Are Cross Border Deals Dead?

On this episode of The Legal Zone, managing attorney Regina Campbell, of The Campbell Law Group, PA, discusses the importance of cross border deals as borders start opening up. If you conduct trade across borders, this is a must-see podcast!

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In Episode 7 of Season 1 of The Legal Zone, attorney Regina M. Campbell, of The Campbell Law Group, discusses importance of cross border deals as borders start opening up.

The Campbell Law Group P.A. while representing clients whether in civil, corporate, commercial, employment, or family law matters, our company’s primary goal is first to help clients minimize the need for unnecessary litigation and conflict where possible.

Contact us by calling our office at (305) 460-0145 or emailing us at service@thecampbelllawgroup.com.

Transcript

0:10

Hi, I'm Regina Campbell, the managing attorney here at the Campbell law group.

0:16

And I want to welcome everyone back for the seventh episode season one of the legal zone.

0:21

Hopefully they've been really helpful and I hope you enjoy today's topic.

0:25

Today's topic.

0:26

We're going to talk about our cross border deals.

0:30

and this is a particularly a timely issue to talk about, because just recently the United

0:34

States opened up the borders more for international travel November 8th, and it's believed that

0:39

it's going to create you know, bring back the business investors or bring back some

0:43

of the sort of entrepreneurs and potential increase the deal and flow.

0:47

So to speak of what's going on across the borders.

0:50

But interestingly enough we do think it's going to have that effect, but interesting enough,

0:55

it actually, the first quarter.

0:57

2021, England.

0:58

The third quarter has been a seller year for M and A transactions.

1:02

Surprisingly cross border ones, specifically, according to Bloomberg, by the way specifically

1:08

the United States is one of the top requires as usual UK.

1:12

We have Canada also, Japan.

1:14

So it definitely seems that cross border deals are far from being dead.

1:19

And if anything, I think they're only going to increase now with the opening of some of

1:23

the borders and the reduction of the pandemic is affect right now.

1:28

And some of the countries are kind of loosening up.

1:30

Of course, there are some countries that are experiencing more surges than others.

1:34

This is anticipated, hopefully that it's going to be diminished as time goes on and each

1:39

country starts to get more access to vaccines. which brings us to the overall importance

1:45

of cross board deals and why they're happening.

1:47

This pandemic has certainly caught me off guard.

1:49

I would've thought we were heading towards a, you know, kind of a meltdown like in 2008,

1:54

2009, but this pandemic really has been a re adaptation of new companies.

1:59

Unfortunately, some have.

2:01

You know, gone, gone under and, and not done well, others have thrived, but this has definitely

2:06

been a, a tale of what companies can adapt and are innovative and the use of technology

2:11

to adjust to the circumstances and the changing in the consumer markets, in addition to the

2:16

consumer to commercial markets.

2:18

So.

2:19

With the opening, you know, November 8th of basically some international travelers, it

2:25

is going to allow not just international travelers to come here, but of course, Americans are

2:29

traveling more now that there is more vaccination and as more clarity in some of the rules and

2:34

the different countries and so forth as far as vaccination and who can come in and not.

2:38

I think also one of the other pressures that this country is going to see, and it's probably

2:42

going to increase the need for cross border deals or potentially to, you know, to find

2:46

synergies across the across the ocean.

2:49

So to speak is going to be talent.

2:51

Talent acquisition.

2:54

As everyone knows, there's a great re resignation occurring in the United States right now.

2:58

And it's leading towards of course, a shift in employees looking for the types of jobs,

3:04

reskilling themselves, which overall I think in the long term is going to be Give the United

3:09

States a boost and effectively increase our basically mobility employee, mobility, satisfaction,

3:16

hopefully including pay.

3:17

And some people don't like that idea, but as a business owner myself and a lot of business

3:22

owners that I represent are kind of concerned with the trend.

3:25

However, I think in general, that should be a good trend because it should create, you know,

3:31

Obviously more opportunity and also more money for people to spend as well and a better standard

3:34

of living, which leads to more political stability.

3:37

But in general, I think some of the acquisition issues that we're having here with employment

3:42

and in talent and so forth are going to be filled often by the voids that exist in other countries

3:47

or countries that have more stable sort of workforce in particular industries.

3:52

And.

3:53

So that seems to be driving those type of synergies and obviously political stability,

3:57

governmental regulation, how they've been handling.

4:00

COVID what the outlook looks, not just short term, but long term is driving a lot of companies

4:06

to look for sort of a subsidiaries and other companies that can compliment.

4:11

Their global enterprise or potentially domestic sort of companies that are in the United States

4:16

that they may have.

4:17

They're finding that to be a better fit than trying to find local companies in the United

4:22

States.

4:23

So to speak.

4:24

However, there is some consolidation of course, going on in the domestic sort of arena as

4:28

well.

4:29

For the most part, I not just find it, just, I find it doing more regional.

4:32

I'm a small, I'm a smaller business attorney owner, not necessarily for the one of the

4:36

big firms.

4:37

So I'm not as familiar with maybe the larger scale deals.

4:39

Of course you hear some of.

4:40

You know, on TV and some of the antitrust issues that they raise.

4:43

But in general, I see some regional consolidation sometimes due to distress companies being

4:48

bought up by someone that may have done well, whether because they receive funds from COVID

4:52

or they just had certain types of contracts that were structured in a manner that allowed

4:56

them to survive through COVID better, but yet they want to.

