Forecasting International #privatequity and #venturecapital Deals

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                               Check out this interesting article by Kenneth Springer from Corporate Resolutions!

Chinese, Indian and Latin American companies are increasingly on Private equity and Venture capital firms’ radar and can offer intriguing opportunities to expand investment horizons and achieve strong ROIs.

When looking at a cross-border deal, it is critical to know the background and reputation of the individuals operating the business. While public record data is often limited in certain countries overseas, it is imperative to understand those limitations and have access to appropriate domestic investigative resources that can gather necessary intelligence on the management and owners of a company.

U.S. investors and companies with multinational operations need to be aware of the expansive scope of the Foreign Corrupt Practices Act (FCPA), which has become the U.S. Justice Department’s flavor of the decade. The FCPA prohibits bribery of any foreign official, regardless of rank or position, which has been broadly interpreted to include any payments that have a business nexus and give a competitive advantage. Third parties acting on behalf of such entities are also subject to the FCPA—which means beware your affiliates and contracted representatives.

To ensure compliance to FCPA rules, it is crucial to not only know how the international company operates (IE: are the company’s contracts awarded on merit or favors?) but also to implement the appropriate ethical codes and standards of operations at these facilities as the new investor. The biggest hurdle is cracking the old-school method of getting business in exchange for favors (trips, gifts, cash, etc.). But once employees and company officials understand the ramifications of this behavior and are taught the new and improved way of doing business, the risk of exposure to FCPA violations is mitigated, paving the way to do business fairly across borders.

Like all other deals, there are numerous risk factors to be assessed when doing international deals. The barriers to success internationally can be overcome once you are mobilized with information that mitigates your vulnerabilities to fraud, violations of the FCPA or other unexpected outcomes.

Come hear more from Kenneth Springer, speaking at Private Equity World Latin America taking place this June in Miami, FL!