M&A (Mergers & Acquisitions) entails a multi-layered, multi-stage deal process.
Foreign assets or targets only add to the complexity.
While tax issues, regulatory risk, and political stability are a few of the barriers to cross-border M&A deals, foreign language documentation can further stall the deal process.
Professional translation services can help you navigate cross-border deals, allowing you to secure the foreign presence you need to grow your business.
M&A participants and their attorneys will want to be careful in selecting a legal translation service for their cross-border paperwork.
Here are four reasons why:
1. Professional Translation Services Help Streamline Cross-Border M&A Deals
From planning to closing, your cross-border deal will involve examining an array of documents. This will help you verify that the company you are acquiring is legally and financially sound.
The primary focus of due diligence is delving into every aspect of your acquisition target’s operations, including its financials, assets and liabilities, human resources (HR), and customers. Because your M&A success hinges on a timely and seamless transition of ownership, reducing the time taken to perform due diligence on the documents through certified translators is critical.
Hiring the services of a legal certified translator will be a vital first step as many due diligence documents will not be in your native language. There are many kinds of due diligence in cross-border M&A. Your team will conduct financial due diligence, which will require accurate translation of the target’s financial statements, including balance sheets, cash flow statements, and management reports. Having well-translated financial reports will ensure you are making a sound purchase decision while preventing any financial issues you might have missed without a certified translator.
Having the support of an expert legal translator in evaluating a foreign target and its legal documents will likely save you legal, financial, and regulatory issues that may crop up down the road, while also helping you confirm the fair value of the target during negotiations.
To further streamline deals, M&A participants typically use a virtual data room (VDR) to store and access all documents in one secure location. This is a secure cloud-based data repository for the storage and distribution of sensitive corporate documents. Using a VDR will give your team, the seller’s team, and certified translators access to due diligence documents, ensuring transparent due diligence.
2. Legal Translators Can Help Prevent Fraud in Cross-Border M&A
There are many moving parts to M&A, each requiring the full understanding of all participants. Navigating a cross-border deal requires a certified translator to help ensure all contractual language is understood by all signatories. Using an experienced M&A translator can also ensure all parties act ethically and not take advantage of language barriers or discrepancies.
After due diligence completion, the parties will sign a definitive purchase agreement. This will cover everything from price and escrow to representations and warranties in relation to the asset(s) to be acquired. Highly technical clauses, such as those addressing the treatment of outstanding shares and options, cannot simply be run through Google Translate.
In drafting a bilingual purchase agreement, a professional M&A translator will not only help the parties reach full understanding but also will safeguard against fraudulent and unenforceable M&A transactions.
A certified translator will be especially useful when it comes to intellectual property (IP) documentation. It is now commonplace to see online content or publishing assets as part of cross-border deals. These digital assets might be difficult to track and appraise. Language barriers do not help matters. Ensuring all such assets are duly identified and documented prior to purchase may save you from losing valuable IP, such as patents and trade secrets.
3. Accurate Translation Can Mitigate Compliance Risk in Cross-Border Deals
Cross-border M&A deals often require the input of various subject-matter experts. Unlike attorneys, who typically specialize in one or two fields, legal translators are trained to work across disparate practice areas. This broad expertise should be leveraged in complex M&A transactions involving foreign entities.
Compliance translation is a recurring area for most seasoned legal translators.
Incidentally, investing in anti-corruption due diligence will protect you from the joint enforcement authority of the SEC and DOJ. The U.S. Foreign Corrupt Practices Act (FCPA) “makes it clear that there is an expectation that Anti-Bribery Anti-Corruption (ABAC) due diligence will be performed prior to the closing and that the results of the diligence should be documented and acted upon by the acquiring company. Failure to do so can result in stiff penalties, fines and/or imprisonment.” (Corporate Compliance Insights, 2014).
To ensure FCPA compliance in a cross-border M&A transaction, the use of a legal translation service is a no-brainer.
4. Post-Purchase Translation Support for Keywords and SEO
A translation service will not only help with the purchase and sale of foreign assets, but also with translation and localization for search engine optimization (SEO), keyword research, and other marketing-related tasks.
Understanding SEO and keywords in a foreign language can be problematic, let alone word usage, alternate meanings, or completely different phrases. Using a certified translator can help you and your international expansion team find the right keywords and execute the right SEO strategy to ensure you reach your new target market.
Understanding the context and user intent in another country will help you optimize your search marketing. You may also need the legal translator to assist you in complying with privacy laws such as the GDPR, which is essential to understand when dealing with user data in the EU. While a Machine Translation (MT) tool is occasionally capable of spitting out foreign language privacy policies of passable quality, we always advise our clients that human input is absolutely necessary to ensure legal translation accuracy.
The support of a certified and professional translation service is invaluable to cross-border M&A. The right service will help streamline your due diligence and prevent fraud, saving you time, money, and potential trouble caused by language barriers or misunderstandings.
Moreover, many legal translators are competent across a variety of legal areas and capable of providing key services to your new organization post-closing.
No matter the size of the target asset or transaction, we strongly advise you to work with a professional legal translator who has experience in cross-border business transactions to ensure a smooth process and successful outcome.