5:00

Grab the customer base, potentially technology of the equipment that another company has

5:04

and they're being bought out, unfortunately, sometimes in our distress circumstances, but

5:08

it seems to be the pattern sort of regionally and locally that occurs.

5:13

the other thing to consider also with cross border deals is the availability of course

5:16

of funds and money, and to be able to bring money outside the country or into a country.

5:22

There's been some issues here, some upheaval in generals of political basis.

5:26

What's going on in certain countries in south America, which has.

5:30

Including even Columbia, which was always a, a very close sort of connection with, with

5:34

Miami and Florida and the United States, it seemed to be having some upheaval also politically,

5:39

which is kind of Dering some of the deals in Columbia and some of the south American

5:45

countries.

5:46

However, it is pushing some of the residents of Columbia and other countries to want to come.

5:51

so once again, as we always know, political environment and stability is something that

5:56

also drives potential deals and drives people into countries or out of countries.

6:00

And this is no exception.

6:03

This is also another thing to take into consideration is the, you know, access to

6:07

capital again, and to funds in the United States.

6:09

Once again, always seems to have a very friendly environment for that and sort of a credit

6:14

richer capital rich type economy and companies seem to be sitting on a lot of cash.

6:20

Particularly tech companies.

6:21

So it's, once again, it's the synergy of maybe certain technologies working and surviving

6:26

the COVID panic epi, you know you know, disaster, so to speak.

6:31

They might find a smaller company.

6:33

A tech company has a technology that they're no longer able to scale up or bring a.

6:38

To the market on a larger scale.

6:39

And the company comes in and says, Hey, you know what?

6:41

I got this, you know, I think we come together, I'm going to buy you out and I'm going to bring

6:46

your technology into compliment ours.

6:50

And I think those have been the biggest winners.

6:52

So in general, what I'm seeing, I am seeing and on a small level and a small scale in

6:56

Miami is a Miami corporate attorney people interested in purchasing companies a lot of

7:01

money to potentially expand and also look.

7:06

Acquisitions in other states and sometimes other countries, but for the most part, it's

7:09

been local, what I've been experiencing.

7:11

So a couple of tips when you're looking at, you know, doing whether it's a cross-border

7:15

deal or maybe even a local sort of cross-border state to state not international you know,

7:20

once again, you need to look into maybe is it more important than before?

7:25

What, how friendly that state or country's COVID laws.

7:29

what kind of lockdowns or procedures they have in place?

7:32

What is their health circumstances?

7:33

What are their political, you know circumstances, are they stable?

7:35

And unfortunately you know, many people around the world would actually be concerned for

7:41

the first time about the United States.

7:42

However, those concerns are still seem to be damper by the fact that this still seems

7:46

to be the primary location to you know, for companies to go acquire other companies.

7:52

And.

7:53

This becomes the parent company, the remaining company.

7:55

So that indicates some stability and practicality with, you know, keeping them United States

8:00

company.

8:01

So even though there's concerns about stability in the United States, there's also a concern.

8:05

All you know, around the country is different countries.

8:07

So one of the tools is you have to make sure that you understand the landscape and the

8:11

local landscaping of that particular country.

8:15

Not just the country itself, but actually the city and maybe local provinces before

8:18

you get involved in any kind of cross you know, border deals, so to speak, whether it's

8:23

mergers and acquisitions or potentially even transactions, which I haven't really discussed

8:26

much today, but it's the same general concept.

8:29

You want to understand what the environment is?

8:31

Is your money going to be safe there?

8:34

What kind of, you know, assets will remain in the country versus being expat, you know,

8:38

expatriated or.

8:40

Exported back to the United States, the structure of the deals with their stock or cash deals.

8:44

Do these companies have large debts?

8:46

Do they, are they also, when you figure out valuations, one of the major concerns that

8:51

I've seen with companies is that we had some, had a dip, some had a significant dip that

8:56

was unusual due to COVID and a lot of times they're running off.

8:59

Credit lines for a certain period of time and they're catching up now, but it might

9:03

skew the valuation of the company.

9:05

So it's important to maybe extend deals long enough where you either have a look back period

9:10

that sort of evens out or basically.

9:14

Find sort of a baseline for the value of the company, depending after you're selling or

9:18

purchasing, of course, a purchaser right now, if you did a valuation, some of these companies

9:22

might be cheaper and have an interest in buying them at this time.

9:25

If you are a seller, you may want to consider, again, drawing out that timeline and potential

9:30

sort of valuation time period with your financials and your income and, and over time.

9:35

And, and what happened during the pandemic to try to normalize it, to get maybe a better

9:39

price for your.

9:41

So these are some of the things that, you know, hopefully this has been helpful.

9:43

It's really more pre cursory stuff we're talking about here.

9:47

And I just thought it was so important right now because when everyone thinks, you know,

9:50

the cross border deals are dead, they're really, really not as always, you know, human ingenuity

9:55

and determination finds a way and all costs.

9:58

So to speak you know, to continue to go forward and to create, hopefully what's best, you

10:03

know, for everybody and overall create a better future something to consider again, you know,

10:07

when we go forward, even as business owners you know, what that looks like and how you

10:11

can partake in that.

10:12

I want to thank everyone for joining us.

10:15

You know, I, hopefully you enjoyed this podcast.

10:18

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10:22

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10:23

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10:28

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10:29

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10:32

Take care.