Even for the most successful companies, international expansion can be exceedingly difficult. From world-renowned operations such as Disney to fast-growing start-ups like Groupon, the unexpected challenges—and even failures—of expanding overseas often can be attributed to people.
As businesses expand across borders, they must understand the complexities of transactions between divisions, subsidiaries and companies that are under the same ownership but operate in different tax jurisdictions.
The risk of not being part of Africa’s fast-growing business opportunities is pushing business schools in Western Europe and the United States to start expanding onto a continent that is emerging as a force in the global economic enterprise.
Corporate inversion, the practice of reincorporating an American business in a different country by merging with a smaller overseas entity, often to take advantage of lower tax rates, was in the US Government's spotlight in 2014. In September, the US Treasury Department issued new rules that effectively eliminate the practice. In an article published by Corporate Compliance Insights, Katie Davies, Senior Director, Advisory Services at Radius, sheds some light on what happens now for the companies and their executives who rushed to beat the Treasury Department's deadline.
“Don’t assume things work like in the U.S. and don’t take anything for granted.” - Larry Harding
That clear-eyed bit of advice came from a CEO at a consumer goods company, in response to a survey we conducted on the topic of global expansion. The survey, done in partnership with CFO Research, asked senior executives at small- and mid-sized businesses about the opportunities and challenges of opening overseas offices. Nearly 90% of the respondents were already operating overseas (the rest were considering expansion), and nearly two-thirds (65%) expected to be increasing their global footprint within a year of taking the survey.