M&A operations for internationalise

Often the concepts of outsourcing and plain internationalisation are misunderstood. The first one requires the research of productive factors at low cost, the second one is intended to recreate the company in a foreign country while looking for outlet markets. It is possible to achieve these aims in different ways: looking for suppliers and distributors, cooperating with foreign third-party manufacturers or through deeper M&A operations.

The competitive pressure applied to a greater extent by foreign companies is a kind of competition that originates also from different fields because of the crossover of technologies and it implies a greater and greater projection of companies in the international contexts

According to these positions, the entrepreneur can avail himself of different organizations and individuals:

* Organizations that support the internationalisation (ICE, Simest, SACE...)

* Entrepreneur networks (associations near to Confindustria...)

* Advisory Company

* Commercial information suppliers and international corporate ratings

To the purpose of M&A operations, the last two items of the list above are surely more interesting

Mergers and acquisitions have the prerogative to speed the process of internationalisation because they take advantage of the target company's know-how.

In order to be performed, they need capacity of corporate analysis, negotiation skills and last but not least the purchased company has to be run with a firm hand

Therefore, we can point out the related risks:

* operative risk (analysis of the micro-economic context of the target company)
* country risk (correct evaluation of the criticalities due to the foreign nation)
* risk due to the value of acquisition

Here there are some data about our Country: M&A operations adopted by Italian companies drastically decreased in value during 2007-2008 but on the contrary they increased in number. This fact clearly means that middle companies have been making more and more use of tools of this kind.

I am going to close this analysis with some purchase advice: in a period of lack of cash-flow due to a drastic credit freeze, firms provided with a good cash-flow have considerable chances to purchase companies at extremely convenient costs.

There are several companies that operate in this way supported by a good brand: they purchase firms even located in different fields, but where high growth rates are expected.

Nowadays China and South-east Asia are in the centre of attention of different organizations because of their catchment area and productive capacity, while East-European contexts seem to be more risky.