Transatlantic M&A: Navigating cross-border transactions
Transatlantic M&A: Navigating cross-border transactions
Ensuring success in international mergers and acquisitions requires a deep understanding of the differences between Europe and the United States. Like any long journey, cross-border M&A calls for thorough preparation, flexibility, and the right advisors by your side. At Eight International, our professionals support investors and dealmakers across the Atlantic every day.
We’ve created the Transatlantic M&A Playbook, a practical guide that highlights the crucial distinctions between European and US dealmaking. This resource is designed to help investors anticipate challenges, minimise risks, and unlock value creation opportunities. It provides insights on compliance, tax structuring, cultural alignment, and risk management, equipping you to approach cross-border deals with confidence.
Cultural differences: negotiation styles and approaches
Cultural expectations strongly shape how M&A negotiations unfold across the Atlantic.
- Europe: Negotiations often take a formal and trust-driven route. There is an emphasis on building long-term relationships, cautious decision-making, and compliance with detailed regulations.
- United States: Discussions tend to be more pragmatic, straightforward, and outcome-focused. The priority lies in efficiency, speed, and measurable short-term results.
These differences extend into due diligence practices. In Europe, reviews generally concentrate on operational and market aspects, analysing industry risks, growth opportunities, and business fundamentals. In the US, by contrast, financial indicators take centre stage, especially quality of earnings, given the less frequent use of statutory audits and the greater focus on bottom-line performance.
Understanding and adapting to these cultural dynamics is essential for smooth negotiations and successful outcomes.
Tax and financial structuring: driving value
The way deals are structured can significantly affect profitability.
- Europe: Share deals are more common, with tax liabilities being transferred to the buyer.
- United States: Asset deals are frequent, and goodwill can be amortised over a 15-year period.
Tax regimes also differ. US entities can elect for opaque or transparent taxation, directly influencing how liabilities are managed. Financing structures show contrasts as well: while European deals often rely on structured financing with a strong debt component, US transactions lean more heavily toward equity funding.
Additionally, while intra-EU and intra-US flows are typically free from withholding taxes, transatlantic transactions may be subject to them. That’s why proactive tax planning is essential to reduce costs and capture post-deal synergies.
Compliance: navigating regulations
Overlooking regulatory obligations can lead to costly delays, or even cause a deal to collapse.
- In France, for instance, companies must consult the Social and Economic Committee (CSE) before signing a transaction, which may extend the timeline.
- In the United States, CFIUS has the authority to block deals on national security grounds.
- In Europe, foreign direct investment (FDI) is scrutinised at both Member State and EU levels.
Contract law also diverges: while France enforces good faith as a legal duty, the US does not, which directly impacts how agreements are written and negotiated. Close legal coordination is therefore crucial to keeping deals on track.
Risk management: protecting deal value
Risk allocation differs widely across jurisdictions.
- Europe: Parties rely heavily on transparency and good faith. Deals often use locked box mechanisms, where the price is agreed before closing, and sellers assume full responsibility for the information disclosed. Anti-sandbagging clauses are common, limiting buyers from making claims if they were aware of an issue pre-closing.
- United States: Risk is managed primarily through contractual protections. Purchase prices may be adjusted at completion, warranties are carefully drafted, and warranty & indemnity (W&I) insurance is often used. Pro-sandbagging clauses allow buyers to claim even when aware of potential risks.
Tailored legal advice is essential to navigate these differences and secure transaction value.
How Eight International supports clients
With multidisciplinary expertise across financial, tax, and legal matters, and an international team experienced in both Europe and the US, we guide our clients through every stage of the M&A process.
Download our Transatlantic M&A Playbook to explore our insights further and learn more about our Transaction Services and Tax Consulting capabilities.
