After listing your startup, you might spend weeks fielding buyer inquiries to find the perfect match. But what if your ideal buyer lives halfway around the world? How will you reconcile your different legal jurisdictions, currencies – even languages?
Opening yourself up to an international acquisition expands your buyer pool and increases your chances of finding the right fit for your business. You can run most online businesses from anywhere in the world. But before you accept an offer, consider the practicalities below.
What Does It Mean to Sell Your Business Internationally?
If you accept an offer from an international buyer, you’re willing to let a buyer from another country manage your business in its current location or transition the business to a new jurisdiction.
Marketing to international buyers means understanding their strategic or financial motives. A strategic overseas buyer will likely expand in a new market location, while a financial buyer will invest capital in your business for a high return. Depending on your startup, you can highlight different components of your business to attract either a strategic or financial acquirer. And by exploring international options, you expand your buyer pool.
That said, selling your business internationally can be a little more complicated than selling domestically. It depends on where the buyer resides and how they plan to run the business after the acquisition. You’ll also have to consider the acquisition process itself – legal documents, escrow, currency conversion, and so on – so you close without headaches or additional costs.
Why Should You Sell Your Business Internationally?
The bigger the pond, the likelier you’ll catch the nice, juicy trout you want for dinner. Acquisition marketplaces are no different. Being open to international buyers increases your chances of finding the best fit for your startup.
Just look at Agustín Capalbo, founder of Jongleur. The Argentinian founder ran an ecommerce business out of Mexico and ended up selling it to Eshkol, a global business operating out of Gibraltar and Israel.
Eshkol already owned properties in Mexico but sought an ecommerce business. Agustín knew he could trust Eshkol to expand his skincare business because it understood the Mexican market. While Eshkol benefited from new ecommerce customers, Agustín found the ideal buyer who would pursue his dreams of scaling the business.
If Agustín had limited himself to domestic buyers only, he might’ve waited months or years to find a buyer instead of a few weeks. He might never have found the right one for his startup. But soon after Acquire.com featured Jongleur in its global newsletter, Eshkol contacted Agustín and made an offer.
All buyers want the best deal they can find or negotiate, even if it means acquiring a startup from another country. If your business provides the best return on investment, they’ll pursue it. Especially if it’s a SaaS or other business that runs well remotely.
An international acquisition also allows you to pursue entrepreneurial goals you couldn’t have before, like expanding in a new market. You might sell your business because you want someone with capital to invest in its growth. International buyers can provide the cash and the experience to scale your business in a new market.
How to Sell Your Business Internationally on Acquire.com
Acquire.com is a global platform where founders and entrepreneurs from all over the world buy and sell businesses. From our vetted buyer pool to our asset purchase agreement (APA) and letter of intent (LOI) Builders, you have all the resources you need to sell your business to someone abroad.
Start by making your listing attractive to international buyers. Study our recipe for the perfect listing and use that knowledge to spruce up the company overview section.
Here’s where you’ll describe what makes your business unique, from its competitors to pricing models to key assets and tech stack. Emphasize how international buyers could easily run your business from abroad. Prompt them to ask about transitioning assets smoothly or connecting with a remote team.
But don’t let them ask all the questions. Vet the buyer to ensure they’re a good fit for your business.
Vetting International Buyers
When you talk with international buyers, you’ll ask them essential questions like any other prospect. What experience do they have in your industry? What attracted them to your listing? How will they fund the transaction? What are their goals with your business?
But selling to an international buyer also means unpicking a few complexities before you can get Acquire’d. For example, Muhammad Taimoor Hassan, founder of Untapped and LetsPost, sold to a buyer in Europe who wanted to pay in USD. Unfortunately, his native country of Pakistan doesn’t allow incoming USD transfers. Thankfully, he had a US account he could use.
Currency conversion can also cause delays in closing. When Roman Rose, a British entrepreneur, acquired Mailivery, a German startup, escrow took longer due to fluctuations between the pound and the euro.
Before moving forward with an international buyer, ask the following questions to avoid complications or delays to your acquisition:
- How do acquisition laws differ between your countries? While most countries’ acquisition laws work to increase competition and battle monopolization, nuances exist in each jurisdiction. Canada’s competition laws, for instance, prohibit deceptive marketing practices and pyramid schemes specifically. Founders in the US must abide by federal acquisition laws and unique state regulations. Ask the buyer about their acquisition laws to ensure your deal can advance.
- How do acquisition documents or terms differ between your countries? Before signing a legally binding asset purchase agreement, clarify that both parties understand and agree to the wording of the document. Prepare to adjust the wording or include specific provisions pertaining to your buyer’s local acquisition laws.
- How does escrow or transferring funds work between your countries? With any large acquisition, use escrow to transfer funds and protect both parties. Ensure your buyer can access the same escrow company (such as Escrow.com) as you before closing the deal. And confirm that the escrow company can exchange the buyer’s funds for your local currency.
- What are the tax implications for each of your countries? Ensure the buyer understands your local tax implications so they know why you’re negotiating certain terms or allocating the purchase price a certain way. Business tax laws differ wildly by state and country, so explain to the buyer how your tax system works to garner their understanding.
- What deal schedule works for both of your time zones? You might receive an LOI and prepare to kick off negotiations first thing in the morning. Your buyer, however, might be sound asleep. Plan ahead to accommodate time differences. Scheduling buyer-seller meetings might be more difficult, but one person can also draft the documentation or conduct due diligence while the other’s asleep. Establish a suitable deal schedule early in the process so everyone knows when to complete their tasks.
