Companies commonly expand into other countries via a merger or acquisition of an existing company in that country. In this article, we explain what mergers and acquisitions are, and when they might be useful during international expansion. We also explain why using the services of a Professional Employer Organization (‘PEO’) might be a crucial part of your international expansion strategy.
What are Mergers and Acquisitions?
A merger means the joining of two companies, creating one new company. An acquisition is the takeover of one company by another. In all cases, the goal of mergers and acquisitions (or ‘M&A’), is to improve profitability or reduce risk in some way. Specifically, the reasons for M&A might include (but are not limited to):
Cross-Border M&A ranked by Sectors
Summary: M&As can have many different purposes. In all cases, the company seeking the merger or acquisition considers that this will aid profitability, or risk for the company in some way.
Mergers and Acquisitions and International Expansion
Often your entry to the global marketplace, is motivated by wishing to expand your existing enterprise into a new territory. There are various different ways in which this can be carried out, including incorporating a new company, a joint venture, or a PEO.
However, sometimes you may wish to expand by merging with, or acquiring, an existing company in another country: Many of the reasons for M&A will also coincide with the reasons that you have to expand your existing business into another country. For example:
Once you have decided that M&A is the right move for your business, you then need to determine what the best way of achieving that is. We set out further below how using a PEO can be an important part of the is M&A strategy.
Summary: An M&A may be a crucial part of your international expansion strategy where your expansion does not involve setting up an entirely new business in the target country.
Volume growth for cross-border M&A
What Is the Role of a PEO?
An International PEO is an organization that uses a co-employment model to hire workers on behalf of your company.
The PEO is the ‘employer of record’, and is legally responsible for the employment relationship and related compliance matters. At the same time, your business maintains day-to-day oversight of the employees and has the services or the employees completely at the disposal of the business.
While the exact services offered by PEOs can differ, the best PEOs takes responsibility for:
Summary: As well as employer of record services, many PEOs provide a range of associated business, legal, and compliance services to support international expansion.
What Are the Benefits of a PEO for a Merger or Acquisition?
There are benefits to using the services of a PEO as part of your merger and acquisition strategy. These benefits include:
Summary: A PEO can be of benefit at various different stages of M&A.
Mergers and acquisitions are often an important part of your international expansion. Instead of starting an entirely new business in another country, you can secure the benefits of acquiring or merging with an existing company.
In many cases, using the services of a Professional Employer Organization (‘PEO’) is a useful component of your merger and acquisition strategy.
Note, not all PEOs will provide all of the services outlined above. At New Horizons Global Partners we provide the full complement of professional services you may need for M&A as part of an international expansion. We can provide assistance in the merger or acquisition itself, and ongoing PEO solutions to be the ’employer of record’ for your employees in the newly acquired or merged entity.
Find out more about our tailored mergers and acquisitions support here.