From due diligence to post-merger integration, find out why quality translation is crucial in M&A transactions. Discover how we can help!
Companies engage in merger & acquisitions (M&A) for a variety of purposes, including accelerating growth, gaining market share, strengthening their brand, or accessing new technologies.
Whatever the reason behind an M&A, this sort of financial transaction is complex and demands clarity and strategic understanding. Companies involved must gauge the potential risks and rewards and ensure it is aligned with their long-term objectives and financial goals.
With businesses aiming to increase their global presence, international M&As are becoming more and more common. Keep reading to find out how translation services can ease your cross-border transactions.
What’s an M&A?
Mergers and acquisitions refer to transactions that bring together two companies.
A merger is when two independent companies join forces to create a whole new enterprise. Companies merging tend to be similar in size. If things go well, they’ll become one new big happy family.
An acquisition takes place when one company purchases a controlling stake in another one. This means 50% or more of its shares, allowing the holder to control its major decisions.
Examples of famous M&As.
M&As present complex legal and financial challenges. Imagine the process these corporate giants must have gone through to strike a win-win deal:
- Pfizer’s acquisition of Seagen for $43B in March 2023.
This deal is one of the biggest in the biopharmaceutical world since 2019. Seagen, a biotech company famous for its cancer treatments, became part of Pfizer. This move strengthened Pfizer’s oncology portfolio.
- Merger of Heinz and Kraft in 2015.
The new Kraft Heinz Company became the fifth-largest food company in the world and the third-largest in the U.S.
Yet, this transaction ended up with billions in stock value being lost. It seems that accounting practices at both companies before the merger are to blame for what has been described as a “mega-mess.”
One of the main reasons why M&As fail is that the partners’ corporate cultures are dissimilar. Even more so when deals happen between companies operating in a different country, language, and legal system.
This leads us to emphasize that…
Translation services are a must for international M&As
M&As involve all kinds of technical, legal, financial, and regulatory documents. And everyone, from stakeholders to management, must understand all aspects of the agreement. Translation prevents mix-ups or misinterpretations that could cause problems or delays in the process.
But let’s take it one step further. Translation offers significant benefits to both buyers and sellers. Imagine wrapping up an international multi-billion-dollar deal a couple of months earlier because of a quicker review process. Or achieving faster integration of market strategies thanks to a clearer grasp of synergies between companies.
So, for which purposes are translations required in the M&A lifecycle?
- Due diligence.
International mergers and acquisitions go hand in hand with due diligence. This process protects both buyers and sellers, reducing the risk of legal issues during and post-acquisition.
Legal professionals review thousands of legal and financial documents, often in multiple languages. Due diligence addresses key questions such as the following:
-
- Should the business be purchased?
- How should the transaction be structured?
- How much should be paid?
The company’s finances, intellectual property, customers, and employees are subject to scrutiny. This implies translating such specialized documents as:
-
- Financial reports: Income statements, balance sheets, cash flow statements, among others.
- IP documents: Patents, trademark licenses, trade secrets, to name a few.
- Compliance checks.
International M&A are increasingly put under the microscope by governments worldwide. to ensure they don’t harm competition, innovation, or lead to higher prices. So, M&A consulting firms find themselves handing in endless documents for compliance checks.
- Transaction execution.
In the course of M&A activities, you’ll need to translate legal and financial documents: partnership contracts, agreements, letters of intent… This is key to ensuring a smooth transition and clear understanding of the terms involved.
- Post-merger integration.
Bringing together companies with different cultures, management styles, IT systems, and business relationships is no easy task. Mergers often struggle to blend everything after the deal, not living up to their potential.
It’s important to consider aspects such as how to retain key staff and bridge cultural gaps. Translating internal communications, training materials, and policies will contribute to a seamless integration process.
Best practices for legal translation in M&A
The American Bar Association highlights how legal translation can pave the way to a successful transaction. They share a list of best practices for businesses to “minimize the risks and maximize the opportunities associated with cross-border M&A transactions.”
Here is a summary of their 4 recommendations:
1. Partner with legal translators specialized in M&A.
Find a vendor with experience in corporate finance due diligence and M&A, especially in the countries involved in the deal. This ensures that all necessary information is communicated and understood.
2. Foster cultural awareness.
Translations reduce the risk of misunderstandings that could hinder progress. They play a key role in building trust and transparency between both parties from the onset.
3. Conduct quality assurance and check for accuracy.
Make sure your legal translation services have a rigorous quality assurance process in place. Additionally, you should conduct your own review to verify the accuracy of translated documents.
4. Ensure data security and privacy.
With the rise of remote work and digital deal closures, the importance of data security and privacy protocols has heightened. Even more so for services handling confidential content like M&A materials.
The platform used for sharing translations and other transactional elements must be secure.
Why rely on Montero Language Services for your M&A-related translations?
We have what it takes to help you untangle the myriad documents needed to ensure the success, legality, and smooth progression of your M&A.
- Efficient project management skills to coordinate subject matter expert translators, editors, and proofreaders.
- Flexibility to accommodate your budgetary and turnaround needs.
- Commitment to quality, as proven by our ISO 9001, ISO 17100, and ISO 13485 certifications.
- Highly secured platforms to manage documents.
But that’s not all. We’ve been ranked among the top 20 LSPs specialized in legal translation and interpreting services worldwide (a recognition awarded by independent market research CSA Research).
Reach out to us to experience the peace of mind that comes with choosing an LSP proven to deliver top-tier language solutions.
