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Executives work for years to build the business of their dreams, and there’s one thing all high-growth company leaders have in common. The exit is one moment many of those dreams are realized.
Revenue and growth are clearly essential, but when assessing the value of the business, investors will also evaluate how the company is structured, the assets you’ve created, and the strength of the foundation on which your business was built.
Whether you plan to take on investment, go public, or sell the company completely, potential acquirers will conduct due diligence to answer the following questions:
- Are there any doubts as to the ownership of the intellectual property this company has built?
- What will be required to keep the company successful upon acquisition?
- Are there compliance concerns that could trigger legal issues, and ultimately mean risk to the company?
- What’s valuable, and what isn’t?
- Where could the company cut costs and operate just as easily?
When building an exit strategy, the groundwork you lay now will determine how much your company appeals to investors or acquirers and how challenging it is to get through due diligence.
Here are three ways Globalization Partners helps you maximize your success upon exit:
1. Create more value faster by hiring in emergent talent pools from day one.
If you don’t need highly specialized skills in your HQ office or in specific locations, consider hiring your talent outside the known tech hubs when building critical teams.
Instead of competing against other companies within the scarce talent pools of San Francisco or New York City, look in Poland, Cincinnati, Mexico City, or Colombia. Not only are there top-tier, bilingual, talented people in many locations around the globe, but many are found in lower cost jurisdictions, ultimately benefiting bottom-line operating costs.
Hiring in emerging talent pools from day one enables you to create more value faster while you’re dealing with a startup’s limited resources.
As remote work becomes standard, a company set up with highly talented yet lower cost teams around the globe is a boon to investors. Hiring your talent in cost-appropriate jurisdictions also minimizes the likelihood of an acquiring company coming in and replacing your talent with lower cost resources after you sell the business.
There’s always a time and place for hiring in Silicon Valley but working with Globalization Partners enables you to grow your talent pools in the most appropriate location to get the job done.
Besides hiring talent in lower cost jurisdictions when appropriate, there’s also the opportunity to hire high value talent in exotic locations sooner. If there’s any way to create more value faster, it’s tackling more sales markets sooner than you otherwise would.
You can also use Globalization Partners to establish market presence in sales locations your Chief Revenue Officer had imagined getting to only years from now. Why not pop a sales team into London, Singapore or Berlin when you can leverage our fully compliant infrastructure to do so almost overnight? Globalization Partners enables you to grow more efficiently, and grow faster – the magic formula by any standards.Hiring in emerging talent pools from day one enables you to create more value faster while you’re dealing with a startup’s limited resources. Click To Tweet
2. Facilitate a seamless, easy, and fully compliant transition at deal close with our turnkey solution.
In the past, the only way to hire full-time employees in a location outside the U.S. was to set up a business entity, putting considerable compliance, tax, and regulatory burden on the employer.
Acquiring companies rarely bought those subsidiaries because they were perceived as full of risk.
Instead, acquiring companies set up new entities in that country and transferred employees into them, which took considerable time and investment.
As soon as the deal was done, the acquiring team had to rush to set up new companies around the globe, often leaning on long transition service agreements (TSAs) while they spent considerable time and resources on entity setup.
Today, modern companies take advantage of global Employer of Record (EOR) solutions that bypass these traditional hurdles. Using a fully compliant global Employer of Record partner like Globalization Partners to onboard global talent means when you sell the company, you can avoid long transition service agreements. Your employees are seamlessly and easily transferred to the new company by a simple addendum to the contract.
You simply assign your master service agreement with Globalization Partners to the new company and with one signature, all of your employees seamlessly transfer over – with their payroll, benefits, and compliance intact. Meanwhile, your team never wastes an executive minute setting up employment contracts, subsidiaries, and auditors around the globe for companies your acquirers won’t want anyway.
The benefits of this are numerous. It leaves your transferring employees’ benefits complete, meaning the acquiring company has no payroll and benefits setup burden and your transition to the new company can be as easy as assigning the contract with Globalization Partners to the new company.
It keeps employee payroll, benefits and experience stable and intact, giving founders peace of mind while also boosting retention. Globalization Partners handles equity liquidation as well, ensuring that all factors of the exit are successful and compliant.
All in all, a turnkey transfer contributes to the success of the deal for every partner involved.
3. Get compliance under control early to set up future deals for success.
Without a competent Employer of Record, it’s difficult to hire in new markets without running into a compliance challenge. Setting up your own international legal and tax infrastructure is time-consuming and costly, and the truth of the matter is: investors don’t want infrastructure anyway because it doesn’t usually add value.
When going it alone, there’s significant compliance risk, particularly if you don’t have a team of seasoned experts building the framework with the company’s long-term best interests in mind. The roadmap is fraught with risks, from invalidly assigned IP with employees to non-compete agreements that aren’t enforceable. Even with a seasoned team of experts, the likelihood of making a mistake or missing something is high.
Don’t wait until due diligence stages to get compliance under control. Suppose your intellectual property isn’t properly flowing to your business via a locally enforceable employment contract, or international contractors are raising red flags with the acquisition side. In that case, this spells time and money on your end to fix and may affect valuation or jeopardize the deal as a whole.
What’s most appealing to the buy side is a fully compliant, mobile infrastructure they can trust meets all local requirements, will help avoid permanent establishment issues and is vetted to the highest standards.
For the same reason, buyer beware – using a “cheap” or local Employer of Record solution, where local entrepreneurs may not have seen the full scope of compliance requirements obligatory for cross-border businesses. Headaches created by solution providers that weren’t designed to meet world-class compliance standards can create as much of a headache as having built shoddy infrastructure yourself.
Be careful you don’t save a few dollars by subcontracting your global employment to cheap partners and ultimately ruin your exit, when every detail of your global compliance will be checked with a fine-tooth comb. Globalization Partners is the leading global Employer of Record company in the world, as named by independent analysts including NelsonHall.
Focus on growth with Globalization Partners – a fully compliant Employer of Record
Leverage a fully compliant existing infrastructure you don’t have to build yourself. Besides the cost savings of international tax advisors, accountants and lawyers, the time saved brings compounded benefits to your internal team.
You can focus on growth, knowing that you have a trusted, value-adding partner to lean on that shoulders international legal, tax, HR, and financial regulations. Our partnership enables you to reach full potential.
Reach out to our team – we can help you build value now for future success.