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 (often as a foreign subsidiary), 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:
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. With an ability to hire almost anywhere in the world, an international or global PEO is a useful mechanism for building a global team. 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: