Expanding into Europe as a US business with David Bates of Taylor Wessing

In an era where businesses are increasingly crossing borders, understanding the intricacies of international law and market dynamics is crucial. In this episode, David Bates, Partner at Taylor Wessing, discusses the complexities of expanding into the European market, highlighting key differences in regulations and cultural norms.

Key Takeaways:
(02:17) The European M&A market shows signs of recovery.
(05:36) European employee protections are generally stronger than in the US.
(07:48) Hiring processes in Europe are typically slower than in the US.
(10:00) The EU is advancing digital regulations more comprehensively than the US.
(11:00) GDPR sets a global standard for privacy, influencing global legislation.
(12:18) Europe is not a homogenous market; each country has unique systems.
(14:30) France's "right to switch off" mandates an eleven-hour work break.
(15:49) Cultural differences significantly affect business operations in Europe.
(22:00) Understanding local market differences is crucial for success in Europe.
Resources Mentioned: 
David Bates - https://www.linkedin.com/in/dbates2/
Taylor Wessing - https://www.taylorwessing.com
Taylor Wessing | Website - https://www.taylorwessing.com/
GDPR Guidelines - https://gdpr.eu/
European Data Protection Board - https://edpb.europa.eu/
Digital Markets Act - https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en
Digital Services Act - https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/digital-services-act_en
AI Regulation Updates - https://digital-strategy.ec.europa.eu/en/policies/european-approach-artificial-intelligence

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Interesting on the privacy side on GDPR is actually we've seen the rest of the world in a lotof respects follow that. There's legislation in a lot of countries in Asia, which again ismodeled on the GDPR. So that really has set a global standard for privacy.

You're listening to the Global Work Force podcast with me, George Britton.

Each week, we interview an industry expert to dive deeper into the world of managing aglobal workforce and discuss the big strategic challenges that you're going to encounteralong the way.

This episode is brought to you by Omnipresent, the global employment platform that allowsyou to employ anyone, anywhere without having to set up an entity.

Designed, built, and supported by global employment experts, Omnipresent takes care ofyour international employees and contractors so you don't have to worry about payroll, HR,or compliance issues, making it easier, faster, and safer to expand internationally.

My guest today is David Bates. David co heads Taylor Westing's business office in SiliconValley. He specializes in advising US clients and then assisting them on their m and aactivity, investments, and expansion plans to the UK and Europe. Welcome, David. Great tohave you on the podcast.

Thank you, George. Great to be here today.

Fantastic.

So, David, one of the things I wanted to, really kick off with is, I think, generally, I think it'sconsidered the m and a market in the last, eighteen months or certainly last year were,were fairly flat. But there's a lot of, excitement about coming to the talent of twenty twentyfour. And right now, we're in early early July. So, there's interest in in some in some earlygreen shoots there. Just wanted to get your take on on the market activity generally, andwhat are the key trends that you're seeing from your perspective?

Sure. I mean, I think you're you're absolutely right. Last year was definitely a flat or even adown year compared to what we've had coming out of the pandemic. It was, boom times,and then we all know what happened with sort of Ukraine, inflation, interest rates,etcetera. And that really did put a break on, the VC markets and the m and a markets, theIPO markets that drive a lot of activity, particularly out of the US.

And, you know, last year was a difficult year. There were, you know, fewer deals, beingdone. I think you're right. We are seeing, some green sheet green shoots.

Sorry. If you look at PitchBook data, for example, the first half of the year, which has justfinished first half of twenty twenty four, there was a recovery. Volumes were, you know, up,not dramatically, but definitely up and moving back in the right direction. Numbers sort ofyou have to go back to twenty twenty two to see to last see equivalent numbers, that was,I think, in large part driven according to the data by a lot of, mega deals, the the the bigsort of consolidation in the tech industry in particular as companies come out of, you know,starting to see inflation going in the right way.

There's interest rate cut predictions, sort of certainly priced into the market. So what wenow need to see is that momentum sustained for the second half of the year and the sortof upper mid market, which drives a lot of activity in terms of volume, pick up and mirrorwhat's happened in the mega deals. And if the IPO markets continue to sort of regaintraction, that will drive activity as well. So, the reasons for cautious optimism is, probablythe best way to describe it.

Yeah. Make makes a lot of sense. In the UK, they announced today the inflation figures waswas staying at two percent. So that's that's certainly positive compared to where we'vebeen. So fingers crossed that the green shoots can can help us turn the corner.

