This continues the article on entering overseas markets. Part 1
1. ACQUISITIONS: purchasing an existing company.
1) Established market
2) Skilled workers available (often not found through normal employee search)
3) Licenses are “grandfathered” in
5) Technology, clients, and vendors are instantly acquired
6) Negotiations usually take place on top level, target handles licensing and compliance
7) Instant branding
8) Reduction of competition
9) Increased knowledge base
1) Hidden surprises?
2) Which employees are politically connected, and with whom?
3) “Favors” and concessions are assumed
4) Bad will
5) Technology often outmoded, vendors usually chosen for reasons besides merit
6) In many nations, employment continuance becomes conditional for the deal
7) Branding often not part of HQ’s ideals
8) Often expensive, and time consuming to complete an acquisition
9) Blending of corporate cultures
10) Necessity to train local management, and HQ’s management
11) Potential tax and legal problems
Things to consider:
• Half the merged entities never achieve their projected financial and market goals.
• A merger may mean short-term cash, but not necessarily future stability.
• Existing business problems, synergy problems, staff problems
• Buying an overvalued company
• How should you finance the acquisition – cash or stock?
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