- What location will be the governing law jurisdiction for your acquisition? The governing law jurisdiction determines which laws govern your agreement. You’ll adhere to this state or country’s laws for disputes or other legal issues during and after the acquisition. Choose a location either you or the buyer live in for your jurisdiction and check out our FAQ below for more info on jurisdiction in international acquisitions.
- How will the buyer accommodate cultural differences, especially if they’re exploring a new market? Startups wouldn’t survive without employees running them or customers funding them. Gauge how comfortable your buyer seems with your culture and the practices that dictate how you run your business. Do you see them struggling to acclimate? Are they curious and inquisitive about the people involved in your startup? Do they seem likely to clash? Trust your gut and ask personal as well as professional questions of your buyer. And remember that they might need more help transitioning your business if they’re new to your market or location.
Remember that not every buyer you talk to will be a good fit. If you ask these questions and you don’t like the answers, let the buyer go and move on to the next one. That’s what Elephbo founder Nicholas Huxley had to do. He ran an ecommerce business targeting the small, tight-knit Swiss market. While he got 40-50 offers on Acquire.com, most of them came from Asian, US, and EU buyers who didn’t know the Swiss market well.
“Many interested parties didn’t realize that this is not an ecommerce business you can just take and shift to the US or to Germany easily,” Nicholas says. “Everything was in Switzerland, and Switzerland is not a market that’s integrated into Europe. It operates strongly by itself, and a lot of buyers, when we got into deeper talks, they underestimated that.”
Don’t Wait to Start Selling Your Business Internationally – List It Today on Acquire.com
Eager to match with international buyers? Sign up for a free seller account on Acquire.com now. Meet thousands of vetted buyers from around the world and find the perfect fit for your startup. To learn more about your responsibilities in the acquisition process, check out our recent guide.
What Challenges Will You Face When Selling to an International Buyer?
While marketing to international buyers expands your buyer pool, it also brings new languages, currencies, time zones, and acquisition and business laws to the table. Prepare to face these challenges so you can close the deal quickly.
Selling to someone across the world? Adapt to the time change so you can conduct buyer-seller meetings and work out a deal schedule. You might have to operate outside normal business hours to accommodate the buyer and vice versa. Accept that you’ll face a few late nights or early mornings to secure the deal.
Struggling to communicate with the language barrier? Hire someone who can speak the buyer’s language to act in your interests. A digital translator might help, too. Deals are more than just numbers and metrics. Building a trusting relationship through good etiquette requires clear communication.
Finally, tell the buyer about any acquisition, tax, or trading laws pertaining to your location that might impact the deal. For instance, antitrust laws in your country might hamper the deal if the acquisition lessens competition in your market.
Preparing for these challenges in advance will move the deal quicker and prevent these roadblocks from killing the sale entirely.
Can You Operate a Business Internationally?
According to Statista, over 330 million companies operate worldwide, so yes, you can operate a business internationally.
When living in one country and operating a business elsewhere, pay attention to local business laws and cultural practices. How will your employees expect to interact with you virtually and in person? What’s the work-life balance in your business’s location? How does the market differ?
Answering these questions and being open-minded about potential cultural differences will help you connect with international workers and customers. Learn as much as possible so you can build as much success as possible.
Plus, the more you understand the culture of the business you run, the easier it’ll be to sell in that market. Understand how those buyers think so you can provide them with the benefits they want from your product or service.
How Do You Address Governing Law Jurisdiction When Selling To an International Buyer?
When a buyer drafts an asset purchase agreement in our APA Builder, it’ll ask them to specify the governing law jurisdiction, which is the state, country, or international laws that govern your agreement. The parties thereby agree that the governing law of that location will govern any disputes that arise and would be applied by a court or adjudicator.
If you or the buyer are US citizens, you’ll likely choose a familiar state like Delaware. But non-US citizens will choose a location that either party lives in. Just remember that our APA Builder uses default terminology related to American corporate law. If your governing law requires other specifications in the APA, you or your attorney will have to add them to the document yourself.
To avoid facing an international legal dispute, take these actions during your acquisition process:
- Use escrow to transfer funds. Escrow ensures the buyer receives the promised assets and you receive the promised payment. The buyer entrusts the full purchase price to a company like Escrow.com before you send the assets. Once the buyer approves the assets, the escrow company releases the funds to you. If any issues arise with the funds or assets, escrow helps you track everything because it documents each step of the process.
- Verify your identity with Persona. This two-step process puts a verified identity badge next to your profile so buyers know you are who you say you are. By submitting proof of identity, you build trust in the marketplace and decrease the risk of buyers acquiring fake businesses. Buyers can verify as well, so look for verified identity badges from buyers who request access to your startup.
- Build trust and goodwill. The better your relationship with the buyer, the less likely either of you will take the other to court. Hopefully, you’ll settle any disputes outside of court because you’ve established an open, communicative relationship. Both you and the buyer should trust the other to be transparent about any issues and work together to find a solution.
Remember that seeking remedies from an international buyer (or vice versa) requires more time and money than a domestic dispute. You have to hire an attorney and begin a case in the buyer’s country, dealing with time zone differences, language barriers, different currencies and legal systems, and more.
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.