Now, obviously, you specialize in helping US companies and their expansion to Europe bethat through different different means. I'm curious to get your take on what most commonquestions or most common kind of topics come that come up in in your line of work andwhat US US companies are really thinking about when they're doing that.

Well, I think it depends a lot on the, experience of the US company. If they've beenoperating in Europe for, you know, some time and have their own operations or haveacquired operations in Europe, then they'll have a pretty good knowledge. And to them, it'sjust, another transaction. We're very fortunate to have a lot of clients who are serial,acquirers. They know the playbook and they, you know, they know what they're doing. Ifyou are Europe for the first time, that's when I think more questions, arise.

And that's because it's different. It's not that Europe is, better or worse or wrong, and it'sjust a different market. There are different legal systems. There are different, commercialsystems.

And even, within that, there's no one such thing as Europe for these purposes. You know,the how deals are done in the UK is different to how deals might be done in Greece, whichis how different to how deals might be done, in Spain, so or France. So we part of the sortof the skill that we try to bring to clients is to help them understand those differences andnavigate them, and work with them to understand what are the key things they need to beconcerned about and how to manage that process.

We get a lot of questions, and we'll come on to this more, I think, later on around, youknow, the difference in employment laws. That's one of the big ones that we see, justbecause it is so different across Europe, to the US. I think we'll touch on that in more detail,but that's that's the sort of the high level where I think the differences are.

Yeah. Yeah. It makes a lot of sense. I think employment employment law is one topic thatwe'll we'll come on to, but it's interesting how, obviously, because there's a there's the,European Monetary Union. Right? And there's loads of there's loads of, countries that arethat are, using the same currency, but have, you know, a central bank and and alsodifferent completely different, tax regimes, country by country. So, incredible amount ofcomplexity that goes on there.

In terms of and I think the the other thing about just to touch a bit a bit about employmentlaw is, I just wanted to get your take on, like, the key things that you would be talking abouton the on the employment law upfront with, with your clients. What are the key things thatyou need to to be known for speed on Nominally?

Yeah. Sure. So I think the key difference is, the US has employment at will, which is, youknow, there are pluses and minuses to that. The the the proponents would say it makes theUS economy very dynamic. It allows both companies and employees to move on, veryquickly.

We quite clearly don't have that, across Europe.

Europe is, generally speaking, much more employee friendly, than the US. Now there's aspectrum there within Europe, the UK. If you've been employed, at least under the currentlaw, that may change with the new government for less than two years. It's pretty close toemployment at will.

Germany, if you have fewer than ten employees, it it's also, again, pretty close to,employment at will. And then, you know, there are some of the more southern Europeancountries, where employee protection is at its sort of high watermark, where it can take aconsiderable amount of time, money from an employee. Employees have a lot of protectionaround their sort of continued employment. And that is, I think, the biggest challenge thatwe see with US clients getting their head around.

They're used to a more dynamic environment of people moving, both because theemployee wants to move or because the employer wants them to move than you often see,in Europe. And that is the, that's probably number one. The cost also can be, a lot higher inEurope in terms of the, social charges, the European equivalent of national insurance in theUK. In a lot of European countries is a lot higher, than in the US, and that sort of financiallevel can come as a, a shock to, to employers as well.

Yeah. Absolutely. I think that's that's a really interesting one. And I think two of the two ofthe common things that we often see are are, firstly, that as you mentioned thatemployment and will.

Yeah. Especially when you get over certain thresholds, all of a sudden you've got a defaultthree month termination period. Like, that's when they catch up people off guard from theStates of them. The other thing is the, because you have that employment at will, you alsohave, I think it's really interesting when it comes to, job offers and, like, the the powerbehind that.

Like, certainly, lots of European companies, when they're making an offer, they know thatthis has to be a serious thing because they can't just pull it very quickly. But, but in the inthe US, it's very different. But like you say, employer costs are really different when you'vegot places. France, one of the most expensive countries in the world compared to the US.

But then on the flip side, the benefits are really different. Not not many people are going toexpect, you know, additional health care benefits, but it's kind of the default in the states.Right?

Exactly. And the other part you make a good point about the hiring thing. The the thing weoften under have to explain to clients is that the hiring process also just takes longer inEurope. If someone is with their current employer and has, say, a three month noticeperiod, it's not that they can give notice on a Monday and start the following Monday withyou.

