International due diligence: how Blackhawk helps companies before they go international

Nurturing your company to the point that it is ready to expand overseas is a major achievement. As a company director, you know first-hand the challenges that face a business taking this route.

The decision to take a business from a national presence to a global stage is one that requires careful planning. Issues pertaining to localisation, cultural difference and compliance are real and likely to require assistance from external experts to get them right.

At Blackhawk Intelligence, our international due diligence team helps businesses prepare in their quest to go global by mitigating risks from a legal, financial and/or commercial perspective. In this article, we will cover the basics of going international, highlight some of the most important things you can do to ensure that your venture has every chance of succeeding across global markets, and share with you how our team can help you achieve that.

Things to consider before going global

A few things must be in place for international expansion to have a chance of being pulled off without a hitch and they include:

1. Compliance

One of the major sticking points for businesses going international is ensuring that they are in compliance with the rules and regulations set by their target market’s government and governing bodies. These can include a country’s tax laws to accounting practices. The best advice is to engage good counsel in your target country.

2. Capital

While it is likely that you are only considering taking your business international after financial success in your home country, there are companies who have been caught off guard when the anticipated costs inflate quickly like a balloon and leave no room to manoeuvre. Examining every cost is a given, while not ruling out further investment from new investors or shareholders is also a wise move.

3. Be patient; be committed; be flexible

A global expansion takes time – a long time – and time requires an equal amount of patience. Rushing into markets, especially without proper risk management procedures, can be devastating to a business’s international (and even domestic) aspirations. It is important to set clear goals and base them on a reasonable, achievable timetable. After all, it is always better to under-promise and over-deliver to investors, than to over-promise and under-deliver. As such, this requires commitment and dedication from the major shareholders – backed by an equally-driven team of employees who are also committed to achieving these goals.

Flexibility is an especially important consideration for your business during this period. Despite your best efforts, there are likely to be unseen challenges ahead that arise from entering international markets. Being too rigid can be disastrous to a business.

4. Know the market

Entering into another non-domestic market for the sake of envisioning further revenue generation and profit is what drives most companies. To achieve that, you need to consider whether there will be actual demand for your product in a foreign market. Conducting research to learn about buying habits and local competition is key. Don’t be afraid to ask tough questions like:

• Who are the competitors offering similar products or services?
• How ingrained are these brands in the culture of this country?
• How much are they charging and what is their profit margin?
• Do you want to match their price point or plan to undercut them?

5. Equal standards

In order for your product or service to be taken seriously within a foreign market, you need to ensure that you are offering products and/or services that are comparable with what you offer in your domestic market in term of quality and availability. Your quality assurance efforts need to stand up to the rigours of foreign rules and regulations.

6. Cultural differences

Having a local perspective, or learning to understand these cultural differences, is vital to your expansion efforts. While most people rely on finding a trusted local representative who has the ability and knowledge to handle your business, you may also want your team to get learning the language, as well as learning about the culture, of your target markets.

Why due diligence is vital when going international

An important responsibility that a business should absolutely undertake when there are plans to enter an international market is due diligence. Generally, this is when a party investigates, verifies and confirms claims made by another party before forming partnerships, signing contracts or buying companies. A key reason behind the need for due diligence is to allow businesses to investigate and identify business risks that had otherwise gone unseen, often due to discrepancies on what is reported by other parties.

As there are many unknowns to businesses that are going international for the first time, or that are entering another foreign market, due diligence can be a vital investigatory tool in determining business risks. These are risks that can affect who you partner with internationally, what assets you purchase to set up in the process of going international, and the risks inherent with setting up in a particular foreign market.

Due diligence is a long and complicated process, covering anything from financial, intellectual property, information technology, compliance to human resources. Accordingly, due diligence is best performed by specialists like Blackhawk Intelligence who have established networks and processes in place.

How Blackhawk performs international due diligence

International expansions and transactions come loaded with a number of business risks that may not present in domestic markets. As such, international due diligence is best performed by specialists with experience in investigating foreign systems and who have excellent, trusted contacts around the globe.

At Blackhawk Intelligence, our international due diligence team operates internationally with clients across the globe who want to move into foreign markets. Due to our experience in working on due diligence investigations around the world, we have access to a vast pool of human intelligence that can be called upon across Europe, the US, Southeast Asia, the Far East, Middle East and Eastern Europe territories – including access to local language expertise.

This allows us to pursue all sorts of international investigations, including but not limited to:

• International company checks
• Local director background checks
• Financial investigations
• Local compliance investigations
• Undisclosed liabilities
• Financial profile and analysis
• Local and international links between companies, their principles and associates

In essence, international due diligence helps you to:

• Identify business risks in your target country
• Identify any red flag issues
• Gain vital information for negotiation purposes
• Help in the decision-making processes

To find out more about how Blackhawk Intelligence can help your business successfully navigate the pitfalls of international expansion, simply call us on +44 (0)20 8108 9317, email us via enquiries@blackhawkintelligence.com or fill in our online form.

This article was first published in 2017 and has been updated on 14/08/19.

If you found this interesting, you might also like:

• Protecting your overseas interest – Connecting the local intelligence dots
• Asset Tracing: getting back what is rightfully yours
• How can due diligence help you to attract investors?

This post is intended to provide information of general interest about current business issues. It should not replace professional advice tailored to your specific circumstances.