Global Expansion: Quick Takes and Lessons from the Largest Mergers and Acquisitions
Over the years, global expansion has become more attainable than ever before through the rise of the digital age. But another way companies can expand internationally is through mergers and acquisitions. According to Statista, it’s estimated that the current value of global merger and acquisition deals is around 5.9 trillion USD.
However, merging and acquiring another business in a different country can be complicated as there are a lot of considerations to think about.
Today, we will discuss this topic with Ofer Tirosh, the CEO of Tomedes, who manages a translation agency that has assisted international companies with their merger and acquisition deals. We will gain some insights from him on some examples of global acquisitions and mergers where they went wrong in their approach and what you can learn from them.
If you want to learn more about it, keep reading to find out!
What are Mergers and Acquisitions?
Mergers and acquisitions (M&A) are described as a consolidation of companies and/or assets for various financial transactions. Usually mentioned together, mergers and acquisitions are different from each other.
Mergers are when companies combine together and consolidate their resources and become a new entity under new ownership and restructuring of management, with each firm still having the same members.
Acquisitions are when a large company acquires a smaller company. This is why it’s sometimes called “takeovers.” It usually requires having a large amount of cash for absolute buyer’s power.
During these financial transactions, multinational companies must work with an accredited translation agency, ensuring that experts translate them and the translations are up to international standards.
Tomedes: Supporting Global Mergers and Acquisitions through Translations since 2007
In discussing global mergers and acquisitions, we had the fortunate opportunity to contact Ofer Tirosh, who had 15 years of experience overseeing translation projects, particularly for this type of financial transaction.
“From my experience in running a translation agency, language barriers are one of the most problematic parts of international mergers and acquisitions. Communication during this period is crucial. Our role as translation experts is to bridge those gaps and ensure that things go smoothly during negotiations,” Tirosh explained.
He mentioned that besides language barriers, they would have to consider other factors when conducting mergers and acquisitions, such as:
- Targeting the Right Company
- Financial Risk
- Legal Risk
- Failing to Integrate
- Overpaying
- Market Demand
During the negotiation and transition stage of mergers and acquisitions, international companies have professional translation agencies interpret and translate the communications from meetings to creating multilingual documents.
Although you can always hire freelance translators, they might not have the expertise to handle multiple types of documents, like legal and financial documents. So you will end up hiring multiple translators during the duration of the transaction.
By hiring one translation agency, you can work with multiple translators on various tasks like translating financial to legal documents and interpreting the meetings. You don’t have to manage them as it’s all taken care of.
Insights on The Three Largest Mergers & Acquisitions
To give you more perspective on this topic, we talked with Tirosh about three of the largest mergers and acquisitions in the world. We wanted to get Tirosh’s opinions as someone who manages a translation agency that deals with multinational companies translating all types of financial, legal, and operational documents.
Daimler Merger of Mitsubishi
In 2000, the Daimler-Chrysler had a merger with Mitsubishi. It was after Chrysler was acquired. They wanted to enter Asia, which is why they sought to acquire Mitsubishi. When we asked Tirosh why this particular merger didn’t last long, he explained that due to cultural differences between these multinational companies led to its eventual separation.
“Daimler-Chrysler is a German multinational company. They have a very different work culture compared to the Japanese. Because they had Germans manage the workplace, they were treated more like guests than workmates. It didn’t help that they had an indirect way of communication, which showed in the poor performance of Mitsubishi,” Tirosh explained.
He continued, “Before “Going Local” wasn’t much heard of when it came to acquiring an international business. Just because you have the opportunity to force changes in management doesn’t mean that it will work well in the end. Change can occur, but it will take, especially if it’s not inherently part of their work culture.”
He said that many companies believe that they could change the management culture of their newly acquired company. That’s not always the case. The internal clash of systems in the workplace leads to lower productivity and income.
So before planning to acquire an international business, be sure to do your research on your target market’s culture, not just for sales but also for the work culture of your employees. You can work with professional translation agencies during research to better understand the culture of the country where your acquired business is located.
TATA Acquiring Jaguar Land Rover
Tata is an Indian multinational company that acquired Jaguar Land Rover in 2008. But unlike Daimler-Chrysler, they successfully merged their business because they respected the existing culture rather than impose theirs on the local employees.
Tirosh explained that when TATA acquired their business, they were the opposite of Daimler-Chrysler. They respected the work culture of their employees and early on established trust within Jaguar Land Rover. They had open communication with internal management, ensuring that they were all on the same page.
When changing management, be sure to listen carefully to your employees as they have a better grasp of their company’s situation. For example, the tax system and process in their country.
Their decision to immediately implement the changes and keep the momentum running because any delays could have led to more problems in the future. The cultural values are often overlooked during these transactions, which leads to becoming a failure.
However, with the aid of professional translation agencies, you can start developing your plan that follows their cultural and linguistic preferences.
The Merger of British Steel and Dutch Royal Hoogovens
Lastly, this merger case between British Steel and Dutch Royal Hoogovens in 1999. Experts explained that this union didn’t work out wasn’t just due to cultural conflict but because of poor leadership and management.
“Goals are useless without strong leadership and a well-organized management system,” Tirosh said. “The absence of clear leadership and organizational structure was what caused it to fail.”
The Dutch management model is more focused on consensus and the interest of both employee and employer, while Anglo-Saxon management focuses more on the shareholders. It caused several problems, like strikes and low morale in the labor force, leading to poor performance production.
Growing your team isn’t only about expansion. It means helping your employees develop and innovate in their respective fields, and it requires trust and respect from both employees and employers.
As you can see, it’s a recurring theme that these mergers and acquisitions failed due to prior knowledge of the work culture and management systems of the countries they were entering through their transactions.
Final Thoughts
Merging or acquiring a new business from a foreign country brings great opportunities or problems. It depends on how well you have researched and prepared for the transaction. Culture and communication can either break or build your newly acquired or merged company. Hopefully, the insights from a translation agency have given you some valuable lessons and perspective on what you must consider when expanding your brand through mergers and acquisitions.
