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Business Exit Strategies

Practical tips for selling to an overseas buyer

Many of the deals we do have an international element. If you have a decent company, with a good position in the UK market, and its large enough for a cross border deal, overseas buyers may pay a premium in order to get access to the market. There are some practical points to consider if you're thinking about cross border M&A.

The timescales involved in the sale process will typically be longer. Some overseas buyers may have slow decision making processes, or for that matter will need time to book flights to come and visit the vendors.

A buyer which has already got some kind of foothold in the market will probably move faster than one for whom you might be the first acquisition.

Overseas buyers may have different expectations on the legalities of the deal. Hopefully they will appoint a decent UK lawyer to guide them. However sometimes their choice of lawyers can be unhelpful - we've seen huge City of London firms appointed where a decent regional practice would have been more appropriate, equally we've seen inappropriately small firms appointed just because they are a an internatinal network with the buyers lawyers. Then there are questions on what they expect re warranties and other key provisions. Many overseas buyers will expect to put some of the purchase consideration in escrow - this would be unusual for a UK buyer.

Overseas buyers need some flexibility in the auction process - bear in mind they have do deal with a different culture, legal jurisdication, and find the time to visit.

Tax laws may be different in the UK. We've had foreign buyers keen to make asset purchases - of course this is bad news for an entrepreneur who would not benefit from Entrepreneurs' Relief in a deal structured that way. Surprisingly we have even seen one north American buyer which was prepared to gross up the price to compensate the sellers for the tax disadvantage.

In short its well worth considering overseas buyers - but they need careful managing to deliver the best outcome.


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