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International business acquisitions involve the kind of capital which can seem to fantastic to even understand. In 2019, France based advertising company Publicis acquired US based data marketer Epsilon for $4.4 billion. As you can imagine, those who help facilitate these kinds of deals are the brightest and most valued in the industry. Julie Comer of Lazare Consulting specializes in these types of complex cross-border growth strategies and developments. A financial analyst and mergers & acquisitions expert, Julie has been instrumental in making massive deals between business entities from different countries and the entanglements this can involve. The esteem she has garnered among her peers and those whom she works with testifies that she has a vantage which is highly attuned to guiding these types of transactions. The process can be overwhelmingly complex, a bit like 3D chess. We asked Ms. Comer to describe it and discuss the direction she sees happening internationally.
Investments are flowing across international borders increasingly. In consulting an expert like Julie, we requested her insight about some of the “hot spots” and what is happening to make them so. The relationship between the US and various parts of Europe has seen its share of ups and downs but the UK and France are of particular interest to American entities presently. Ms. Comer informs, “It is a trend we have seen over the last few years; more money from the US flows into Europe: The value of deals involving at least one US investor grew by 4x between 2020 and 2021. Compared to France, the UK can be seen as more appealing to foreign investors thanks to its Anglo-Saxon work environment and being an English-native country.” Unquestionably, China continues to expand in its fiscal prominence and the importance of a massive consumer pool. Julie states, “China is an attractive market because of its size and growth over the last decade but entry barriers are sizeable. My expertise in the Chinese market mainly relates to e-commerce and retail, a sector that is especially attractive for foreign companies.. China’s e-commerce market is almost twice the size of the US market, and growth predictions are double-digit. E-commerce grows two times faster than offline retail sales.” In spite of challenges brought about by the pandemic and the looming threat of a recession, Julie gives her point of view on the US market “It is a game changer for any foreign company in terms of value created for the company and its shareholders because of the size of the market, the clients, and the deals. The US market is quite different from the others as fast-growing companies are not only located in the usual large cities (NY, LA, and SF); the ideal partner can be found in smaller markets such as Minneapolis or Austin. The US market can be a consequent growth accelerator when companies grow organically or through acquisition because of the massive market size. If we speak about the advertising market, the US represents almost half of the worldwide market.”
Knowledge is one thing but real-world practice is proof of validity. Julie Comer has repeatedly established that her knowledge and skill is substantially practical. She was a primary component in the acquisition of US based SRDS (Chicago based) by France’s Adwanted. To ease this transition, Julie (as a representative of Lazare Consulting LLC) advised the hiring of an American CEO whom she helped onboard and whom has proven critical to running the business. Scrutinizing attention to both fiscal and cultural differences led to this successful and amenable deal for both parties. Julie and her team repeated a successful outcome for Adwanted when the company acquired UK based Mediatel Group (whose 2021 revenue of ten million euro was a result of their prominence in events/news, data, and software). Julie describes the intricacies of this deal stating, “For smaller deals (under $50M), very few financing options were available in the UK for a foreign company without an established presence recognized in the market and a historically positive UK cash flow. We discussed with many banks, including the seller’s bank, but the discussions were complex and would stop because Adwanted’s headquarters was not in the UK. As we expected this complexity, we had parallel discussions with funds in the Adwanted home market. We managed to fund the acquisition with two French funds: Financière Arbevel, a fast-growing French independent asset management company, and SWEN Capital Partners, a key player in Responsible Investing in private markets in Europe with more than €5.8 billion of assets.”
Just this month, Comer and Lazare Consulting LLC brokered one of the biggest deals between US based GAP and China’s e-commerce leader Baozun. The challenges of communication between two major entities on opposite sides of the planet were as substantial as the legal stipulations/requirements of these two different cultures. The reportedly $40 million cash transaction making GAP Greater China a part of Baozun will vastly impact the e-commerce preeminence of this brand and company.
Beyond the fiscal regulation and legal structures that are unique to each country, there are numerous factors that must be scrutinized with great care when making deals across international lines. Julie cautions, “It’s essential to always take into consideration the cultural and consumption differences between the two countries. They might not be as apparent as the ones with the Chinese or Indian markets, but they are real. For example, consumption differences can be quite visible if we take the way we buy in the US versus in France. American online purchasing penetration is higher than in France, and US customers are more receptive to promotion days like Black Friday or Cyber Monday than French customers. Be aware of the difference during the financial due diligence: the reporting and accounting standards vary according to the country. For example, listed companies in the US would follow the US GAAP framework. In contrast, companies listed on the UK or French markets must follow IFRS Standards for the consolidated financial statements. Note also that most smaller companies have their financial accounts done on a cash basis (versus an accrual basis for the French system). The quality of the financial statement might also differ based on legal authority requirements enforced in the country of the transaction. For example, most small American companies don’t have audited accounts. Also, there is difference at the end of the M&A process, closing practices are not the same (locked box vs. completion accounts). Suppose a company thinks about acquiring a company abroad. In that case, the main element to keep in mind is the timeline, you need to be aware that it will take more time to acquire a foreign company (more significant investment, more travel, need of an advisor who knows the market), but if well done, it’s a real game changer for your company!”
Writer: Coleman Haan