They'll have to, unless you can agree to have a different serve out that energy period. Sothere is a longer runway on that sort of you may find someone who likes them and offers ajob, but you might then be waiting two, three months before they can start, and that's verydifferent, to what people are used to here, in the US. So it it it it will come back to thistheme again again. It's not that one is better than the worst.

It is just you have to sort of explain there are differences, and these are the differences,and these are the, you know, the practical implications of them.

Yeah. Absolutely.

So employment law of law, so I guess I'm curious to get your take on some of the widerregulatory, implications. So, you know, the obvious one that springs to mind for me isGDPR. And, like, yeah, does that do you find that that that's an educational piece for clientsas well, or are they more kind of up to speed on some on things like data protectionregulation?

I think data protection, the picture has changed in the last five plus years. When GDPR wasfirst coming in, in the run up to twenty eighteen, it was very new. It was, very different,particularly for US, you know, US companies. A lot of countries in Europe already hadpriority laws. Germany, for example, before GDPR, which effectively sort of brought in acommon standard across Europe where there were multiple different standards before.

So the that was very different. But we're, you know, six plus years down the down the roadnow. A lot of US companies are, you know, much more familiar with that, regime and muchmore understanding of it. What's also helped that journey, undoubtedly, is that you nowhave a number of states, in the US that have their own privacy laws. They are not, I thinkit's fair to say, as extensive and all encompassing as GDPR, but they're on that spectrum.

California was probably, you know, the first major one and certainly the high watermark,the CCBA that came in in California in first January twenty twenty.

And because California is such a big market in the US, if you're a US company of any size,you're gonna have to be complying with that anyway, and you're gonna have to have yourown privacy policies. And that is you know, it's modeled on the GDPR. It's not as extensive.It doesn't go as far, but it has a lot of similarities.

So most sophisticated US companies of the size that are, you know, thinking of goinginternational and coming to Europe, they've already dealt with a lot of privacy stuffbecause of the legislation, in the, in the in the US. What I think is interesting though is thereis now a sort of second tranche of digital regulation coming out of Europe.

The AI Act came into finally came into law this week, will take effect, I think, from the firstof August.

You'll have you've got things like the Digital Markets Act, the Digital Services Act, a lot oflegislation coming out of the EU in particular, seeking to sort of regulate the digitaleconomy that isn't currently mirrored, in the US. The US has a very different approach tothings like AI regulation, its guidelines. There's no federal legislation. Some states arestarting to look at it, but I think the more business friendly ones that are trying to putbusiness friendly AI regulation in place.

The UK, interestingly, doesn't yet have a sort of a comprehensive set of AI regulation and isfollowing more the US path, which may be a competitive advantage, for the UK whenlooking to sort of attract investment in this sector from from Europe. So, you know, we'rekind of through GDPR, but there's lots of other stuff coming, and in the pipeline aroundregulation that I think the US companies will need to understand and get their head aroundbecause, again, it's just different to what they're used to here.

Yeah. It makes a lot of sense. Sounds like on the data protection side of things, kind of likeEurope leading the way and then then the US kind of kind of follows it. But on it, on AI, it'sstill probably a bit in symphony. Right?

I think that's exactly right. And what's interesting on the privacy side on GDPR is actuallywe've seen the rest of the world in a lot of respects follow, that. There's legislation in a lotof countries in Asia, which again is modeled on. It's not as extensive.

It was modeled on the GDPR. So that really has set a global standard, for privacy. I'm notso sure that will be the case when it comes to things like AI. I think there's much morescope for different approaches, there.

And I think that certainly, the view here in the US is that it's almost too early to regulatesome of the stuff because we don't actually know what it is fully yet. And your theregulation will be out of date six months after it's, in place. So, but that doesn't mean that ifyou're in that sector or using AI, a US company already in Europe, you are now gonna haveto pay attention to this.

Yeah. It make it makes total sense.

You know, I think I think you're absolutely right. There's there's we're still learning so muchabout this at the moment. And, you know, to apply a regulation right now is gonna be, let'ssay, our our state in a few months' time most likely.

I'm curious to get your take on on market dynamics more broadly. So how in your mind themarket dynamics in Europe differ from the US, and what should US companies be thinkingabout? What do they need to kind of price into into deals that they're doing in in Europe?

Yeah. So I think what's interesting is as an as an outsider, my perspective is actually,although there are fifty different states in the US, they are all actually remarkably similar. Imean, that may sound slightly strange at the moment with certainly sort of politicaldebates that are happening, but there is a lot of similarity between, I find the states whenyou travel them and and people's approach to, you know, business or life generally. And Ithink there's much more that sort of I think Americans have actually much more in commonthan they realize with each other than a much less that divides them.

