Doing International Business? Sweat the “Small” Stuff.
By Hdeel Abdelhady
Business transactions necessarily become more complex when they involve two or more countries. The legal tasks associated with business transactions multiply in cross-border contexts. Among other tasks, it is necessary to understand the content and applicability of foreign laws, retain local counsel, addressconflict of law issues, and make (hopefully strategically, rather than as an afterthought) governing law and dispute resolution selections.
These more obvious, foundational, and substantively significant tasks tend to get the most and earliest attention from deal teams, and rightly so.
Avoid Unnecessary Legal, Financial, and Relationship Costs
But the focus on more substance aspects of international transactions should not be exclusive. Often, tasks that are secondary and more administrative in nature—such as registering a security interest, obtaining a power of attorney, notarizing a transaction document in accordance with local standards, or obtaining government approvals bearing required seals—tend to get little to no attention, particularly at the outset of international transactions.
Ignoring or failing to plan early for these tasks is a mistake. Such steps, which often are needed to effectuate a transaction legally and practically, are critical. Delays in completing these steps can be costly, in legal, financial, and relationship terms.
Plan Early, Gather Information, and Verify
As a general practice, legal personnel and other responsible team members should take steps at the outset of transactions (including foreign market entry or expansion) to map out the administrative, licensing, documentation, or other measures that will be required to finally and officially complete a transaction.
Such steps should include the following, as appropriate for the foreign jurisdiction(s) and transaction type(s):
- Thoroughly inquiring and verifying (i.e., more than once and/or with multiple sources in relevant agencies or offices) information about exact registration, documentation, and/or other administrative actions necessary to consummate or formalize a transaction. This can be done through or with the assistance of local counsel or other local representatives, and/or with the help of any company personnel on the ground.
- Reaching out to relevant agencies or other parties early and more than once can be immensely helpful, if this outreach is done with the right goals in mind. As a priority, such contacts should be approached as dry runs designed to gauge relevant parties’ general availability, responsiveness, and consistency. Done right, early outreach can yield valuable information for planning, such as assessing the amount of time, resources, and contacts that might be necessary to complete a needed task, taking into consideration the uncertainties inherent in the involvement of external parties. (Side Note: When dealing with government agencies, including on purely domestic matters, I make contact more than once for the purposes of obtaining information and, more importantly, gauging the knowledge, style, and responsiveness of personnel who will eventually be essential for the completion of a matter).
- Obtain specimen applications, forms, or other documentation that will need to be completed. Having such documents early will allow the team to prepare (with, e.g., checklists) and formulate more precise questions for local counsel or other parties liaising locally on your team’s behalf.
- Track down information about the experiences of companies or other parties who have completed similar transactions or have required the same registrations, licenses, or other clearances to understand any likely hurdles and act to avoid or mitigate the time and cost dealing with any them. In taking this step, it is best to focus on experiences of parties that, if available, were similarly situated (e.g., foreign companies in the same or similar industries).
Bottom Line: Sweat the Small Stuff
Of course, different or other steps– as suitable for jurisdiction(s), transaction types, and team capacity– can and should be taken to make it more likely (but not guaranteed) that all transaction steps can be completed efficiently and on time. The key is to be aware of secondary or administrative tasks, understand their importance, recognize that such steps are not uniformly “easy” or pro forma around the world, and plan early and appropriately for context. In other words, sweat the small stuff.
Hdeel Abdelhady is Principal at MassPoint Legal and Strategy Advisory PLLC. She has handled transactions, disputes, and compliance matters in and involving the United States, Africa, the Middle East, Europe, Asia, and Latin America.