Cross-Border M&A: What U.S. Sellers Should Know
In this video, Kirk Michie shares what founders should know when dealing with non-U.S. buyers in an M&A transaction. From CFIUS review to legal structure concerns, understanding the nuances of a cross-border sale is key to avoiding surprises and securing a strong deal.
Cross-Border M&A: What Founders Should Know About Selling to a Non-U.S. Buyer
When a non-U.S. buyer expresses interest in acquiring your company, it’s important to understand the added layers of complexity that come with cross-border transactions. Selling to an international buyer can open the door to broader opportunities, but it also brings regulatory, legal, and structural issues that don’t always show up in domestic deals.
Here are a few key points founders should be aware of:
1. Regulatory Review May Apply
Transactions involving foreign buyers may trigger a review by CFIUS (Committee on Foreign Investment in the United States). This is especially relevant if your business deals with sensitive data, technology, or infrastructure. The review isn’t automatic in every case, but it can delay or change the structure of the deal.
2. Corporate Structure Limitations
Certain entity types in the U.S., such as S-Corps, come with restrictions on foreign ownership. If your business is structured as an S-Corp or LLC, you’ll want to explore whether the buyer can legally hold equity—or if a conversion or new structure is required. These changes can have tax and governance implications that need to be addressed before closing.
3. Understand Currency and Legal Nuance
Beyond converting euros or other currencies into dollars, there may be unfamiliar legal practices or documentation standards depending on the buyer’s home country. Make sure your legal team has handled international deals before, or bring in someone who has. A seasoned M&A attorney can spot and solve issues before they become deal breakers.
4. Align on Expectations Early
International buyers may have different ways of evaluating companies, running diligence, or setting closing timelines. Misaligned expectations can create friction, so it’s smart to clarify early what both sides are looking for.
5. Don’t Limit the Buyer Pool
A global search can lead to the best possible outcome, especially for companies with niche products or services. But if a cross-border buyer enters the picture, don’t go it alone. Make sure your advisors understand the complexity of these deals and have experience navigating them.
Cross-border M&A can be highly successful if handled with care. Having the right advisors and taking a measured approach helps reduce surprises—and keeps your deal on track.