Whereas, if you look at Europe, there again, come back to that earlier point that wherethere are now twenty seven members of the EU, they are all distinct countries and, youknow, there are similarities, but there are actually quite a lot of differences, I think, inculturally how people approach business. How you do a deal in Greece is different to howyou do a deal in London, is different to how a German would approach a transaction.

So you have to be I think the key is understanding, taking the time to understand the localmarket you are actually operating in and not thinking that there is this just onehomogeneous thing, called Europe and everything is the same, you know, all the way from,you know, the Atlantic coast in Portugal right up to the borders with Russia. It's not. It it isvery different, across those markets, and it is about taking the time, as I say, tounderstand, the differences in those markets.

And then within that, there are, you know, differences within, you know, that are differentto how things operate in the, in the US. Things, generally speaking, may not be as fastpaced as Americans are used for in terms of, getting transactions done. They take a littlebit more time perhaps in certain countries, in Europe. There's definitely more process andregulation in some of the, civil law jurisdictions of Europe where you've got the involvementof sort of notaries and chambers of commerce and how you actually record transactions isdifferent, and there's just more process involved, as I say. So it it is about understandingthe local market you are operating in and how that market operates. There's no there is nosubstitute I find for actually getting that getting your as a company, getting your handsdirty and getting in in there and understanding, you know, how to what people like to see inthose markets.

Yeah. Yeah. I mean, it makes a lot of sense. I think, such a bit on, like, some of the some ofthe legal the legal aspects there, but I guess there's also you touched a little bit on some ofthe cultural side system might take a bit longer.

You know, try and try and acquire a company in Sweden in August. Like, it's gonna be anightmare trying to get things done right. So Yeah. Can you talk a bit about, like, thecultural side of things in particular?

How you start to think about integrating these different workforce on different side of theworld with different culture? What one do you have on that?

We've touched on a very good one already. It still always comes as a shock to people whodon't understand it that, you know, I wanna get a transaction done in Spain in August. Well,you know, that is not going to happen. You so you have to understand that, you know,again, the cultural difference that people take holidays in a different way in Europe, thanthey do, in the US.

So there are there are things like that. There are, issues around, you know, working hoursand availability. You know, France now has the right to switch off. You have to have aneleven hour sort of break away from your, device or your computer, and, you know, not tobe contactable.

Now clearly, many senior people don't may not abide by that, but that is you you don't havethe sort of twenty four seven availability of people that, certainly, you think a lot of peoplein business in America are much more generally available and contactable and, workinglonger hours. So it is again, it's those sorts of things. Germany, if you believe the statisticsare still much more of a cash economy than a, you know, a credit card company, and that'schanging as the younger generations take over. But if you're a online business, that has animpact on you in terms of how things get paid for and, you know, market penetration ofdigital, services or buying things online, much higher in the UK.

It's the high watermark of Europe versus some of the, you know, Mediterranean countries.So it is under again, in my earlier point, it is sort of those those are sort of interestingcultural differences in and of themselves, but they also drive how you operate, as abusiness. There are things the the way you advertise products is different. In the in the US,you'll see adverse you know, this is the best burger in the world.

You can't say that in Europe. There are regulations that say you if you're gonna make astatement like that, you have to have empirical evidence or independent evidence thatbacks that up.

So there are things like that you just need to be, aware of to work your way through. Butwe shouldn't I think it's important to say, you know, there are also fantastic opportunities inEurope. It's a massive market. There it is, four hundred and fifty million consumers.

You know, if you took it as a whole, the size of the US economy, so there is, you know,there's also a lot of positive as well. We should also just focus on the all the differences.

Yeah. Yeah. No. I totally agree. And, you know, I totally buy into the the best burger in theworld concept. Like, I'm not gonna hold you to account if I don't like it.

Yeah.

Perfect. I guess the other the other big consideration I guess there's a number of differentthings flowing right in my head right now, but one is the big difference in, political andeconomic risk. Right?

So Mhmm.

This is, I think, the second podcast we've recorded since the new UK government. Yep.You're never here. Feels like over in the states, it's like there's a the wind blows a differentway every other every other week, and, that kind of even just things like the debate, from acouple of weeks ago can have an act on expectations and then business take businessesstart to take action, sooner rather than later on on some of those predictions.

