How to Handle Global M&A

Executing global M&A deals presents unique and rewarding challenges. Success in these ventures requires a deep understanding of the cultural, economic, and political contexts of the target market. So, how can one address these deals strategically? In this article, Pablo von Siebenthal, Global Head of M&A at Swissport, talks about how to handle global M&A.

“You’ll always be surprised with new deals. Nothing will prepare you for new situations in unfamiliar countries, but your experience in adapting and anticipating complexities helps. This gives you the confidence that, while you'll be surprised, you won't be overwhelmed.” – Pablo von Siebenthal

Challenges of executing global M&A deals

Having done deals in more than 20 countries, Pablo notes that surprises are inevitable, especially when managing situations where your counterpart's cultural context is different from your own. Your experience in adapting and anticipating complexities can give you the confidence to navigate these challenges without feeling overwhelmed. 

Pablo shares that the first step in preparing for a global deal is to understand the counterparty's situation and brainstorm to anticipate as many of the complexities or challenges as possible. This involves: 

• Identifying the ultimate decision-maker
• Understanding the economic and political context that the business owner operates in
• Assessing the negotiation team's language skills and experience in M&A
• Determining the type of entity involved (private equity, government, corporation, or family-owned)

Managing cultural differences in global M&A

In managing a global M&A deal, no situation is the same as the previous one. However, there are patterns that, over many years in cross-border M&A, help you anticipate reactions to certain statements or actions. 

USA

For example, Pablo points out that in US deals, it's easy to initiate conversations about potential company sales compared to other markets. Discussions can begin effortlessly, with a positive and constructive atmosphere. People are generally open, responsive, and quick to engage.

Latin America

In contrast, in Latin America, building relationships and trust are paramount before progressing to substantive negotiations. Confidentiality and trust barriers often complicate early-stage discussions and data sharing, leading to more intricate negotiations around non-compete and non-solicitation clauses. 

Middle East

Negotiations in the Middle East are often more emotional and confrontational than in other regions like Asia. To achieve positive outcomes, it's essential to adapt by being assertive and understanding the role dynamics within the negotiation team.

Asia

In Asia, relationships and trust-building are paramount. For instance, in Japan, careful alignment within the negotiating team and respecting hierarchy are crucial to obtaining meaningful feedback and advancing negotiations. In China, building personal relationships through social activities is vital. In negotiations, they are open to revisiting previously agreed points without negative implications.

Europe

In countries like France and Germany, there's a strong preference for conducting negotiations and drafting contracts in their native languages. 

Pablo emphasizes that to achieve positive outcomes in global M&A deals, M&A professionals must be culturally aware and adaptable, understanding regional differences to build successful business relationships.

Overcoming cultural misunderstandings

Maintaining cohesion and openness among diverse groups is challenging, especially regarding negotiations. Be aware that misunderstandings could occur. The first step to overcoming cultural misunderstandings is to know the entire organization and have access to people. 

Be aware of the differences in communicating these issues and understand cultural nuances to interpret responses correctly. It’s best practice to use local lawyers or advisors to bridge language and cultural gaps. In-person meetings are just as important to build trust more effectively. Use these frequent check-ins to align positions, compare notes, and ensure mutual understanding.

Building global relationships for pipeline

When building a pipeline, robust relationships with potential sellers are crucial. Pablo shares a strategic tiered approach to creating these relationships:

1. Understand key targets - Find important companies you want to connect with and learn about their history with your company.
2. In-person meetings - Prioritize important targets and make time to visit them in person. It can be in conferences or local meetings.
3. Involve top leaders - Get your CEO, CFO, and other top leaders involved in meeting potential targets. Their support is crucial to secure deals.
4. Use local teams - Rely on your local, regional, and country teams to build and maintain relationships. They often know key players better. Use your internal network to get introductions to key contacts.
5. Keep in touch regularly - Video calls are a great tool for keeping in touch, but in-person meetings are irreplaceable for building trust. 
6. Build personal connections - Build strong relationships by discussing common interests, not just deals. Be friendly and approachable.
7. Do your research - Learn about the social and business context of the target’s country. Talk to colleagues who have experience there and ask for references and advice when entering new markets.
8. Avoid judgment and be observant - Enter meetings quietly, observe, learn, and listen before making statements or defining your position.

How to manage coordination between global workstreams

M&A projects always compete for management attention and resources with other projects and organic growth opportunities. It’s key to have a focused approach to what's important, and M&A teams play a huge role in that. They serve as the glue, coordinating various roles and opinions. Pablo highlights that creating checklists also helps people focus on what they need to understand.

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