Perspectives on multi-country, international traditional searches?

June 12, 2024

by a searcher from Columbia University - Columbia Business School in New York, NY, USA

I'm a US-based MBA student with a diverse background, having attended school in Australia and lived in Costa Rica for 10 years. I'm exploring the possibility of expanding my US-base search to include these regions and want to understand investors sentiments on international search - are there investors open to this? Or do most require for a single country focus?

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Reply by a professional
from University of Texas in Fort Worth, TX, USA

Hannah, I've lived in India for several years and have worked extensively throughout the Middle East, East Asia and South Asia over the last 20 years. One of the biggest issues I've run into relates to the security of your invested capital. Meaning, if you are legally obligated to partner with a National when starting a foreign business (which is normally the case) and a financial dispute arises between the National and the Expat, there’s basically 100% probability that the National will be the winner of the dispute -- and of the financial gain from the enterprise. Your capital partners will want to know what safeguards you have in place to mitigate the National vs. Expat risk. You can't completely mitigate this, but you can put in a lot of safeguards to reduce the risk

Reply by a searcher
from University of California, Berkeley in San Francisco, CA, USA

Follow the money. Your capital providers (both debt and equity) will likely want the ability to perfect their legal agreements with you (GP/borrower) and the assets (your target business). Each country will have different laws and regs so you will need to do your homework or have the right tax and legal advisors. For US, SBA is preferred for debt less than $5MM and they may have restrictions on foreign ownership and foreign assets. Tradition lenders will likely shy away from foreign collateral they cant perfect outside UCC plus the cost of doc'ing foreign transactions usually make SF sized deals not financially feasible. As for investors, I suppose its country and individual investor dependent..

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