I'm curious to get your take on, how that might affect, some of the transactions that you'reseeing in flight and what people need to be considering when when there's when there'sthings like an election year going on.

Yeah. I think what's interesting is, I mean, there's the big sort of macroeconomic things andcertainly sort of Ukraine and the consequences of that around sort of energy and securityleading to inflation, interest rate rises, that definitely had an impact on, sort of transactionsUS to Europe, and vice versa because of that uncertainty business, as we all know, doesn'tlike uncertainty.

And, you know, that is the thing that causes people to pause. What I would say at themoment is I think the the more interesting sort of issue if if we're looking at sort of UScompanies undertaking activity in Europe is the US sort of political and economic positionthat drives a lot of that.

We've we've been through and, hopefully, we're going through an end of a period where,you know, US companies have, for very good reasons, you know, looked inward. It's thebiggest economy in the world. They've got their own, you know, huge domestic market toaddress. And in tougher times that we've all been through, you focus on that.

You focus on your core and make sure, everything is okay and you're, you know, payingproper attention to your domestic market. As you come out of that and hopefully theeconomy, you know, across Europe and the US pick up, you can then look more, you know,internationally, look at, you know, more, you know, into the doing things internationally,particularly the first time comes with a cost. In a difficult market, you're gonna preservecash and not, you know, incur those costs. As we move out of that situation, you know, youmay start see companies hopefully starting to look international again as they, you know,perceive the economic risks to be lower.

I think we you know, as everyone knows, there's an election here in the US in a in a coupleof months that will have an effect typically of slowing things down for a few months in therun up to that, election.

It's driven by the public market, which will be quieter during that period.

And then that trickles down to other sectors or other sort of types of work in the economy.

And then we'll see what happens, with that election.

The the big unknown is will be, you know, if, Donald Trump wins his trade policy, it lookspretty protectionist from what he sort of announced yesterday. Sixty percent tariffs onChina, ten percent tariffs on all goods coming into the US. That will, it's just mass. That willput prices up for consumers.

So does that cause a slowdown, here in the US? And does it make it harder for UScompanies to do, business internationally, both from a sort of, you know, a pure economicstandpoint and also from a mood music point? Is there much more of the America firstagenda and people need to be seen to be, spending their money and time here, rather thanon international staff. Now these big companies, they have to be international becausethey can't you know, the market in the US just even bigger than it isn't big enough for themalone. Apple is not only going to sell iPhones into the US. But those are, you know, one endof the spectrum, and they drive a lot of work, but they don't drive everything. So we'll haveto see what impact those economic policies, happen if there is a change of regime here inthe US.

Yeah. It it's super interesting to to see how all of these things affect different differentcomp different industries. So I was talking to a a green tech company the other day, andliterally changed their strategy off the back of the debate and and and the performancefrom a from a couple of weeks ago.

Yeah. I can understand that because Biden has pushed, you know, the green agenda.There's been a lot of money for green tech through the various sort of, bits of legislationthat he was able to get passed. That will undoubtedly all change, particularly if, theRepublicans have control of, you know, all parts of government and can pass whateverlegislation they want. So I I can completely understand that. I think we're all in slightlyawaiting the same see mode until, until the results in November, and then, you know,people will adjust accordingly.

Yeah. Absolutely. I mean, I haven't even touched on, the French situation or, there was theKing's speech today actually in the UK.

I won't I won't test you on that just yet because I think everyone's keen to do what actuallyLabour are gonna gonna Right.

Delivering. But, yeah, something some interesting to add.

Yeah. I mean, the my perspective from from here is that, actually, the for a in the UK and infor a lot of places, the gap between the parties isn't as big as they make out, and thechanges I don't think the changes in the UK particularly will be that dramatic in that sort ofmacroeconomic, sphere. I I don't think there's the economic is going to do that, and, also, Ithink there's the sort of political, you know, conceptual difference between the parties anda lot of stuff. That's that's slightly different here in the US at the moment. Both parties are,I think, further apart than they have been for some time.

So I don't necessarily I haven't it's early yet. I haven't seen it, but, whether that would, youknow, make a lot of difference to US companies making investment decisions, for the UK,for instance.

Yeah. Yeah. Understood.

And I understand in fact that, certainly, mood music is the the the low party wants toattract a lot more in with investment. So, hopefully, they're doing things that make thateasier.

Yeah. Fingers crossed.

