5 Tips for a Smooth Offshore Business Transaction

Expanding your business overseas can be one of the most effective ways to grow, increasing your opportunities significantly. But international transitions can quickly become complicated, with more risks and unnecessary costs—not to mention a greater likelihood of your deal falling off track. 

If you’re preparing to make your first offshore transaction, these tips should guide you through the process, so you have the knowledge and confidence to see the deal through successfully.

1. Do Careful Due Diligence

First, before you sign anything, you’ll want to spend some time checking who you’re dealing with. That means confirming that the business is properly registered and reviewing its financial standing, as well as taking a look at its reputation in the market.

Plus, make sure the business is compliant with local regulations (believe it or not, this isn’t a given, and even small oversights have the potential to derail your plans). The more you know about the other party upfront, the fewer surprises you’ll face later.

2. Understand Local Laws and Regulations

Every jurisdiction has its own rules, and, depending on where you’re doing business, there’s a good chance that those rules will differ greatly from what you’re used to. 

To avoid accidentally breaking the law, make sure you understand the tax requirements and licensing obligations in the region you’re doing business in (these can be real deal-breakers if you’re not careful). You might want to work with a local legal advisor, so you know for certain that you won’t end up making mistakes that could put a stop to your deal entirely.

3. Hire a Process Agent

A lot of offshore agreements require you to appoint a process agent, who essentially receives legal documents on your behalf in the local jurisdiction. 

You might find that the party you’re doing business with will only go through with the deal if you hire a process agent, so they know they’ll have a clear point of contact and that you’re taking compliance seriously. Make sure to hire a reputable agent, like UK-based Point Processing, so you know that all notices and documents will be sent and received quickly. 

4. Protect Exchange Rates

When you’re dealing in multiple currencies, keep in mind that swings in exchange rates can quickly cut into your profits, and that’s something you definitely want to avoid. 

If your transaction involves large sums of money, it’s smart to see how you can lock in exchange rates when they’re favorable to you; for instance, by using hedging strategies or forward contracts. This should protect you from the cost setbacks of sudden fluctuations, so you’ve got certainty over the final cost of your deal.

5. Maintain Strong Communication

Finally, communication can get a bit tricky when you’re doing an offshore transaction, particularly when multiple parties are in different time zones and speak different languages. 

That’s just the reality of international business, but the good news is that you can keep things as simple as possible even with these communication challenges. Just establish reliable communication channels early and agree on how often updates should be provided. When you’re communicating clearly, you should be able to catch issues before they escalate and keep everyone on the same page.