UK.
For example, free ports that are being set up around the UK are expected to “stimulate manufacturing activity and exports by removing the customs burdens associated with the storage and use of imported materials”, according to Bloomberg.
The lower valued pound being seen at present also makes UK companies more attractive to overseas businesses.
What to consider when selling
If you’re thinking of selling your business internationally, then you need to be aware of a number of areas. We are experts at overseas business sales, so we can help you. But it’s always worth gaining an understanding the dynamics in international deals before you make the decision.
- Culture differences
Think of the last time you went on holiday abroad – the culture of the locals will have been different to those of the UK’s. It sounds obvious, but cultural differences mean selling your business overseas will be different to selling at home.
Knowing when there is a chance you could insult a potential buyer will make the difference between selling or losing the sale of your company. Keeping a good working relationship is essential.
Legal and regulatory requirements overseas may impact how quickly the sale is achieved. Also, understanding local holidays and other events can impact on the timing of your sale.
If your potential buyer is at the other side of the world, then the process can slow down due to you being at work while the interested party is sleeping. Understanding this will help alleviate any frustrations.
- Pricing structures
There are many different structures when it comes to pricing your business. For example, fixed pricing arrangements are more likely in Europe than the UK or US.
Different jurisdictions mean that there can be differences to buyer deposits and earn-outs or retentions. Also, the price of your business transaction will attract different levels of taxation for your potential buyer than if they were buying a native business.
Be aware of these pricing structures so there are no unwanted surprises.
- Acquisition documents
Each country has its own legal document requirements to ensure the acquisition of a business. There will a requirement to have the correct documents in place to ensure a smooth transition. For example, US buyers will use documents that have more indemnity and warranty requirements than the UK.
You will also need to both decide which governing law and jurisdiction you will use to determine the format of documents. This is also essential because of the different liabilities in each country when acquiring businesses. Clearly you will need to push for the contracts to be subject to the law of England and Wales, so that any disputes post sale can be dealt with locally here in the UK.
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Article updated 21st October 2022