Let's get back into the nitty gritty for a second. So I'm curious to get your perspective on,BDE considerations. And so what are the things that, often might come up at the lastminute or kind of in later stage deals that the the US companies might not be might nothave already factored in when they're when they're acquiring in Europe, for example?

I think the, in terms of sort of if I look at Didi as a whole, the the things you would bediligent seeing in a purely US transaction are the same things that you would be diligentseeing in a, US to, let's say, UK, France, German transaction.

But the answers and what you're looking for is different. So the sort of the topics and thesubjects I was saying, but the information that you need to get into and the the detail ofthat is different. Coming back to an earlier point, that's where you need experts whounderstand the local market lawyers, accountants, tax advisers who, can, you know, tellyou if there's a problem. A provision in an employment option agreement that is absolutelyfine in the US may not work, may not be valid, in, say, the UK or in France.

And so it's it's understanding that level of detail of knowing what it is to look for in thesesame topic areas that you would be looking at in the US. But as I say, the answers will bedifferent or the the flags, will be different, and making sure you've got people whounderstand what it is that are actually the key points to look at in those in thosejurisdictions. You can't run a, I don't think you can successfully run a sort of diligence on aEuropean business solely from the US with just US to people who are familiar with the USonly.

Yeah. I completely agree. And just to bring it back to one of the earlier points, if youimagine if you're doing a transaction in the US, maybe the acquisition, you've gottermination at will. So actually you can make very easy decisions about what you're gonnado with the workforce. Whereas in in Europe, you might be inheriting a number ofemployees, lot a lot of them with, long severance packages, all the rest of that.

So Yep.

That that's absolutely right. We see that a lot.

If you're doing a what we call a carve out transaction where you're buying a businessrather than a company, in the US, you, sort of everyone gets offers a new role or everyonedoesn't or some do and some don't. Whereas in in UK and Europe, people's employmenttransfers automatically with that. You have no choice but to take them.

That's very different, than what you have in the in the US, and you have to help people inthe US understand that because they're used to being able to what they call offeracceptance. We'll choose the ones we want and make them an offer, and then we'll see ifthey accept. There is no you don't you can't do that in Europe. You get everybody whenyou buy a business, if you're buying a business rather than a company. So there are thingslike that that are points of detail, that you have to be make sure that people understandbecause there is again, it's not right or wrong.

It's just diff Yeah.

Yeah. Makes total sense.

So I'm curious to get your perspective on the the other aspects of, like, the posttransaction side of thing. What are the what are the common areas where US companiesmight trip up? And, what what would you suggest to people to ensure a smooth,integration post transaction?

I'll I'll start with the trite one, time zones.

The, we're certainly seven people, who failed to realize that it is a different time zone and,you know, set meetings at times that just don't work for colleagues in Europe orunderstand that, you know, there is a different you know, just because it's, you know, threePM in New York and people are happy to meet doesn't mean they're happy to meet atthree PM in New York in in Europe. It's amazing how many times we see that, you know,crop up. People pretty quickly get their head around it, but at the start, it it's an issue. Ithink it is about getting, more seriously. It's about sort of culturally getting your arms,around people, making them feel part of the team.

There are various ways to do that. There's no one right answer. But, certainly, you know,ones that I've seen people do it best is they invest time and particularly sort of seniormanagement time. So and that's not just Zoom calls.

There is, I think, no, substitute for some in person stuff. So we see people people who dothis successfully are bringing the appropriate sort of level of, you know, relatively seniorexecutives over for periods, you know, to spend time with the teams they have acquired,so that that they can both get to know them and also to give them the opportunity to getto know the company that they're now part of and the, you know, the leadership team theymight be part of or the or their leaders from the, from the US. I think you, you have toinvest to do it successfully. I think you have to invest the time and money to do that and,like, the clients we work for that are most successful, at least we see them do thatregularly in consistency, and they have, plans and action plans that are essentially a, aplaybook for how to do that.

And I think that works, very well. And then to the earlier points, then it is aboutunderstanding, you know, the market. How does the product fit in that market? Does theproduct need to be, tweaked for that market compared to how you may sell it, distribute it,configure it, whatever it happens to be, for the UX.

You think about fundamental changes, but we're talking about optimization, know, for alocal market, those, you know, those tweaks, things like that.

Yeah. As long as you touched on that, I think your point about making sure there's aproperly structured communications plan with on-site pieces. But also, I guess, touchingthis a little bit, but, you know, you are when you make this acquisition, you are bringingyour workforce. That's the thing that you have to do. So making sure you have the rightcommunications plan for them in the language.

