Just glancing at the mergers-and-acquisitions news this week, the word "global" jumps out.
for example, acquired
of the Philippines, seeking a stronger international presence. Analysts upgraded shares of
in anticipation of an alliance with Belgium-based
in the next few years, citing Anheuser-Busch's need to raise its global profile.
The fourth annual Global CEO Survey released by
PricewaterhouseCoopers this month found that mergers and acquisitions continue to be a key growth strategy for nearly 70% of private-company CEOs who are planning to acquire all or part of another company in the U.S. over the next two years.
But the study also found that 23% of private companies have completed a cross-border transaction this year or are planning to in the next 12 months, citing new markets as their primary motive.
"More and more, we see private companies looking to global markets for opportunities to expand their current business, or to outsource certain processes and functions," says Rich Calzaretta, national practice leader of PricewaterhouseCoopers' Private Company Services.
As companies face a weakening dollar and look for new ways to achieve growth while facing pricing challenges and aggressive competitors in the U.S., cross-border M&A is the way to go, says Fentress Seagroves, transactions services principal at PricewaterhouseCoopers Private Company Services, who has served as lead adviser on numerous private and corporate divestitures and acquisitions across a range of industries.
Cross-border transactions, he says, may be more effective than building a plant or starting a foreign branch, because your international partners already know their way around the culture and its various selling channels.
A Featherweight's Fighting Chance
"Globalization is touching everyone in the domestic marketplace," Seagroves adds, and smaller companies must find ways to grapple within the international marketplace. The word "merger" may not be in the vocabulary of small- or medium-sized companies, so they are becoming more creative, focusing instead on joint ventures and foreign alliances.
"As a small company, it comes down to rolling up your sleeves and making the extra effort, staying up late and being responsive all times of day and night," says Andrew Bleiman, director of marketing for
Dieselpoint, a seller of enterprise search and navigation software that has had considerable success in the worldwide marketplace.
Bleiman believes it is possible to compete globally with the larger players in the industry, but you have to spend significantly more on international marketing and publicity.
"Thanks to the Internet, we have tools that level the playing field," he says. Online
conferencing services and the company Web site make it easier for Dieselpoint to have a presence in countries where it doesn't have an international office.
"Any business that markets itself via a Web site can have a global market share," says Ken Gaebler, chairman and CEO of
Gaebler Ventures. He recommends concentrating on search-engine optimization with a focus on international search engines, and designing your Web site to be foreign-friendly, resolving any currency and payment-method issues.
Now You're Talking
For a small organization like Dieselpoint, employees with international backgrounds are that much more important, as everyone ends up sharing roles.
Bleiman has put multilingual programmer on an international sales call; at Dieselpoint, linguistic ability is a requirement instead of a perk when hiring.
According to the survey, post-merger integration is the third area where a majority (52%) of private-company respondents believe major improvement is required and knowledgeable management is tantamount to a smooth cultural transition.
"People who understand the
local marketplace are critical assets of transaction strategies," says Seagroves, because they cut integration time. Seagroves tells small businesses not to change hiring practices but to globalize them, with an emphasis on creating attractive incentive programs such as profit-sharing and promotion options.
It's also a good idea to set up internships with colleges or universities that have international business programs, advises Gene Fairbrother, the lead small-business consultant for the
National Association for the Self-Employed (NASE).
"More and more companies are looking at mergers, joint ventures and alliances as business processes, just like they would at developing a new product," says Seagroves. As M&A markets become more competitive and companies find themselves up against
private equity, the smaller players can't afford to wait for an opportunity -- they must be proactive to stay ahead of the global curve.
"It's a surprise to me how many small businesses avoid exporting as a strategy," Gaebler adds. While smaller businesses don't have the luxury to buy their way into foreign markets, they can still break in by doing their homework and finding worthwhile local partners.
In the past few years, in fact, many small business have started successfully exporting to countries in which they have no local presence, says Gabler, who recommends Canada's more familiar market as a jumping point for newbies.
Because dealing in a foreign country often involves a whole new set of tax regulations and legal issues, Fairbrother stresses the importance of having an alliance in your target country. He recommends working with the country's trade consulate and doing lots of research, taking trips and making endless phone calls.
"It's one of those things where who you know becomes very important," Fairbrother says.