Deal Strategy

What This Means: Cross-border M&A involves acquisitions between companies in different countries, requiring navigation of multiple regulatory frameworks, foreign investment laws, tax treaties, and political considerations. Middle market cross-border deals face unique challenges including limited resources for regulatory compliance and cultural integration across borders. The Challenge: International deals face complexity disproportionate to their size – foreign investment reviews, multiple regulatory jurisdictions, and cultural considerations that can overwhelm smaller deal teams. Why It Matters: Cross-border deals offer significant growth potential but require sophisticated regulatory navigation and extended timelines to avoid costly failures. Illustrative Deal Scenario: A C$120 million Canadian manufacturing company’s acquisition of a US$95 million U.S. competitor encountered unexpected complexity: Complex tax structuring to optimize withholding taxes and avoid double taxation CFIUS filing requirements and national security review processes Integration of different regulatory frameworks (FDA, EPA, OSHA vs. Canadian equivalents) Currency hedging amid evolving CAD/USD exchange rates Cross-border data transfer compliance requirements The transaction extended from a planned 6-month closing to 14 months, with combined advisory costs reaching C$4.2 million. However, the combination achieved 28% cost synergies through consolidated North American operations and shared supply chains. Key Insight: In middle market cross-border M&A, regulatory complexity often exceeds financial complexity, requiring specialized expertise and extended timelines. Critical Success Factors: Begin regulatory analysis during initial due diligence Budget 18+ months for complex cross-border transactions Engage local advisors early in each jurisdiction

What This Means: Technology due diligence is the comprehensive evaluation of a target company’s technology assets, including software architecture, intellectual property, development capabilities, security systems, and scalability potential. This process assesses code quality, technical debt, cybersecurity vulnerabilities, and patent portfolios. The Challenge: Technology due diligence must uncover invisible risks: Can the code handle 10x growth? Are there unpatched security vulnerabilities? Is the codebase dependent on outdated frameworks or single developers? Does the company actually own its IP, or is it built on improperly licensed open-source code? These questions determine whether you’re buying an asset or a liability. Why It Matters: Technology problems are expensive to discover late. Whether it’s IP ownership disputes, technical debt requiring complete rebuilds, or security vulnerabilities exposing the business to breaches, issues missed during due diligence are costly to resolve and can derail the entire acquisition strategy. Real Deal Example: Hidden technical issues can derail entire acquisitions. When eBay bought Skype for $2.6 billion in 2005, due diligence missed that Skype didn’t own critical peer-to-peer technology (“Global Index”) that powered its core calling functionality – it was licensed from Joltid, a separate company owned by Skype’s founders. Joltid sued eBay over licensing of the peer-to-peer technology that Skype used to distribute calls. eBay failed to identify that core technology was licensed, not owned. The licensing terms weren’t properly secured. This was discoverable during due diligence but was missed or inadequately addressed. Combined with broader strategic failures, eBay took a $1.4 billion write-down in 2007 and sold its majority stake just four years later, having learned an expensive lesson: verifying technology ownership is foundational to successful integration. Framework Available: If you’d like to explore technology due diligence frameworks that catch these critical ownership issues, we can discuss how they apply to different deal types and industries.

What This Means: Creative financing involves structuring deal funding through non-traditional methods when conventional debt or equity financing is insufficient, unavailable, or strategically undesirable. This can include leveraged buyouts, mezzanine financing, contingent consideration, or complex debt arrangements. The Challenge: In hotly contested acquisitions, pure cash offers may seem attractive to sellers, but buyers must balance competitive positioning with capital efficiency and shareholder value preservation. Why It Matters: Strategic financing structures can optimize deal outcomes across all transaction types—whether addressing competitive auctions, bridging valuation gaps, preserving capital flexibility, or aligning stakeholder interests—but require sophisticated execution to avoid overpaying or overleveraging. Real Deal Example: Disney’s $71.3 billion acquisition of 21st Century Fox assets in 2019. Mid-Market Application: While this example showcases a mega-deal between public companies, the same creative financing principles apply powerfully to middle-market and private company transactions. Consider a $10M acquisition where the buyer uses seller financing for 20% of the purchase price, earnout provisions tied to EBITDA growth, and management rollover equity—this hybrid approach can help bridge valuation gaps, preserve buyer cash, and align all parties around success metrics. The scale may differ, but the strategic logic of optimizing deal structure through creative financing remains equally valuable. Deep Dive Available: For strategies on structuring competitive bids that win on value rather than just cash, including hybrid structures, let’s schedule a discussion. 🌍 Global Pulse M&A Market Update: September 2025 The M&A landscape in 2025 continues to show divergent trends between large-cap and mid-market activity. While dollar volumes have increased materially thanks to headline-grabbing transactions worth $10+ billion, deal counts remain down 10-20%, and the mid-market has not seen the same boost. Economic policy is stabilizing, with reduced uncertainty and supportive tax and deregulation tailwinds, though tariff volatility persists. Financing remains robust as private debt and secondary capital strategies help firms meet their liquidity needs, especially in the mid-market where traditional exits have proven difficult. Non-discretionary services continue to drive mid-market deals, while technology, financial services, and healthcare headline large-cap activity. Recent notable transactions include Advent’s acquisition of LayerZero Power Systems (industrial technology), TopBuild’s $810M purchase of Progressive Roofing (commercial services), and Vomela Companies’ acquisition of PFL Tech (marketing automation software). Exit activity is expected to build slowly but steadily alongside continued M&A momentum into 2026—should interest rate relief materialize as expected(1) 🤖 AI Tools Spotlight Gamma Launches Version 3.0 With New AI Capabilities What The Tool Does?: Gamma is an AI presentation platform that creates professional slide decks from text prompts. Version 3.0 transforms it into an intelligent design assistant that can automatically redesign entire presentations and integrate with business workflows. Key Features: Why It Matters?: This latest update shifts Gamma from manual slide editing to intelligent automation. With 50 million users, it addresses the core problem: presentations take too much time to create.