All of these things are aligned. Right? And there's and you you you execute them all at theright time because this and that's gonna be people, human capital that's really, reallyimportant to the to the future state of the business that you want to make sure is is on theon the new journey with you. Right?

Yeah. And I think language is a bit touching on rigor one there. Language that you youprobably would expect, you know, people at the more senior end to have a good level of,you know, English.

But if you have a large workforce, you know, some people may not have that. Differentcountries, Netherlands, everyone seems to speak great English. I'm not sure that's thesame in every country, across Europe. So sensitivity to language is also I think it's a verygood point you raised there as well.

Good stuff.

A couple more things that were on my on my mind, David here. So one of the I think one ofthe really important topics we probably could spend a whole podcast just talking about isin itself is about the corporate structure after acquisition. Obviously, there's bigimplications on many levels about where you want to retain legal entities where you wannahave for two degrees, all of that kind of thing.

What do you what do you typically see? Like, how where do at what point in thetransaction do you do people start to think about that, and and what would your your kindof, suggestions be to clients?

We generally speaking, unless there are good reasons otherwise, it is, dealt with post,closing of the of the transaction unless you are in your planning or sort of, for thetransaction, you are looking at sort of economic synergies, cost savings, in which case youmay look at it sort of, sooner. But generally speaking, even if you've looked at it upfront, wecertainly see the implementation of these things post, closing.

I think there are sort of three, main drivers of sort of entity or structural rationalization,post transaction.

The obvious one is, removing duplication.

If you already have an entity in, say, Italy and you've acquired another one, do you need toor can you consolidate, all into one? We see a lot of work post transaction reorganizations,as we would call them, sorting out things like that.

Are there good, you know, legal or regulatory reasons why you need, to retain an entity in acountry?

If you have a, licensed product or a licensed service, be that a a financial product that's,licensed by a financial regulator or, say, some sort of medical device or something like that,you will need a local entity, in that country to hold that, license or regulatory approval. Sothen remove that entity. So it's understanding, are there any of those reasons?

If you're in a sector certain where you're dealing, with, say, government on the other sideas your contractor, they look, generally speaking, a lot of your likes to see a local entity tocontract with. So, again, you can't remove that local entity flat. So it's understanding, arethere, you know, legal, commercial, regulatory reasons to retain an entity? Once you'vecleared sort of that hurdle, then I think it comes down to a cost benefit analysis of, the costof maintaining this entity.

Is are there justifications for it? Can we do without it? That looks at risk. Do we need anentity to mitigate a, attached risk or permanent establishment risk in a country?

Do we need it to because customers or indeed employees want us to have a local entity?So even if employees want us to have a local entity?

So even if legally, technically, we don't, there's a perception that we need to have one tobe successful in the market.

So do we retain it for that? Or on the flip side, are there more efficient ways to run thatoperation in the country? Do I need an entity there, or can I, in fact, just have one hubentity in, say, Amsterdam, to pick an example, use that to engage, my employees, acrossEurope? We see that work particularly where where you may have, a thin but wideworkforce.

You may have just one or two, three or four in each country. You can employ, you know,you can have what we call a non domiciled employer. For instance, you've got one Germanemployee. He's employed by a Dutch entity.

You don't need a German entity to employ that person. Or are there third parties you canleverage, to take on that employment clients piece for you to leave you to sort of focus on,running your business. What's the cost benefit analysis there? Does that actually make youmore efficient paying somebody else to take that that work off your desk?

So those are the sorts of, sort of the decision tree as as as we see it, typically.

And that, I would say, you know, if you've done that within the first eighteen to start ofclosing a significant transaction, you'll probably ahead of the curve.

Yeah. That that makes a lot of sense. I think it's quite an interesting one when you talkabout, you know, maybe potentially bringing in third parties when these Mhmm. These,efficiencies, are kind of explored. Because sometimes we do we certainly do see thishappen, and we get brought in sometimes when clients decide they're gonna shut downentities, a handful of employees are certain. Sometimes they can predict that earlier on inthe in the cycle, and then then we might be involved in some of the communications plansthroughout the kind of the transaction, which is quite interesting, interesting place to be.

Yeah. And I think that makes a lot of sense if the more you can communicate to employeesahead of the transaction as to this is what it's going to look like, the more I think, you know,the better because they have more information, the more they think they're being, youknow, listened to and informed.

