Last weekend I got a call from an old friend and colleague, who is about to associate with a company in Mexico. He has been trying to enter in the Mexican market since a long while and finally realized that a merger may be the best choice.
Nevertheless, he has a deep concern about security, because news about assaults and major crimes in our neighbouring country come out almost every day. My company also has an associate in Mexico and I frequently travel to Mexico City to supervise our projects; I may also say that I’m very fluent in Spanish; therefore, he asked me for advice on industrial security (or “seguridad industrial”, as it’s said in Spanish).
While we talked, I realized that security was not the only think that my friend ought to be considering. He had studied everything regarding the new associate and also had learned about the laws that regulate mergers and acquisitions in Mexico, but he lacked knowledge about many other aspects and he wasn’t even considering learning about them.
So, our phone call lasted a way more than we both thought at the beginning. But it was quite interesting and useful for both. He discovered all the arrangements that still had to be done for the internalization process of his company and I found a new topic to write about in this blog.
The following is a checklist of the main things you have to review and investigate before doing business abroad.
Financial situation of the country
The obvious first step before doing any kind of merger or association is to check the financial state of the company one is interested in. It’s also a matter of logic to do some research on the situation of the industry. If both results are satisfactory, we tend to conclude that we have found a good prospect, but even the best associations can fail when the national economy is unstable. If you want to make a good decision, you have to consider the whole as well as the particulars.
Social and political issues
As a foreigner you are not expected or even allowed to take part in politics. The best you can do is to be neutral and respectful, but that doesn’t mean you can ignore the political and social environments. On the contrary, you have to study both and find out if they can somehow affect your business.
Laws regarding business and work
Probably you have reviewed the legal terms regarding mergers and acquisitions, but since you will be dealing with a company that operates under local regulations, you should learn all about taxes, social security, labour rights and environmental regulations, among other laws.
Changes and relocations
Would you or some of your current employees be required to move abroad, in order to make a closer supervision of the new associate? Who should go and for how long? Would the company be able to support all the expenses and preparations of the relocation process? You should be able to answer those and other similar questions, before taking further steps.