International business involves a company’s production and trading activities that cross national borders. It also includes foreign trade transactions for non-profit goals.
Understanding a foreign culture is important to international business negotiation. This includes learning their etiquette, handshake firmness and more. It is also important to understand how their cultural methodology affects the way they approach negotiations.
Mergers and Acquisitions
Mergers and acquisitions are a common way for businesses to grow and expand. In some sectors, like health care and technology, a lack of funding can make competing against larger companies impossible without merging. A merger can also allow a business to gain economies of scale by purchasing equipment and supplies in bulk, cutting costs. However, the process can be complicated and require a great deal of time and resources. Companies can avoid problems and speed up the process by hiring local lawyers and accounting professionals who specialize in international transactions.
Cross-border M&A can be a good way for businesses to diversify their client base, boost their competitive advantage or gain access to new technologies. However, cultural factors can make or break an international M&A deal. This is why it is important to conduct thorough due diligence on any company you are considering acquiring. A failure to do so can lead to unexpected issues that arise after the sale.
Tender offers can be a lucrative way to invest in a business. However, you should only accept a tender offer that is based on a legitimate valuation of your company. You can determine a fair value by attending a tender offer information session or by consulting a financial advisor who specializes in valuing businesses.
Different cultures have different negotiation expectations and negotiating styles that can impact the outcome of an international business deal. Negotiation training is vitally important for negotiators who wish to successfully negotiate international business deals.
Logical coherence, consensus, protocol, information focus and limited offers are the most critical negotiation factors in a successful international business deal. However, the level of importance that each of these negotiating factors has in one culture varies from another. For example, eye contact is highly rated in Western cultures while it is a low priority in Thai culture. The differences in these negotiation aspects between two cultures can make it difficult for negotiators to achieve a satisfactory agreement.
Share Purchase Agreements
A share purchase agreement (abbreviated to SPA) is the final contract that defines the terms of the sale and purchase of shares in a company. It typically concludes a lengthy process of negotiations between parties and their corporate lawyers. It binds parties to actually proceed with the sale and transfer of ownership of the shares.
SPAs typically set out the specific number of shares being sold, whether they are voting or non-voting, and the price that is being paid for them. They also set out the various warranties and representations that are being made.
In a share deal, purchasers usually replace the existing owners of the company by buying their shares and so they take on the liabilities and obligations associated with the business. In contrast, with an asset deal the purchaser buys only the assets of the legal entity and does not take on its liabilities and obligations.
Joint ventures (JV) are an important tool for companies seeking to enter new markets. They can help to reduce financial demands on the parent company and to gain a foothold in local government contracts, raw material supplies or production facilities. However, in order to succeed, JVs need to have a well thought out plan. They must be committed to focusing on the long term success of the partnership rather than just immediate returns. This will require honesty, integrity and clear communication.
The most successful JVs share resources to achieve outcomes that would not be possible for either party alone. This can also lead to a reduction in the risks that are incurred by each participant. JV planners should be ruthlessly focused on prioritizing the most critical decisions that will deliver the highest value. They should also be prepared to adapt their plans to deal with unexpected events and changing market conditions. This will require a high level of trust and strong relationships between the parties, which can only be established through extensive and ongoing business and social interactions, such as management off-site events and regular, engaged board meetings.