What we also see, and I'm sure you see this as well, is you may have a company that hassome, you know, acquirer that has some operations in Europe, but maybe acquiringemployees in places where it doesn't, and it doesn't particularly want to set up a structurein certain parts of Europe because it doesn't have any need for that for a handful ofemployees. So, again, they'll look to bring in a a third party such as yourselves there to, youknow, to help with that. If you haven't already got an infrastructure, do you need one or canyou is there a a lighter touch or a more efficient way of of handling that in in thosecountries where you are not in currently, but you are inheriting ones or twos or threes orfours of employees?

Yeah. Absolutely.

So one more question before we wrap up.

I'm curious to get your take on the major shifts that, you see happening in the future. Doyou foresee things changing radically, in the coming years and when it comes to UScompanies making making European acquisitions, or do you think it things are gonna stayfairly fairly stable?

I think I think there may be some turbulence post election as I as I mentioned earlier, but Ithink that's relatively sort of short to medium term. I think in the longer term, I think thingswill stay stable, assuming, you know, the risk factors are, I think, to you that the, you know,what the and the future US government may do around trade policy. Plus, also, you know, II don't think this would be the case, but there's certainly a scenario where sort of Europeregulates itself to a point of uncompetitiveness, through too much regulation.

Very, very big companies will just deal with that because they have the resources and theyneed the customers. It's those sort of smaller medium sized enterprises that may be putoff, you know, moving into Europe for the first time by sort of if if it becomes regulatory, it'sjust too difficult. So I think there is a, you know, care needs to be taken there by politiciansnot to be able to make things go too far.

But assuming all things there is sort of to play out reasonably sort of sensibly, I think,actually, you could see increased investment, in Europe, given the sort of size and wealthof the market. And you are seeing at the moment with sort of US China relations, sort of apullback of US companies from, China, that money or the you know, has to go somewherein the sense of the investment has to be made to sort of drive growth, and I think Europecould be a net beneficiary of that.

Yeah. Absolutely.

Fantastic.

David, last question may, I think, is, what would your top three takeaways be for anyEuropean looking at a European acquisition right now?

So I would say, in sort of some sort of order is sort of plan ahead.

The people we you know, what I mean by that is, you know, plan ahead both for theacquisition and for post acquisition in terms of how you're going to integrate.

The people that we see do this most successfully, have detailed plans, have a sort ofmultidisciplinary team involved in those plans. It's not just the lawyers and maybe theaccountants or the finance people. It involves the full suite of the business, the operationsguys, the HR folks, everybody sort of working together, the commercial team, the salesteam, as to what the future will look like once this track either acquisition or setup has hashappened and have, I think, buy in from the top, to drive that forward.

I guess I'm bound to say this, but I do think there's value in taking good advice that's notjust legal.

That's tax. That's accounting.

That's HR.

It covers a whole sort of suite of professional, services so that you understand, you know,the business environment from those perspectives and and how that operates so you canplan for that. And then finally, the one we particularly particularly around sort of, what Iwould call investment rather than m and a is once you're decided to do it fully commit, thethe if you have a plan implemented, don't sort of we do see people who sort of go gung hofor a, you know, maybe a month or two, and then it kind of falls down the agenda andeverything has not been done. People that do it most successfully, they have a plan, theyimplement it, they fully commit to it because they have that buy in from the top that thenempowers people, to drive through on the plan and on the implementation, and that leadsin our experience to the, to the best results.

And what I would also say is we certainly see clients who fully commit. They test themarket. It isn't there for whatever reason. That's fine.

That's not a failure. You've you've done the right work there, and you've realized, okay. Thisisn't quite the market we thought it was. We need to pivot here or we need to pull backthere, Whatever.

But at least then you know that answer rather than you're still not sure if it's actually amarket for you or not because you haven't fully committed to it.

Yeah. Yeah. Absolutely. It makes it makes a lot of sense to commit. Get buying from thetop. And I think Yeah. Given kind of the breadth of the topics we've to discuss today, like,you know, make sure you've got the right experts on your side.

Yeah. Yeah.

Perfect. David, if people wanna get in touch, what's the best way for them to reach out toyou?

So, my details are on, website, Taylor Wissing dot com. They'll find my, email, phone, andeverything else there. So that's probably the easiest way to find me or, of course, LinkedIn.

Absolutely. Sounds, sounds perfect.

Just don't call David at ten AM, average time because he obviously That's right.

I, you know, left we're in the room. That's something I learned very early on once this year.

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